Enough is enough.
I think stock-picking is an idiotic strategy for individual investors, and I almost never do it.
The smart investment strategy for individuals is to buy a balanced portfolio of low-cost, tax-efficient index funds and rebalance them every year or so (or whenever the balance gets out of whack). Just about every investor is best off in index funds, and that’s where I keep almost all of my portfolio.
(Why is stock-picking an idiotic strategy? Because he stock market is pretty efficient, and individuals are at a massive disadvantage to professional investors–and even professional investors can’t pick stocks well enough to offset the costs of their efforts. It’s a muppet’s game all around–unless you’re getting paid to manage someone else’s money.)
But, sometimes, I just can’t take it anymore, and I have to put my money where my mouth is.
And I just did that with Apple.
I see two possible scenarios for this investment.
Either Apple really is becoming Nokia, in which case the stock will go to $250 and stay there until they break up the company and distribute the cash. (And I’ll lose half my bet).
Wall Street has become way too pessimistic about a company that still makes great products and still has a strong strategic position in fast-growing markets that will do OK over the next couple of years… and the stock will go up.
In the meantime, I’ll collect a dividend that is a lot bigger than my index fund is paying me.
Yesterday, Jay Yarow and I wrote a long article spelling out the “bull case for Apple.” If you’re curious about the logic, you can read more here.
And, if you’re an Apple hater, you can cheer wildly as the stock keeps dropping and I lose my shirt. (My cost basis is $391, in case you’re curious.)
SEE ALSO: The Bull Case For Apple