Richard Russell On The Lessons Of Investing In Apple, And Why He Likes Rare Earths And Gold

In his daily note, Richard Russell teaches an investing lesson he learned from Apple:

Some years back my son, Ryan, told me that he loved Apple products. He pressured me to buy some stock in Apple. I wasn’t particularly intrigued with Apple at the time; the company had troubles, and its stock was selling at 22. But under pressure, I bought Ryan 75 shares of Apple. I soon forgot about Apple. Had I bought 1,000 shares I’d probably have been checking on the price twice a day, and I probably would have sold it on the first correction.

But through thick and thin, we held onto the stock, finally selling it recently for a fat profit. Lesson — often you will hold a small position in a stock where you couldn’t sit with a big position in the same stock over a long period of time.

Where does he see a similar opportunity? In the rare earths.

Current example: I like the future of rare earths. I bought a small position in the rare earth exchange traded fund, REMX. This ETF looks OK, but nothing dramatic has occurred. The action has been slow. I’ll sit with my small position until either the ETF breaks out to the upside or until it craps out. Either way, I don’t feel under stress holding a limited position in REMX. Actually, although I like the story in REMX, I don’t have the guts to take a big position in this ETF. Wait, if REMX closes at 27 or better, I’ll add to my position. Otherwise, I’ll just sit.


And given the bounce of its 50-day moving average, he likes gold


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