Going all in with Apple

Last Friday I sold most of my Google position and bought more Apple. This makes my Apple holding my biggest position ever by quite some margin. Why did I do it? I was inspired by two facts:

1) Apple's free cash flow (FCF) per share was higher than Google's last quarter. I calculated Apple's at $11.23 and Google's at $8.07. However Google's share price is over $200 higher. This despite the fact the Apple is growing much faster. If Apple stopped growing right now it shares would still be fairly priced.

2) Charlie Munger said I could. Seriously at a recent Berkshire Hathaway shareholder meeting Charlie said that he once had over 100% of his portfolio in one stock (meaning that he used leverage.) He thinks that it is less risky to invest in one company you know really well that to diversify into a number of companies that you know less well. On the whole I agree with him so my aggressive portfolio is now 100% Apple. However I am not sure that I would recommend putting all your savings in one company. Although you may understand the company and its market you may not understand all the macro-economic factors that could affect it. Investing in a handful of promising opportunities that you really understand may be the best option.

One problem with having only one stock in a portfolio is that it makes for painful viewing when the stock is having a bad week or month. However I have other portfolios I can look at and I am not one to panic.

When the next iPhone is announced the stock should get a modest boost and iPhone and iPad should sell like hotcakes in the 2011 Christmas season.

Now that I have a big position it is time to hold on and enjoy the ride.