Saturday, March 03, 2012

Using iPads to buy an iPad

I really need an iPad. The kids really need an iPad. My wife does as well, she just doesn't realise it yet.

As my wife has other ideas about how we should spend our money I have a solution. Use some long term savings to buy some Apple stock. When it has gone up 20% I will have made enough to buy an iPad. This is in effect using the success of the iPad to fund our iPad!

Of course using stocks to fund short term spending plans is foolish. However it is fun to be foolish sometimes as long as it is carefully moderated! I don't know of a stock with a better risk reward ratio than Apple so I guess if it drops in the short term we will just have to wait a bit longer for that tablet.

On a more serious note I think my smartphone position is now complete. Here are the purchases since I last listed my smartphone purchases:

22 Jul 2011 - Sell 11 GOOG @ $592
22 Jul 2011 - Buy 17 AAPL @ $385
27 Jan 2012 - Buy 5 GOOG @ $595
27 Jan 2012 - Buy 185 MSFT @ $29.20
01 Mar 2012 - Buy 10 AAPL @ $553
02 Mar 2012 - Buy 6 AAPL @ $555

I haven't spoken much about Microsoft recently. It generates an impressive amount of cash and is busy buying back its own shares as well as paying a 3% dividend. The one thing it hasn't got is the growth to compete with Google and Apple. However the stock may have a pop when Windows 8 comes out and I may take the profits if that happens. In the meantime it is up 10% already.

So the purge of my portfolios is now complete. I no longer own any individual UK companies. I do hold the FTSE 100 ETF. I only hold 4 individual companies now - Apple, Google, Microsoft and Oracle. I also hold the NASDAQ 100 ETF (QQQ). Apple accounts for well over half my position. Charlie Munger would be proud (see a previous post about Charlie Munger having all his portfolio in one stock.)

The only question now is: have I gone far enough? Why do I still own slow movers like the ETFs and to a lesser extent Microsoft and Oracle? Should I just put everything into Apple? It is hard to answer questions like this but all I can say is that I have come a long way. At the start of this year I had positions in 14 individual companies and only 3 or 4 of them were growth stocks. Many of them were in industries that I had little knowledge of like banking or petroleum.

I now own only 4 individual companies, all in the industry I work in and understand the best - technology.

I am massively overweight in Apple but then it is still massively under-priced. I think that the share price of a mega-cap. has a certain amount of inertia. The market is simply being slow to adjust to the reality of how fast Apple is growing and how much cash it holds. The potential launches this year of the iPhone 5 (which will hopefully be less incremental that the 4s) and the iTV will only add to the excitement.

My infatuation with banking and industrial stocks is officially over. It is all about finding low cost of growth and investing in what you know. And I KNOW technology!


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