I recently sold some Apple shares on February 17 at $359 per share. Why would I consider selling AAPL with a fantastic growth rate, a lot of cash on the books, and a seemingly unending supply of chart-topping products?
The answer is really quite simple: I had a gain of more than 200% from my purchase price. I originally bought shares in Sep 2008 at $105, and additional shares in Jun 2009 at $140. (See my posting about buying Apple.)
This means that my portfolio continued to be a bit overweight in Apple, because the stock price had appreciated faster than most other holdings. Also, selling 50 shares allows me to take out all of my original investment.
Besides, I was a bit nervous about Apple’s share price in April 2010 when I wrote my previous posting, but I never did sell any shares. I held on for a terrific gain.
Apple has been a long term holding of mine, and I have bought and sold the shares several times. I tend to prefer to keep a 100 shares as a core holding, and buy 50 share more when the valuation is low. Now AAPL has reached the level where I don’t feel bad about selling the extra 50 shares.
As I write this post, my sell at $359 seems to be a really good decision short-term, as the price has fallen to $338.61 due to nervousness about the political situation in Libya. This represents a difference of approximately $1050 in the value of those 50 shares.
So I continue to be a shareholder of Apple, but will look to invest my cash from the this sell to pick up some bargains during this market downturn.
I am also glad to improve my diversification, as having a winning stock overrun a portfolio a bit can increase risks if not corrected. Since I have mentioned diversification, please join me at InvestEd 2011 on 13-15 May in San Diego. I will teach a class on managing portfolio risk and diversification at this great investment conference.
NOTE: Stock selections in this post are for educational purposes only and is not intended to be a recommendation to purchase or sell any of the stocks, mutual funds, or other securities that may be referenced. The securities of companies referenced or featured in this web site are for illustrative purposes only and are not to be considered endorsed or recommended for purchase or sale. Investors should conduct their own review and analysis of any company of interest before making an investment decision.
Securities discussed may be held by the author in his own personal portfolios.