General Question

Mtl_zack's avatar

Invest in apple?

Asked by Mtl_zack (6759points) June 3rd, 2008

if a new hardware comes out, then it would be worth it, but if its only a software update, will the price of the share still go up?

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18 Answers

richardhenry's avatar

I’m considering selling my shares from February. Whether or not you buy shares now would depend on how many you are considering; for a small amount, the payout wouldn’t be worth it. Remember that there aren’t any dividends on AAPL stock.

Mtl_zack's avatar

im thinking around 20–30 shares. another thing thats possible is that a new hardware is NOT released and then the price will fall. then i make my move, because apple always surprises people with something new, probably in the more distant future. (tablet, remote, etc…) what are your opinions?

richardhenry's avatar

A date around February 22nd would have been a perfect time to buy, but I’m not confident about now. What length of investment would you like to make? Two months? A year? More?

Mtl_zack's avatar

well, if it dips after the wwdc, then i’d keep it for longer, because then apples overdue for something new to come out. i have to decide wheater to buy now, or right after the keynote. obviously, if i dont buy now, and something does come out, then id keep my money in my pocket. if nothing happens, then id be ready to invest. if i buy now, theres the risk that nothing will come out at wwdc.

another thing is that im not a u.s. citizen so i can sell after a shorter period of time and not be taxed.

richardhenry's avatar

Characteristically, Apple’s share price sees a minimal increase in the week preceding and tailing a Jobs keynote. The increase is around 4 to 5% on the existing share price. So; based on history, it could potentially be a fairly safe investment.

However, with the degree of media speculation pointing towards an iPhone being released at the keynote, I wouldn’t be surprised if Apple’s share price fell $20 to 30 if the product wasn’t released, against hindsight. This scenario forces you into either making a loss or making a longer term investment.

So, for the purposes of this, let’s say an iPhone is definitely going to be released.

Firstly, if you’re looking for the huge increase in share price that took place in Apr-June ‘07, it’s not going to happen. The industry was psyched up over the fact that Apple were choosing to make a phone, not because they were revising a phone they already make.

In addition, the market climate is all over the place, and the type of people who would generally push a lot of money into Apple’s pockets are claiming to be uncertain that they will be able to meet their sales targets. Unfortunately for you, the guys who pump $100m into Apple make a bigger difference to the share price than your confidently invested $5000.

However, although the share price probably isn’t going to skyrocket, we will probably see a healthy increase. Also, since you’re willing to make a longer term investment, if Apple don’t announce a product revision at the keynote it’s not the end of the world.

With any luck, Apple release a phone and the share price will rise to something like 220/share, and you will make just over $1000 on your $5000 investment. Worst case scenario, you leave your investment for longer. I don’t see any reason for you not to invest.

richardhenry's avatar

Also, are you sure you don’t have to pay tax on share dealing? In every country that I’m aware of, no matter the length of investment it is still considered income, so you have to pay income tax.

richardhenry's avatar

Actually, more realistically the share price will rise to just over 200 or 210. I wonder if 220 might be a bit generous. I guess we’ll have to wait for the day to find out. :)

Mtl_zack's avatar

maybe it wont skyrocket, but theres evidence that a OS 10.6 will be released in the next year or 18 months. i suspect, that it will hold all the glory of touch screen, but theres no proof of that yet.

another big thing is that the student rebate season just started in the u.s. and canada and apple started their rebates today, june 3rd.

i dont mind investing a little bit later in the year, mainly because all the talk is just rumors, but im a strong believer that old news is no news. once everyone finds out, the price will soar.

this is my decision: these are just rumors. no one knows for sure whats going to happen. im going to play it safe and maybe find another company to invest in.

and by the way, i think the income tax detail is extremely low, because im 18, i have no job (im investing with my interest from my israel bonds that just matured).

richardhenry's avatar

Oh, and since you were wondering to buy before or after, I’d say to buy before for the maximum increase in value. This said, if you have a dealer who will make a fast transaction for you, buying after the keynote won’t really put you at a loss either.

richardhenry's avatar

Also, unless you’re deliberately looking to lock away your cash for an extended period of time, I wouldn’t recommend another company in the technology sector right now. Apple are perfectly poised for a rapid increase, if an iPhone is released.

Mtl_zack's avatar

thanks for the great advice :D :D

richardhenry's avatar

Lastly… http://apple20.blogs.fortune.cnn.com/2008/05/23/apple-takes-delivery-of-188-mysterious-ocean-containers/ (Also, if you’re not already, you should subscribe to that column. DeWitt knows his stuff!)

Personally, I’d be surprised if they don’t release a new phone. They have FCC clearance already, they’ve sent dummy boards of a 3G device to all the carriers, and 188 ocean containers is a lot of something. If they don’t release an iPhone, they’re releasing something.

It’s all about risk, and it depends what you would like to do with your money. Best of luck, and let me know how it goes for you. :)

richardhenry's avatar

@jp: I was actually looking for that. The only downside is that it only covers the day +/-, whereas a week to two weeks would be more helpful since Mtl_zack isn’t looking to make recurring investments.

I still do find it particularly interesting that “if you held the $10,000 of shares bought in 1997, your investment would be worth $525,187 today (with AAPL around $200/share today, counting two 2-for-1 splits).”

Cheers for the link.

Mtl_zack's avatar

i found something new:

an apple store just recently opened in vancouver, and it mentioned in here that some of the crates are going to vancouver. also, rogers and fido said that they will be releasing the iphone in canada. this is too much to be a coincidence, especially at this time. im buying rogers and fido.

richardhenry's avatar

Although there was an increase in the price of AT&T stock, for the sake of it I would stick with Apple. Not to mention the fact that they may release a version unbound to a specific carrier, although unlikely.

What we know:

* Apple will release a phone, if not at this upcoming keynote, at some point
* Apple are releasing something at this keynote
* Apple’s stock has more energy than Rogers or Fido

I would stick with Apple.

Mtl_zack's avatar

the thing is, i just crunched some numbers, and it turns out that with my commission rate, id have insufficient funds to buy 20 shares. i travel a lot (going to south africa and alaska this summer), so i have to take notice of these things. i also will plan trips in the wintertime and probably march or april. if apple releases something then, then i’d be tempted to keep my apple stock and not go away (i love travelling sooooooo much, and id rather travel than make money. experience is the best way to measure wealth in my opinion.).

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