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The Question That Continues To Haunt Me: Sell Apple Stock To Take Profits Or Let It Ride?

29 May 2008 2 Comments

I have written several articles recently about my Apple (AAPL) stock trading actions. The stock has had a roller coaster ride throughout 2008, plummeting close to 40% to start the year then making most of that back over the last few months. The true believers, myself included, bought more stock near the lows several months ago. The question that I sit up at night thinking about and have been for a while now is if and when should I take profits in this stock?

Why Do I Always Talk About Apple?

I feel it is necessary to address this question before we move on. First, Apple is an interesting stock and an interesting company. It is a stock I personally own. It is a stock that moves significantly in both directions. Lastly, just because Apple is the example used in this discussion, the same issues can apply to other stocks in your portfolio. If you don’t own this stock specifically, then pay attention in case a similar scenario arises for one of your positions.

My Recent Activity

In my previous articles, I have noted my recent selling a portion of my position in Apple. I have justified these actions by telling myself that it is never a bad idea to ring the register and realize my profit. Until I ring the register, the profit is only on paper.

Fundamentals in the company have had no part in my decision to sell the stock. I am still a believer that the long term Apple story is in tact for many reasons that you can read all over the internet (I won’t detail here). However, this is a stock that moves in heavy momentum to the upside and to the downside. Will the stock be higher in two years? Probably. But I feel the market conditions are creating an environment where the stock needs to pull back first.

Ideally, a pull back to the $150 range would be beautiful. I would buy up as much as possible in that range. In the move to take a profit, I risk the stock going up further and missing out on potential additional gains. This is why I have been reducing my position in small chunks. I still have more than half of my original position in the stock; therefore, I am well poised to take advantage of more moves to the upside.

I have over-traded in the past, as detailed in my previous analysis of my Apple trades, but I don’t think I am over-trading by taking profits after a big run in the stock such as what we have experienced in the last few months.

I am still long Apple, just not as much as before. I will be watching intensely to see what happens with this stock in the near term and in the long term. Whatever happens, I will learn from my trading decisions one way or the other.

Related Apple Discussion

What are your thoughts on this question about selling Apple?  Join the discussion by adding your comments.

2 Comments »

  • Daniel Hoang said:

    You can sell half your position and preserve your profits or buy some puts to hedge your downside loss. The market is making a bigger deal over the 3G iPhone release so there’s potential for AAPL to drop if it doesn’t release the phone in June as expected. Long-term, there’s still a lot of upside, but a lot of general market volatility remains.

  • bob Johnson said:

    take profits… don’t be a hog… don’t try to ‘time’ the market, etc. etc. I have done quit a bit of trading of AAPL and have consistently lost money in the long run Hence with this stock in particular, I have excepted the reality that I can’t and won’t time the market and decided to HOLD my position long term (at least for a year or more while accumulating on the dips. It is so tempting to try and catch EVERY MOVE the stock makes but I JUST CAN’T pull the trigger without driving myself crazy… I have some stop losses in place that still guarantees my ‘making money’ (maybe not as much as I would like).. but its still money. I believe in the fundamental of the company sbelieve we are in ‘a good tie of the year'(back to school and Xmas) when the stock tends to do well. I will re-l00k at the stock after X mas and hold until then.