This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Don't Buy Apple, It's Too Cheap

Retail investors decide what percentage of their portfolios to allocate to any given stock. If Seagate (STX - Get Report) is growing relative to your other holdings because it's trending faster than the rest of your portfolio, you don't have to rebalance unless you want to. It's not an excuse to be reckless, but flexibility and quickness are key advantages.

Timing is maybe the greatest edge the average investor has over large fund managers. Retail investors can pick and choose the time frame for any given position. For example, in "BlackBerry Isn't a 10 for Investors" I suggest that Research In Motion (RIMM) may be bought for a gain, and then sold or shorted for another gain when the BlackBerry 10 is released.

Most funds can't micro-time entries, exits, and reversals to the degree retail investors can. Timing not only includes buying and selling, but also sitting on your hands.

Sometimes fund managers would just as soon stand fast, but they have to allocate money as capital comes in. An investor can add money to his account and hold it as cash while waiting for the right time to enter. The choice to say "no" or do nothing can be powerful, and an investor discounts it at her peril.

I believe the time is now to start/add Apple, but not everyone agrees. The Street's Rocco Pendola makes a valid point on CNBC "Fast Money Tuesday" about earnings releases. I fully agree with Pendola that it's foolish to try to time an entry into a company reporting earnings unless you're fully comfortable with the volatility that accompanies the potential market reaction. The fact is most are ill-prepared for the kind of volatility earnings deliver.

It's the same volatility that takes my focus toward options as the vehicle to gain exposure. I have written several bullish takes on Apple lately, and they all advise selling volatility into earnings because it lowers your risk and provides an edge.

I used options to enter a bullish Herbalife (HLF - Get Report) position by selling put options, and I expect to short Research In Motion by selling call options.

Using options as a hedge, an investor can time a Herbalife long incorrectly (I was early) and still have the staying power to continue the position while time works to his advantage. Within a day or two, Herbalife was back to the same price I averaged in, but the options experienced time decay and loss of implied volatility. As a result, I was back in black on a trade that would would have only broken even had I bought stock instead.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.99 0.31%
HLF $43.70 -1.50%
STX $29.48 1.60%
FB $103.20 1.30%
GOOG $687.50 0.64%


Chart of I:DJI
DOW 15,893.71 +233.53 1.49%
S&P 500 1,847.89 +18.81 1.03%
NASDAQ 4,294.0220 +27.1850 0.64%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs