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

Apple, where the perfect is the enemy of the good

By Libardo Lambrano

On September 21, 2012, Apple (AAPL) reached $700 per share for the first time, only to go back down to $390 per share six months later. The company has had a fantastic run since 2010, but its current price of $628 is still under the $700 peak in 2012.

Apple invests huge amounts of money in research, design and development, but it seems that the company may be suffering from the paralysis of perfectionism syndrome. The endless pursuit of the perfect, the enemy of the good and product execution, famously killed off Duke Nukem, one of the best computer games of all time.

The original Duke Nukem game was so successful that the development team tasked to create a sequel utterly failed. George Broussard, one of the owners of 3D Realms, the creator of the game, forced his team to re-start from scratch every time a new gaming technology was available (which at the time seemed to be almost every day).

After Broussard and his partner Scott Miller had spent $20 million of their own money over a span of 12 years, they disbanded all development at 3D Realms in 2009. In the quest for the perfect sequel to an original game released in 1996, nothing was ever released.

This is one of the most interesting stories of success paralysis in recent history. A similar challenge seems to be plaguing Apple lately. It's not clear whether executives are perfecting the Apple TV or Apple smart-watch, but something is clearly in the works.

Is Apple waiting for the perfect moment that may never arrive? In contrast to 3D Realms, Apple is one of the largest companies in the world. Even so, the company (and its share price) risk stagnation if innovation and product launches stop. Just ask Bill Gates and the team at Microsoft (MSFT).

In November 2012, I reduced my position in Apple, due to rising business expenses and increasing competition. Yet even after that slight reduction, the stock still comprises close to 10% of my entire portfolio.

Will Apple really be able to launch a game-changing product again? iTunes radio was a complete fiasco. It never got better: it was difficult to use and glitchy, and was years behind of rdio, Spotify or even Pandora. I just cancelled my subscription and moved on to a different service.

I am curious to see what develops after their recent acquisition of Beats - especially since Apple is a company that hasn't done a lot of large acquisitions in the past. I'm still invested in Apple for the long run, but since questions remain I plan to keep a close eye on it.

As of June 19th, since inception (01/19/12), the model is up 18.6.% (annualized) through the end of May, versus 20.8% for the S&P 500 Index (SPX). The return of the S&P 500 in May 2014 was close to 2.1%, as compared with close to 2.0% for my Dividend Paying Large Caps portfolio. Year-to-date my portfolio is up 6.19% as compared with 4.07% of the S&P 500.

In May, Apple (AAPL), JC Penny (JCP), and American Express (AXP) all performed well. They were up 7.3%, 5.5%, and 4.7% respectively. The stock that hurt my portfolio in May was actually one of my recent acquisitions: Pfizer (PFE), which declined -5.3% after the failed $117 billion bid for AztraZeneca (AZN).

At 18.11 PE and 3.5% dividend, Pfizer is a position I'll plan to hold for the rest of the year. Pfizer is one of the large cap companies with more aggressive stock buyback programs, which shows management responsibility and commitment to investors.

1 of 2

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 $93.74 -1.15%
FB $117.58 0.73%
GOOG $693.01 0.29%
TSLA $240.76 -2.81%
YHOO $36.60 0.03%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs