Let’s jump in real quick this morning with a short-term look at Apple stock. As always, the best place for your long-term investments such as retirement savings and even most college savings is in a well-diversified portfolio tailored to your risk tolerance. Only after you have funded your retirement and college savings and other long-term goals should you be looking at the volatile world of shorter-term investing.
Apple as a Bond
As regular readers know, I’m all about treating stocks as bonds. If you project a company that will almost certainly be up in share price in 5 to 10 years, that’s a AAA bond. Apple is obviously one of those companies.
Unfortunately, Apple’s coupon rate (annual dividend rate) sucks for bonds. On the other hand, it’s way better than whatever you are earning in your Marcus savings account or other high-interest savings account. At least, until interest rates get better. Right now, as I look at a stock price around 163.75, the forward annual dividend yield is $0.88 per share, or about 0.54% interest.
So, if you’re looking for a place to park some of the cash overflow from your emergency fund, then maybe you like this stock and interest rate.
Apple as a Company
Apple is a lot like Amazon back in the day. What the company does is in many ways irrelevant. Apple has a built-in nation of people who will buy whatever Apple puts out. If they don’t like it, they will buy it anyway, and just replace it later with whatever Apple releases when it gets around to fixing it (and everything in between). See: all the MacBooks with terrible keyboards that broke too easy and everyone hated yet bought up with every minor upgrade all the way until Apple (without admitting what they put out earlier was trash) got around to making laptops with a better designed keyboard. Seemingly not one customer was lost to competitors with more powerful laptops with keyboards that weren’t reviled.
So, when the company announces new products, it really doesn’t matter what they announce, there is a baseline of consumers that will buy it.
Apple’s Peek Performance Event
Today, Apple’s stock is down in line with the overall market due to the events in Ukraine. However, tomorrow, Apple will hold an “Apple Peek Performance” event (yes, I know, wrong form of peak, but that is what the Apple official spelling is, as in sneak peek.) That event will undoubtably trigger an avalanche of press and pre-orders.
Traditionally, this also kicks the stock price up a notch. Obviously, if you are buying this morning, you are not buying Apple stock as a bond, but if you were buying this morning expecting a jumpstart to the stock price, but then you didn’t get what you were hoping for, then you could go ahead and hold Apple stock as a bond until you did get what you wanted. If you did get some $5 or even $10 pop and wanted to cash out, well then you can use those funds to find an investment you like better for the long run.
I’m in at $163.17. I already have some Apple stock that I collect a small dividend on. This will just add on (and technically lower my yield), or if we see $170+, well, I’m happy to take some short-term gains. (Yes, there is a way to do this with options, but I’m kicking this article out fast this morning, so you’re on your own there.)
(Update: Funny story. Apple stock did not get a boost from its event. Instead, the shares went down into the $150s. But, as I said above I’m willing and able to take 0.54% — which is way more than I can get anywhere for savings or money market right now — to hold onto Apple stock. And, what do you know as of today 3/29/22 Apple is trading up at nearly $180 looking to move into positive YTD territory. I would sell a bit here, but I don’t have any place better to put the money, so we’ll wait for the Fed to start bumping online savings accounts up over 0.6% and we’ll take another look then. Until then, earnings season is coming… who wants to be against Apple? — Not me.)
Author – Brian Nelson
Brian is a former Certified Financial Planner and financial advisor. He writes for the Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or investment advice. This is not a recommendation to buy or sell securities. At the time of publication, Mr. Nelson owned shares of Apple stock, however, that may change at any time without notice.
ArcticLlama, LLC, FinanceGourmet.com, and Brian Nelson, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.