This post is directly related to something that I just did and then thought better of it. One of the things that I have preached on this blog is that mutual funds are the best way to invest. It is the only kind of investment I own. However, I fully admit that sometimes I can be prone to the idea of accelerating my financial independence and a get rich quick scheme or chasing investment returns. In fact that just happened to me yesterday.
If you have been paying attention to the stock market you know that it is a tough time for many markets so far. That is fine with me because that means stocks are on sale. However, there are some really quality stocks that have taken a beating. One of those stocks is Apple. I fully admit I don’t own a smart phone, but Mrs. ROB does and it is an Iphone. I don’t get the obsession with smart phones, but I am not stupid. I get the idea that Apple is a very well run company. I mean it is sitting on over $200 billion in cash. It is really a good company. But because of predictions of declining iphone sales and other factors Apple stock has taken a beating. It has gone from $134 a share to $96. That is a drop of almost 30% even though it has exceeded growth expectations and is still extremely profitable. The drop in price seems to be a lot of people questioning the innovation of Apple.
I don’t necessarily share that sentiment. Apple has tens of millions of users who love their products. Additionally, with that kind of money it can buy all kinds of other companies to diversify its products. Couple that with tonight I was listening to my favorite local financial show and they were talking about how Apple’s valuation was at a low that was dirt cheap.
After hearing this all I could think was I have to get in on this. I mean this could be the deal of a lifetime. Why not? I mean it is Apple right?
Guess What Happened?
After Mrs. ROB and I got out of the car I went into my Roth IRA and I sold a major mutual fund, partly because of its losses, but also because I didn’t have any cash to buy Apple stock. So I put in the order to liquidate my position, which would’ve brought me almost $25000. $25000 to buy Apple stock.
Fantastic right? 10 minutes later I cancelled the order.
Why Did I Cancel My Order?
I cancelled my order because I got caught up in the hype. Kind of like friends of mine who don’t normally buy lottery tickets now have Powerball fever. One friend bought $100 worth of tickets. For the record I haven’t bought Powerball tickets and doubt I will. I haven’t bought a lottery ticket in 3 years and the last time I did I think I spent $5.
I fell for the allure of quick returns, a get rich quick scheme.
Now the truth is I think Apple is a GREAT investment. I would love to actually buy some stock, but I don’t have the money to do so or I haven’t taken the leap so far. I might still sell a little bit of a mutual fund to do so, but I would rather buy it with new money (e.g. my 2016 Roth IRA contribution). There is a problem. I don’t have the money. So it is very well possible I might lose out on this investment.
So be it.
I have been pretty good about the tortoise vs. the hare. The tortoise always win. The story doesn’t change. I need to stick to that advice. I need to not make hasty financial decisions. Making decisions based upon emotion can be disastrous.
So maybe I lose out on this opportunity. If that is the case then maybe it wasn’t meant to be.
The truth is I already own Apple stock through my Fidelity Growth Company Fund and Fidelity Contrafund. Both are major holdings my portfolio and both own Apple so it isn’t like I don’t own the stock. I just don’t own individual shares.
I still would love to buy Apple, but I am going to sit tight. Think about this more and not make a decision out of emotion.
The Bottom Line: Don’t make hasty financial decisions. Think about it. Mull it over. That is the case for investing, buying a house, car, etc. Try to take the emotion out of it. In fact a good rule of thumb is to not make any decision for at least 24 hours. If you still want to do it then do it, but don’t pull the trigger out of emotion like I initially did. Slow down. The tortoise wins the race. ALWAYS!