Aug 08, 2018
Apple (AAPL) is the winner in the race to become the first U.S. company to hit a market capitalization of $1 trillion. Yes, you read that right – trillion!
It’s a remarkable achievement, and it’s pretty cool that there was even a race to that level. Amazon (AMZN) is not far behind at $920 billion, and both Alphabet (GOOGL) and Microsoft (MSFT) have market caps over $8 billion. Facebook (FB) was in the race before it got hit after earnings (although I think that’s a long-term buying opportunity).
I was lucky enough to be in New York and appearing live on Yahoo Finance at the very moment AAPL went over the $1 trillion mark. We were already talking about the company when it happened. You can check out the video of my appearance below.
It’s a great story, and whether you like Apple’s products or hate them, my congratulations to the company for doing something never done before. In addition, there are a few very important lessons that I feel all investors need to take away from the milestone.
1. Long-term investing works. If you bought AAPL 10 years ago, you would have a 10-bagger right now. It was trading near $21 in the summer of 2008 and today sits near $208. Hindsight is 20/20 of course, and holding onto Apple stock for a decade would not have been easy as there were several significant pullbacks along the way. From the middle of 2012 to the middle of 2013, the stock fell 41%, and from early 2015 to mid-2016 the stock lost another 34%.
However, the business model did not change much, and the company continues to innovate to this day. It is not easy to hold even good stocks through their own bear markets, especially when the overall market is doing better. This comes down to finding an investing strategy that works and then trusting it so as not to be swayed by outside factors.
2. 100-Baggers are real! Even more than a 10-bagger over 10 years, if you bought Apple in 2004 it would have been one of those coveted 100-baggers. You would have made 100 times your money. A $5,000 investment in Apple that you put under your mattress would be worth over $500,000 today.
3. Bet on the jockey. When I was a kid, I would sneak off to Philly Park to bet on the horses. An old man once told me he always bet on the best jockey, not the horse. That turned out to be an extremely valuable lesson. A jockey, or CEO in the case of a company, can be the difference between winning and losing. Apple has been led by two of the best CEOs in the last few decades in Steve Jobs and Tim Cook. It’s worth looking into the CEO of any company you intend to invest in.
4. Let your winners run. You just have to in order to achieve a 10-bagger. Selling too quickly will never give you the ability to hit those life-changing big wins in your portfolio. This does not mean you buy and hope, or buy and ignore. Letting a winner run means holding on as long as it still meets all of your criteria. As we talked about in lesson number one, holding a stock for years means that the chances are high it will fall into a bear market at some point. But if the stock continues to meet your buy criteria, you can feel safer holding through both the tough times and the good times.
And the most exciting lesson of all…
5. There are more Apples out there. We know there are. The challenge is finding the winners, and it’s even harder to find the next mega-winner like Apple. Doing so often means going off the beaten path. It is not easy to put money into a company when it is not in the headlines and maybe even not loved by Wall Street, but a contrarian view is needed to hit the jackpot with the next Apple. Get there first, before the big money arrives, and you can make a ton of money.
That’s my goal – to help investors like you earn big returns in companies that can double, triple or even more over the long term. To do that, you need the right company (or even companies) in the right trends, like the spreading legalization of marijuana, the coming sports gambling boom, medical breakthroughs like gene editing and more. There are powerful trends and innovations unfolding as we speak, and that’s where we’ll find the next Apple.
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