12 years should be a long enough term for 'safe' equity investing in any bodies book.

Yes I am long Apple, been a stock holder for many years,the $ value of my holding is greater today than when it was 700, so I am a buyer. My second biggest holding Netflix has tripled since Apple was 700 so I am very happy . Have reduced Netflix holding with an average cost $22. So you could say the net cost of increasing my holding is under $100 a share today V if I had bought a tracker. Originally bought Netflix at 28, they fell to 16 I bought more rather than cried.
Buy trackers if you want, I would rather own Berkshire myself if I wanted diversification.

Certainly possible. But not because of the business-model but because of macro-economic conditions. People would then buy less crap from Amazon and Google, too...and they have far lower margins.
Apple could just be the tip of the iceberg then. But they don't do a lot of expensive money-sinkhole-type side projects like MSFT and Google...

Totally missing the point.

2001 is an arbitrary date. The FTSE100 is an arbitrary index. And I suspect your example presumes an irrational one-off cash deposit?

Despite all those weighted factors, I don't think it even proves your point

Some admittedly brief research hasn't unearthed the total-return data for the FTSE100 from 2001, but a survey of the past 10 years I found on Trustnet - HERE) - shows a return of 172%, which is very good for a period that includes the worst market crash in modern times. In fact, annualised, it's better than my own targets.

But my issue with your previous message was that you simply can't say "avoid trackers" to people whose investment horizon, circumstances and risk appetite are unknown to you. Why not say something like "given my trading style and exceptional stock-picking abilities, trackers are not for me, but they might suit those with a longer-term view who aren't interested in daily portfolio monitoring, or those who are more cautious"?

Things seem strangely black-and-white to you, as if you can't empathise with people who might have a different perspective or be in different circumstances from you.

Equally, saying "buy something you believe in" is useless advice. Many of us believed in the banks in 2007/8 because for so long they had been a solid, high-yield staple of any portfolio. What about people who believed in HMV last year? I ask you again: what if what you believe in is wrong? We can't all get rich by investing in things we simply like.

Apple is a great company. I love their products, and own many of them. But you are very unlikely to get rich by being long on Apple these days. If you are genuinely a long time holder of Apple stock, fair play to you. Some lucky punters have become very rich with Apple stock, though only if they sold up before now. If you really do have an old holding of Apple, you have far too much to lose by holding on now. A hiding to nothing, as football fans say. You are taking on excessive risk without enough justification. Sell, and look for your next Apple.

You may even be telling the truth -- I hadn't considered that possibility. I've no way of knowing. I do know that there are a hundred delusional 'talented stock-pickers' for every real one. Delusional because like all gamblers, they tend to dine out on their successes while quietly sweeping their failures under the carpet. Delusional because they will never admit to good luck when things go well, but will always blame bad luck when things go badly.

The most annoying thing about these people (and as I have said, I've no way of knowing if you're in this category or not, so am not including you) is that they invite judgement only after the event. They never say: "Forget the past. Here is my current total portfolio. Let's see where the total portfolio is in 12 months."

At least in your case we have your investment advice about Apple given last November that "$1000 [a share] must be in sight over the next 12 months, it's a huge bargain at today's prices." Let's see where AAPL is in November 2013.

You keep worrying about what happens in 12 months, 1 year is the time the sun takes to go round the world, it has nothing to do with the investment cycle, & is not relevant to anything other than investment managers bonuses.

The Japanese market will have lost you money, most of the last 25 years, not just the FTSE over 12.

Why would I not sell my Apple holding you ask? I have lost more money selling winners than holding onto losers. My first great investment was Ocean Wilson Holdings, traded in London. Cash & stocks on the balance sheet were 65p at the time, I paid 52p (dividend was 4p). Warburg was one of 3 market makers who wanted out, they sold 4,000,000 at 28p. The shares have traded as high as 1400, today about 1000. I sold at 10 times profit, an expensive mistake.http://uk.finance.yahoo.com/echarts?...rce=undefined;

Apple dropped over 50% to 85, 3 years ago, I did not sell, however I had no free cash to increase my stake at the time. I have plenty of cash on hand, just like Warren Buffet, waiting for a good time to buy.

Interestingly my Schwab account shows annual gain since inception. It's between 19/20%, rather like Mr Buffets. I have the advantage that I have a small portfolio to invest.....

Because of a handful of great stock market investments, I can retire at any time I want, I hope you can do the same with your investments. FYI I am 50.

what i mean is, you are pricing 6 years of current earnings, but how many years of earnings would it be if revenues are half (and costs remain the same)?

Well as they don't have huge fixed costs, costs won't stay the same, big advantage of using Chinese factories.
What happens if interest rates hit 10%, The US & the UK will be bankrupt but Apple will be doing well....
You have to remember that profits are still rising......., they made more profit than any company ever in history..... but trade on 6 years earnings! Always happy that the market is wrong most of the time, it's the big picture thats important. Ask the question, how much money would you need to produce Apple II, a direct competitor making the same profits a year from today? It could not be done for any price, yet the premium is free, which is good for me! I hope to be paid soon for February so time to buy more Apple again this month!

Eh? I am not worrying in the least about 12 months. You mentioned AAPL in 12 months.

As I thought I'd said, or suggested, I take a much longer term view.

But I rarely buy anything without having a rough idea when I should consider selling, and making a note so that I don't get too complacent. I never ever look back at profitable sales and think I made a mistake for not hanging on. You sell for a reason. Later regret smacks too much of trying to time the market. I never even check back to see what previous investments are priced at now. Pointless. It's gone. Take the profit and move on.

Having most of my investments in trackers and funds does not mean I never reassess and rebalance.

Where did I mention Japan? I bought my first Japan-specific tracker last November, after the election, and it's done incredibly well. Having occasionally looked at the Japanese stats for the past couple of decades I never had any inducement to invest. Being happy to have most of my portfolio in passive investments absolutely does not mean that you buy a little bit of everything and never look at it again.

You rebalance, you take profits, you buy more when prices drop, you religiously reinvest dividends.

Don't knock it till you've tried it.

If you're at all interested, you might want to read the great Tim Hale book, "Smarter Investing". A modern classic: superbly written and argued. Unless you're putting yourself in with Buffett, Bolton, Woodford et al (and I'm beginning to think you might be), it's very hard not to be convinced.

I think "buy something you believe in" meaning invest in what you have conviction in being a good investment is important.

If you are wrong, then you are screwed whether you believe in it or not. But the worse thing is to lose money when you are right.

I had this example when I invested in JPYGBP around 2006 and 2007. At a high level it was a simple idea, changing macro-economics and unwinding of the carry trade would lead to a higher JPY, so I went long JPYGBP.

I just thought directionally it was the right bet, but I didn't research it enough. I didn't think about time horizons. In the end, I just didn't feel happy with the position, so I decided to close it a few months later at a small loss. Of course, if I'd held on for only 1 year, I would have doubled my money as my timing was almost spot on buying near the low point of JPYGBP.

Similarly, I think I could look at AAPL now and figure out on a purely economic basis it would make sense, but in the end, I don't believe that AAPL will maintain its margins and market share with iPhone and iPad offerings and this will impact the price. Of course, I could model that with the worst case scenario I would think of and if it is better, I would buy, but that would probably be a ridiculously low price that AAPL would not sink to and so I would not end up being comfortable buying.

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My uncle gave me this book for my 12 birthday, I never looked back!http://www.amazon.com/Reminiscences-.../dp/1592801943 as a book, rather than CD!

I don't rebalance for the hell of it, I used to & it's cost too much. I prefer to look at original cost rather than market value now! My investment period is as long as it takes, a long term investment is a short term investment that went wrong!

10 years ago I was 100% passive invested, I took 25% & made higher risk investments myself, that 25% now exceeded 75% of my net worth, due largely to BIDU, OWH.l, Select Comfort & Netflix. Apple & GS have contributed, but not in the 10 bagger plus league.
The remaining 25% is currently split between Berkshire & Fund Smith, whilst Berkshire is good value it's become over diversified, so Fund Smith with under 30 holdings better fits my criteria today over trackers.

the reason i pick such a worse case scenario is for the reasons in my previous post.

but i don't like to look backwards in history. those arguing PE ratios etc. were massacred (e.g. those buying cheap banks etc. just before the financial crisis). all PEs are totally out of whack at the moment because earnings across the board are going to be hammered when the monetary musical chairs game finally ends. this is why i don't like equities right now - although to be fair, every single asset class is over-priced so it is a case of picking the least ugly girl to date.

and how much to build a competing apple is not the right question IMO. it is how will apple products do in the market place. you could equally ask how long it would take to build a Dixons or a HMV. doesn't mean it would be worth the build cost.

iphone and ipad competitors exist today. they are gaining market share. they are lowering prices. the google model is to commoditise the hardware whereas AAPL relies on premium hardware pricing. AAPL does differentiate, but I still feel it will lose either market share or margins and most likely both.

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Phil,
Do you have at least 1 years after tax salary invested on the stock market or in investment funds, excluding pensions? I get the feeling your an armchair investor with nothing at risk. Rather like an investment analyst!

i think you have a good style of investing which obviously works well for you.

Do you have any direct stock investments?
FYI my Apple holding value exceeds any years After tax earnings for the last 5 years i.e. 2007-2012.

haha. fair point. maximum i've ever had in equities is 50%. i wished in earlier years, it had been higher. now i'm torn between considering equities being too expensive versus being perhaps the best vehicle out of a bad bunch to tide over the next decade. i also don't believe in trackers and only invest direct. the only equities i have now is GOOG.

i've been more invested in commodities/currencies and property. high marks for those being 100% and 1000% of annual net salary (1000% counting geared property, 500% ungeared). problem with property is that it is messy and IMO not a good asset class to be in for the next decade.

at the moment, i'm building cash for a specific property deal (tax-efficient new build in Hong Kong) and whatever opportunities arise.

EDIT: since this post i've been increasing investments in equities and am over 100% of net salary invested.

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Whatever investments I make, I won't use any gearing, way too risky for me!

gearing is a good multiplier, esp. when IRs are low as today.

i always limit interest rate risk and ensure that cashflow is positive with a healthy margin. in a way, the property pays for itself. or at least the tenants pay for it.

The world is in a mess due to low IR, Governments & people think money is cheap so they pay way too much. I think it will all end in tears.

BTW 90% of UK properties that were repossessed in the last 5 years sold for less than the outstanding mortgage & the UK property crash has not even started......Wait for EXCHANGE CONTROLS, 15% Interest rates & 83% tax on earnings like the good old days before Mrs Thatcher!

Broadcom is a semi-conductor company that supplies the chips
to Apple's IPhone and Samsung....

Anyone bought a smart phone lately?

On a PE of 27, I would run a mile, like buying Apple today for $2000

LT, the most relevant question to ask is:
Which companies will make you money when QE and budget rebalancing becomes a reality OR when inflation hits us (combinations of both are also possible)?