One of the main reasons I eventually dumped GOOG, was due to the the Motorola Mobility acquisition (where I felt that they would have to show some returns on that $12 billion purchase). Unsurprisingly, Google did end up selling off the parts they did not want when Lenovo purchased said handset unit, for nearly $3 billion.
Of course, since the time I dumped all my GOOG, the stock has gone in the exact opposite direction (doubling since), while my accumulation of AAPL, has stayed nearly flat. This is in light of the Oracle trial, the fact that the above acquisition was a money loser (the Motorola unit lost hundreds of millions of dollars operating under Google). Had Apple made the same sort of large acquisition, seen that unit lose $250 million, and then subsequently selling it off for $9 billion less than the original acquisition cost, AAPL would have been slammed hard. GOOG on the other hand can do no wrong.
Ironically, AAPL’s stagnation (in light of recording revenues and profits), and GOOG’s continued ascendance, is bringing Google closer to overtaking Apple’s market capitalization. Basically, what all of this amounts to is that the only way, Apple will be able to break out of this trading range, is to not only announce new product categories, but have to also do it with ever greater regularity. Record profits and revenue is not going to satiate Wall Street as their expectations with regards to Apple, is re-defining product innovation. And unfortunately, these are unrealistic expectations.
I’m basically looking at this year, 2014; as a watershed year; Apple is going to have to show something new. My own investment strategy is changing because of what has amounted to dead money since the above divergence (where AAPL went from a high of $700 to this current trading range). As I had noted before, my original plan was to begin divesting out of some of my AAPL beginning in 2015, as my target price for the stock was that it would be around $700 during that time frame (getting back there seems like a stretch now without significant catalysts in terms of re-defining product categories and actual products). Right now though, there are higher dividend yielding stocks (nearly 5.6% versus Apple’s 2.27%) that are less volatile, and would give me decent dividend income if I purchase enough shares (that would come from my dumping some AAPL).
I’m now basically pushing off my plans for early retirement by at least 2 years due to the above. I’ve already stopped (for at least the past 4 months) accumulating any additional AAPL shares (and have no plans to unless it drops below $425). I’ve already earmarked all my recent purchases in that $425-500 range though, for sale (LIFO) whenever the next major rally occurs. However, if Apple does not show any new product category this year (leading to that major rally), I’m basically going to begin re-allocating a portion of that into those less volatile, but higher dividend yielding stocks in Q1 2015.
With regards to Facebook (FB), I still own the stock as from a ROI view, doubling down on my original IPO purchase (dead money for an year), has been a big winner (so far, tripled my original investment). I do have an exit strategy but am not going to go against the grain on this one just yet (the stock has room to run given this recent acquisition of WhatsApp). There is also irony here; Facebook is clearly something that even though I tried using/testing out, isn’t for me. And I also know about all the issues with social media; yet, there are many including businesses who utilize the platform effectively and keeps people engaged.
