A day or so before the latest Apple (NASDAQ:AAPL) earnings report my finger hovered over the sell button on my shares of Apple stock.
This is the third time I’ve owned Apple. I’ve lost money in Apple. I’ve missed its most spectacular moves up and, ignoring conventional wisdom, stayed for some of its most shuddering falls.
I had bought soon after its disastrous fourth-quarter earnings report last November, after it had dropped from its all-time high of $230 to a more comfortable $209 per share. Since then it has been at $146 in December, and $175 last month.
My finger hovered, but it stayed up. I decided to wait on the earnings report. It was a winner. Apple stock rose to $219.
This taught me an important lesson, one worth sharing.
When It Comes to AAPL Stock, Relax
Apple is what you call a “core holding,” because the iPhone represents an inflection point in the global economy.
Before the late Steve Jobs introduced the iPhone in 2007, the internet was a desktop thing. You reached people with the phone network. You bought things by walking into stores.
That world is hard to even comprehend now. The iPhone, and its competitors, have made everyone part of the world market. Africans, South Asians, people in what were the most remote quarters of the globe, are now instantly accessible over the internet. They’re part of the global conversation.
This has dropped the cost of doing business to the floor. The productivity of the smartphone, combined with the cloud, has destroyed millions of jobs, putting whole industries on their back.
You don’t fight that. You don’t time that. You just put some money into it and go about your business.
When Jobs spoke, Apple had 12-month trailing revenues of $27 billion. In 2018, revenue was $265 billion. Under Tim Cook, who took over after Jobs’ death in 2011, some quarters have shown year-over-year sales falling by as much as 14%. But if you just sat tight, you have a gain of 685%, you have 7 times more shares than you did and you have a steady stream of dividends.
Ignore the Noise
We live in revolutionary times. Clouds and devices like the iPhone are the revolution.
The companies behind this revolution represent core holdings you should maintain. Don’t buy or sell a core holding. Just sit on it. Ignore the noise.
Other companies I consider core at this time are Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Visa (NYSE:V) and Nvidia (NASDAQ:NVDA). A big bank like JPMorgan Chase (NYSE:JPM) should be there, maybe Walt Disney (NYSE:DIS) or Netflix (NASDAQ:NFLX). You can argue for Square (NASDAQ:SQ) or Charles Schwab (NASDAQ:SCHW).
I don’t hold all these stocks, but I leave the ones I do own alone. I ignore the headlines. I treat them like a piggy bank. I’ll open it when I need it, not before. I’ll let time do its magic for me.
The Bottom Line on Apple Stock
The deflationary impact of clouds and devices are the most important change of this decade.
You must be in the stocks leading this revolution, even if it means having a portfolio that leans more heavily into technology than previously.
There will be other revolutions coming, because clouds and devices accelerate the pace of all change — social, political and economic. Given the state of the climate, that’s the only hope I can give your grandchildren.
Apple leads the device side of the revolution. The Apple Watch will open almost as many opportunities as the iPhone did, once its capabilities break beyond Apple’s walled garden, into the larger mass market.
Core holdings aren’t perfect companies. But just ignore the noise and hold them. Your patience will be rewarded.
Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O’Flynn and the Bear, available now at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AAPL, JPM, AMZN, SCHW and NVDA.