Wednesday, March 21, 2012

Apple And The Magic Of Compounding

I don't know what lesson (of many) to derive from this, but....

Apple Inc. announced that it would be paying a dividend this next quarter. I think it's one of those one-time dividends, but if it isn't, and will be paid quarterly, it will still only be a fraction of one percent in annual interest.


That yearly amount ($320) would be approximately the same as what I paid for those shares originally ($330). That is, nearly 100 percent return on original investment. Per year. Yowza!

The lesson of that one is "invest in solid companies with lots of cash, and then hold 'em no matter how the market fluctuates."

HOWEVER (again)....

My initial investment in Apple was actually $2000. It shrank to $330, because Apple is such a heavy duty growth stock, I would sell off small amounts of it whenever it hit a record high, and diversify my portfolio. While the rest of my portfolio did pretty well, if I had just left it in Apple, I'd have nearly twice as much in my IRA as I do now.

The lesson here is, "Don't bet against Apple."

However, I still believe in hedging your bets.

See you in the funny papers.

No comments: