Patience with the product pipeline

When it comes to investing patience is an absolute virtue. So is sticking to your guns if you believe in something. Of course if something fundamental changes then you need to reevaluate your position. Sometimes nothing fundamental changes but the share price doesn't go your way. That is when your patience really gets tested and you start questioning whether your convictions are correct. On other occasions there are short term changes or lets rather call them challenges which do have an impact on a shares performance but not enough to switch out of the stock.


In the case of Apple the last example is most fitting. Take a look at the share price over the last ten years. As you can see, from September 2012 to now the share price has had a really tough period. In fact it had nearly halved within 6 months. Wow that is tough to stomach as an individual investor.




But what actually happened? The passing of Steve Jobs is an interesting case study because it is impossible to tell where the company would be today if he were still at the helm. The fact of the matter is that competition, as you would expect, swooped into the smartphone market because Apple were reaping all the rewards. That is not sustainable, it is economics 101 to realise that competitors will come in and grab a piece of the pie.


This subsequently turned Apple into a cash cow as apposed to a growth stock. Revenue growth slowed and this was hard to swallow for the market who had become so used to such fast growth. Inevitably the share price pulled back and on a fundamental basis the stock started looking really cheap. But the business was still making huge cash and sales were still growing.


What spurred me to write about Apple today was 2 things. Firstly the share price is now 4% away from its all time highs, having improved nearly 20% year to date. Secondly I came across this article from the WSJ titled Tim Cook's Vision for "His" Apple Begins to Emerge. I'm not going to go into the details of article but I do urge you to read it. It basically says that at the time when Steve Jobs left us, Apple was in fact ready for a manager like Tim Cook as opposed to an erratic inventor genius. And to be honest I agree. Tim Cooks patient rational approach seems perfect for a company in Apple's current position.


What I do want to emphasis from this piece is that we stuck to our guns despite all the naysayers (and there were plenty). Not only did we hold Apple but we added at every opportunity. What an opportunity to buy shares of the best company in the world at a cheaper price. If you have a portfolio of 10-15 stocks there will always be a few that are going through a tough patch. Ironically those are the stocks that fickle investors are most likely to want to sell when in fact, if the long term story remains in tact, that is when you should be adding.