Apple Stock And What To Do About It

The meteoric rise of Apple stock has done something odd. It has provided an option that makes buying Apple products less attractive.

Apple products tend to have a higher up front cost relative to the competition, so if one buys non-Apple alternatives then one can take the saved money and use it to buy Apple stock, and if historical trends continue, the profits from the stock purchase could eventually offset the full purchase price of the alternatives and then some. However, if one actually buys the Apple products, then all one ends up with is old Apple stuff.

For example, Let’s say that one had $3000 fifteen years ago and one was looking for a computer. If one buys a Mac, then the money is gone. If one instead bought a PC for $800 and then bought $2200 worth of Apple stock, then one would have seen 900% profits on that stock if held since then for a present value of $19,800.

Obviously, if everyone did this there would be an impact on the Apple stock price. It would rise due to the additional purchasing, but their sales would drop, so earnings would drop, so the P/E value would balloon up which could discourage some institutional investors and eventually cause the stock price to plateau or recede. And I think in that situation, Apple management would be looking to reduce their products’ prices, which would bring their sales back up and restabilize the stock value on a more normal trajectory.

But I don’t think that everyone will do this. More likely, things will keep going as they have been, which means that for people in the know, it is smarter to not buy Apple products, and use the savings to invest in Apple stock. You can even hedge the bet by investing in a combination of Apple and the company that you are actually buying from. This same concept may apply to a few other stocks on meteoric rises as well.

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