Friday, July 27, 2012

Why Apple's a Buy After Earnings

I recently published at Seeking Alpha Why To Buy Apple's Post-Earnings Drop, which should continue to be relevant for a while as people take time to figure out that Apple's recession-resistant business is still cranking out products it can sell like hotcakes.

In other news, the abysmal showing of Motley Fool Million Dollar Portfolio constituents Zipcar and now Bridgepoint Education appear primarily responsible for the decline of my post-crash returns. As calculated by the Motley Fool scorecard ...

... my post-crash purchases are now only doubling the performance of the S&P 500. The service's eponymous million-dollar portfolio has just returned to a $1m value, which since its inception means it's about broken even: the +0.2% return claimed by the service beats the dividends-excluded S&P 500 return of -0.9%, but why would one exclude dividends? One of my best ideas last year – buying American Capital Mortgage Investment under $17 – has turned into a dividend play. (When I entered the position, it was a value play: it was trading well under its NAV, which then was about 20. Now trading a bit above NAV, the story is about NAV growth and after-tax returns.)

Since the Motley Fool's Million-Dollar Portfolio hasn't met its stated aim of crushing the S&P 500, the remaining question is whether it's succeeded in steering me toward gains with which I can crush the S&P 500. After all, I gave up mirroring the portfolio when it decided to allocate more of the portfolio to Microsoft than to Apple – a curious decision during this decade – and incidents like Bridgepoint underscored that I really needed to stick with businesses whose risks and rewards I rally appreciated. Peter Lynch and Warren Buffett both had that one right.

So, I'll be cancelling my subscription for a refund in the not-too-distant future – like I've cancelled every other Fool subscription I ever tried. You might considering doing the same.

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