I haven’t given an update and performance update with my WTF Fund to my readers in awhile. The last time I gave an update was in April 2011. At the time I was in the red, and I’ve done much better since then.
2011 Results
As of January 5th 2012 I am up 14.5% from my initial $10,000 investment, mostly because of owning Apple (AAPL). The account is now currently worth $11,454.92. I sold my shares of Cisco (CSCO) in July at a loss of 16.84%. If I still owned the stock today, I still would be negative even after dividends.
Investments
I traded only Apple during the remaining part of the year. Since last year the stock market was very volatile, and I was able to buy more shares during the dips. Apple is $10,450.75 of the fund. The remaining $1,004.17 is in cash.
I believe Apple has much more room to grow, though at a slower pace. Not including the $82+ billion they have in the bank, their forward P/E is 10.7. This is almost unheard for a tech stock like Apple. With the passing of Steve Jobs, this is a critical year for Apple to prove themselves in the post Jobs era.
Many fear Apple will languish without Steve’s persona, and perform like they were during the 90′s. Apple is a much different company since then. Not only do they have a very capable management team on board, their existing and planned products should last at least for the next 3-5 years. Apple isn’t going anywhere and at worst case will coast along. Many would love to be like Apple and exist with the profit margins and cash flow they have. I plan to own the stock at least this year, and more than likely at least the next 3 – 5 years.
Keep in mind their competitors like Amazon (AMZN) or Google (GOOG) are not keeping idle. Although it seems they are creating some neat technology, they still have the issue of the fat profit margins Apple creates. The competitors, while they can replicate just about everything technical, just can’t seem to replicate their profits, the Apple ecosystem, and marketing buzz.
A perfect example of this is Amazon’s Kindle Fire. At $200 a pop, they have a very slim profit margin, and it’s rumored they are selling at a minor loss. Amazon (like Gillette) hopes to make up for the difference in the “razor blades” they sell.
I bought the Kindle Fire for my mother for Christmas. It’s great for someone who needs an electronic reader, but ok for other functions. It lacks the finesse of Apple’s iOS. I still see the Kindle line as primarily e-readers, with some lite web surfing or E-mail reading. While it no doubt will eat into Apple’s sales, I don’t see it affecting consumers who need the full features of an iPad. Keep in mind also it’s rumored that the iPad 3 will soon come out, and the iPad 2 models will be sold at a discount. If Apple sells the lowest iPad at $300, I can see how buyers could easily justify the $100 more to buy the iPad instead.
Future Plans
I currently have a open order to buy Oracle (ORCL) at $25/share. I just missed that price point a few weeks ago, and am kicking myself because the price Oracle is now at $25.50/share. I am seeing many technology companies fitting the value investment profile, which is great for me since I’m a value investor, and a lover of technology. I’m on the hunt this year, and hope to find some good stock deals. Oracle is one of them.
Funds at the moment are little tight, and I want to fully fund retirement and 529 accounts first. I do plan on adding additional $10k to this fund sometime this year. In the meantime will investigate possible stocks to purchase.
