Apple Inc (AAPL) 4 for 1!!!

  ***Please make sure to do your research and consult a professional. I am not a professional and content is intended to be used and must be used for informational purposes only.****

Apple Inc is an interesting ownership for me. It starts with wanting to own one of the big tech companies for years but never buying in. The "big four", or"big 5" (aka FAAMG) depending on who you talk to, are Facebook, Apple, Amazon, Microsoft (or Netflix for FAANG), and Google (Alphabet) . Although they all operate in different arenas they are all ultimately tech companies. I have always passed on the opportunity to put these stocks in my portfolio for various reason often because they were too expensive for my taste. They sell at a high PE and I was not willing to pay so much money for one stock. But in actually I should have bought as I would have made a fortune on them.

Which brings me to how I have come to own Apple shares. As a consumer, I have had a back and forth relationship with Apple and Google's Android devices. Lately I have taken more to the Google/Samsung side (I am writing this on a Samsung Chromebook). I like to stick to stocks I am a consumer of since I tend to better understand the company, customers, products, and brand.

However, in this case I went with Apple over Google stock. It goes back to the same reason why I was always hesitant to buying into these stocks and is relevant to today, perceived value in the price. Apple had a 7 for 1 stock split when the stock was at about $700. It was my chance to get in at price I could afford. Now it is back to the Mid $400's and about to have another split (4 for 1).

When a company splits its stock it is simply increasing the number of shares in a company which in effect lowers the market price per share but IT DOES NOT CHANGE THE COMPANY'S MARKET VALUE.  This is why I earlier stated perceived value.

If doing this doesn't increase the actual value of the company why do it? Why is Tesla doing a split as well? Typically this done to make a single share more affordable to smaller investors. It is also a positive sign about how the company feels about its outlook on its stock.

To me this signals another possible trend, the importance of smaller and individual investors. These two tech companies feel that making their stock available to the everyday investor maybe a telling story. As more individuals are now investing on their own due to apps like Robin Hood and zero fee trading. (that is us!!).  And yes Tesla is a tech company not a car company, it trades like tech not like car companies do but that is another post. It will be interesting to see if other high priced companies follow with splits.

Back to Apple, this may be another opportunity to get in on Apple. However, with many companies offering factional stocks you already had a chance to get it a a lower price point.  

I also feel comfortable enough understanding Apple, its products are all over the place and I interact with it as a consumer and with its consumers. Everyone seems to have an Apple product these days, I have an ipad and ipod sitting next to me. Even with Apple hardware sales being softer these days, their innovation starting to slow, government looking at tech giants, and legal issues with the app store, I think they are a buy. I believe in Cook and Apple has been able to increase its revenue in its services division along with its customer base are all positive signs. Apple also has ALOT of cash on hand (about $200 B).

I think owning stock in  FAAMG (FAANG) stocks is a good idea but I wouldn't buy all of them for diversification purposes. It is possible these stocks could be facing a bubble. 

T. Rowe Price Equity Index 500 Fund (PREIX)

 ***Please make sure to do your research and consult a professional. I am not a professional and content is intended to be used and must be used for informational purposes only.****

PREIX is my go to when I am looking to invest more to my portfolio. It is my largest single holding. It is an Index fund the is based of the S&P 500. I am a believer that the everyday person is likely best off investing in a solid index fund for a big portion (or all) of their self managed portfolio. This is especially true for those that don't have time do the research for individual stocks but want the exposure to the stock market. The indexes historically have a much higher return than any other investment type and is easier than actively managing your portfolio. Index Funds are a great option for retirement accounts (more about that later). 

You can also choose different indexes that focus on different segments. Alternatively you can also look at mutual funds or ETFs.  Mutual funds are like index funds but tend to have higher expenses. EFTs have lower fees than Mutual Funds as it isn't actively managed. 

The reason I choose PREIX over other available funds is because I  personally tend to follow the S&P 500 over many other indexes. It also tracks well-known American based businesses representing a wide range of industries (safer & diversified). Other top indexes are Russel, Dow, NYSE, Nasdaq. There are international index funds as well.

Another reason I have chosen PREIX is because it doesn't have a minimum buy in and a low expense ratio. Expense Ratios represent the main cost of owning the fund and is subtracted from each fund shareholders returns as a percentage of the investment. In general index funds have lower expense ratios since it is managed to reflect the index it is based off but they can vary from fund to fund. Some index funds require a minimum investment. Ones with higher investment requirements tend to have a lower expense ratio. Over a long period (compounding factor) this could impact your overall return. If you have the money to invest into an index fund with a lower ratio you should but this is a good fund to start with.

PREIX does have a minimum hold time before being allowed to sell without penalty. Since I plan to hold long term this isn't an issue for me but should be considered when buying.

Summary:

-PREIX is an Index fund based on the S&P 500

- Doesn't have a min investment requirement

- Expense ratio (.19%) isn't the lowest but isn't the highest

-Index funds are great low cost options to not have to actively manage your account, don't have the time to do the regular research for stocks, and provides exposure to stocks

-9.57% standardized return since inception and 13% in last 10 year (just under the actual s&p 500)

Ford (F)

***Please make sure to do your research and consult a professional. I am not a professional and content is intended to be used and must be used for informational purposes only.****

Ford is one of my holdings. I have bought a little at a time over time as to limit the risk of buying all of the shares at the same time for a higher price. This allows for a better average price. Some higher and some lower to help reduce risk and test out your theory as you buy.

The reasons I have bought Ford are several. One it is the one company that didn't take bailout money, which meant it had more on the line to succeed. 

The main reason however, was F's consistent dividend. This drives revenue and a rate of return that is a much higher rate than a savings account. I also like stocks that offer consistent dividends with good yields as it generally protects the floor on its price.  This is because, if the company is viewed as a good company, once the yield gets high due to the stock price dropping, buyers will jump in to take advantage of that high yield. Thus stopping the decline of the stock price. Many investors look for these high yielding companies during a downturn but remember to buy best of bread companies.  

 A few things to be mindful of using the strategy of a high yield is that it could be a sign of bad times and to remember that dividends are not guaranteed. Before you buy a high yield stock make sure you understand how the stock got there and where the company might be heading.