by Matt Malick and Ben Atwater
investors like us, the picture above is an amazing sight. It is a
three month chart of Apple (blue line) and Facebook (green line).
Investing without a disciplined strategy is a gamble. Throughout much
of last year, Apple seemed to be infallible while Facebook’s “failed”
initial public offering was the talk of Wall Street. In late October,
however, their fortunes reversed without warning – a trend nobody could
On May 18, 2012 Facebook had its initial public offering at $38 per
share. The stock promptly plunged over the next four months to fall
below $18 per share. After experiencing some fits and starts, about
three months ago Facebook found its footing and has since soared to over
Meanwhile, Apple surged from $400 per share in January 2012 to $700 per
share by the fall of 2012. The stock, which at $475 billion is the
largest market capitalization company in the Standard & Poor’s 500
(Exxon is second at $415 billion), was a major contributor to the
market’s stellar performance until the 4th quarter of 2012. Since then, the stock has fallen to around $500 per share – nearly a 30% drop.
The stock market’s strength over the last three months has come despite
Apple’s weakness, which in and of itself is fascinating.
This is as good an illustration as any that attempts to make
short-term, speculative stock picks can be treacherous. Successful
long-term investing is about limiting your mistakes, not hitting home
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