Irrationally mad decision making to obtain the American Dream.

Apple Computer iPhone, AAPL option trade, Condo Investments

Apple Computer’s announcement of its new iPhone and iTv was no surprise as the stock dropped 3 pts right before CEO Steve Jobs came out with the iPhone around noon PST. As soon as it was shown investors bought in confidence AAPL stock and it rose up 8%. The following day buyers that did not buy the first day tried to get in on the action raising the price another 5%. This is when I had the decision to sell my AAPL JAN 07 100 Calls and get out +$2000 instead of being negative -$4300 just 3 days before!

I’m pretty impressed by the sleek look of the new iPhone and I’m even considering changing my Cingular RAZR for it if it works easy. I keep my cell phone on me all the time and have a nano iPod and I actually really want my iPod in my phone. I think the iPhone idea is brilliant and will be a profit machine for growth for 2007 AAPL balance sheet. The only shortfall to the iPhone is its small harddrive for space. Until a new iPhone comes out I might not get it because its small 4/8gig harddrive is just not enough for all my songs, video podcasts, and data to store on it. This could be the new wave of ultra-small computer devices. Yes, Palm has been out for a while but it was more of a mini-desk organizer then a phone or music player. I owned the sweet Palm phone (silver) back in 2000 for $400 so buying a $500 iPhone really isn’t that big of deal. I do not find price a problem here. Just harddrive space at the moment I think will upset new iPhone users like myself.

As for the stock play I did on AAPL this trade definitely wasn’t the worst trade I’ve ever done because my GRMN trade being +300% and not selling before earnings Nov 15, 2006 is definitely the worst trade. This will have to be my 2nd worst trade of 2006 just because the smart thing would of been to buy these option contracts just days before the Mac Expo. I should of sold out at a $500 loss earlier and bought back in at $.20-30 per contract and bought over 100 and made such a bigger % and income from the trade probably half of my USCG salary in less that 3 days! I am journaling this for next time. What I did do which is good trading but isn’t bad either since it helped me get out profitable was I bought in increments when the stock price went down so my ending cost basis for my options was $1.22 per option and I sold my options at $2.05 giving me almost a 100% profit for around 35 trading days or about a month. Again, bad trading. I’m sure their are some investors that are reading this that are thinking this is a fantastic gain in such a short time, but believe me this is really bad trading, although I sold before earnings and didn’t hold my options being greedy. Because of this reason I have already improved 100% personally and more disciplined.

I saw AAPL starting to hit a ceiling today and thought to myself I’d rather have money in the bank right now then be wrong about tomorrow. I sold before the option pricing starting to go down with the close of the day. In after hours Cisco came out with a big “I’m sueing Apple over iPhone name patent”. So my thinking of I could be wrong tomorrow was a smart move. AAPL stock is pretty bullish right now so hitting $110 or even $120 by earnings is possible, but its also possible it could fall hard right after earnings. For this reason, today, I am happy in Hawaii.

My next trade will most likely be FXI Puts with its strong new trend downward all charts are showing a downtrend and lots of profit taking is happening. I don’t care to be right I just want to perform in my trading for 2007. I’d rather be wrong and sell out early and keep my money.

As for my Mexico property investment the new terms are better on a condo I looked at while I was there even closer to the beach I am in the process of putting a purchase contract on for $560,000 Pesos or converted to USD $52,000 and I’d have to put around $5000 into renovations then rent it for 4-6 months a year to break even. This condo is less expensive than the smaller home I would have liked to buy, but now I am thinking this is the better rental income investment over time.

Another idea I had was build a decent size log cabin on some land in Virginia and rent it out as a hunters lodge during hunting season, ski resort people looking for a private place, weekend retreaters, and churches for retreats. Right now I don’t feel I could really do it well without help and none of my family is really interested at the moment so I will make this a project for later possibly.

As for beginning the new year of 2007 I’m pretty happy being sold out of all my options and feel I have a fresh start of trading wiser and more disciplined this year. For one thing I’m going to stop depositing money into my stock account to trade. I’m just going to build up my savings, something I’ve never really done before. I’ll probably use that money to pay off my car loan because that would free up $400 a month I could keep saving and not worry about that loan payment by the time I’m out of the USCG.

I hope this was helpful to any young or old investors out there. Lesson today is not to be greedy and sell when you are happy.

An article I liked on Apple Computer’s hype and glory for the secretcy of it’s products was done great by a blogger from the Utility Belt. Also here is an article on the growing middle class of Mexico starting a mortgage boom that will help build Mexico’s growing economy by BusinessWeek Online. A good article on the iPhone and how it will definitely change the computer-phone industry by theStreet.com did a great job here.

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2 responses

  1. James

    Hey, not a bad trade on Apple and such.. What do you think about the Oil and other Tech sectors? Any big movements likely in the always moving COP or the like?

    January 12, 2007 at 5:57 am

  2. Hi James. To answer your questions I’ve actually been asked by another friend about ConocoPhillips (COP).
    I think their $1 billion buyback is good news showing they think their stock is lower and want to buy it back before it goes up. As for oil in general it has been on a major downtrend and it hasn’t offically changed trends yet, so I’d be careful. It is currently down around 15% and looks like it has
    made a move up, but has not broken the current downtrend. It has broken a short-term trend (5 days). It also shows to be trading between $62-68. Earnings is Jan 24. Right now would be the best time to buy and sell before earnings because they
    could possibly have lower earning estimates due to higher reserves in oil and natural gas this year.

    So I can’t give you any advice, I’m not a professional, but I’d buy Calls or stock in it as soon as I saw a 2nd or 3rd move up higher. Also if you plan to buy a large amount of shares it shows COP giving out tons of dividends
    as a small income for your portfolio.

    As for Tech. Tech is huge. I think computer makers like HPQ and AAPL are best picks. For software I like MSFT right now hitting new highs for the first time in years. As for internet I like GOOG and BIDU, but GOOG is probably your safer bet right now. Hope this helps you at all.

    January 13, 2007 at 6:08 pm

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