There's a Bookworm in this Apple
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
A few years ago someone asked me something that actually made me think for a few minutes. That’s saying a lot, since my lack of a filter and proclivity for vomiting responses (rather than following an actual thought process) makes most people afraid to ask me questions. “If you could only own ONE stock, what would that be?”
That really made me think. I know of several people that only play one or two stocks, trading in certain buy and sell ranges with Apple (NASDAQ: AAPL) and Google, and similar holdings that sometimes swing in ranges that would make Tarzan squeamish. First, that takes a healthy amount of capital. Second, that also takes a good deal of patience and dependency on market swings.
Yes, there have been days when I root for storm clouds, downgrades, dogs and cats living together. So I root for panic every now and then. But I am beholden to nobody but myself. I report to no agency, no boss, so although it is in my own best interest to perform at a certain level, I can afford to have an entire year where my portfolio is covered in excrement. And there are times when I relish the fact that certain folks are “forced” to abandon ship. So I scoop up those holdings with a sizable spoon.
With the news that Apple is going to crowbar itself into the textbook industry, I revisit my same response to the question. If there was a cruel world where I could only own one stock, and I had to take all my eggs and corral them in one basket, I would have everything in Apple.
Of course, the immediate reaction was followed with, “So why do you have so many (expletive) stocks?” To which I responded, “Quiet you. At least my work attire doesn’t include a paper hat.”
I digress. Given the news that Apple is still in the business of innovating and hopefully relegating college “book pirates” to selling their school’s hoodies, how does that benefit me, an individual investor? Remember how that worked out with the music industry? Pretty good, right? I’m pretty sure my son doesn’t remember what a CD looks like. Ask yourself this question, when is the last time you strolled into Tower Records to buy a CD?
Now I want you to think about something else. For those fortunate enough to obtain enough grants and/or student loans to pay for a portion of your institute of higher learning’s obscene tuition, remember the phenomenal, utter hose-job we fell prey to thanks to the college book stores?
Consider the portion of the young population that currently possesses cutting-edge technology. There are some potential beautiful things occurring here. One, if you are like me, you are more of a Farmer Ted (nerd), than you are a Jake (jock). (Sixteen Candles reference, check.) In the case of either nerd or jock, odds are they have an iPod, iPad, iPhone within reach. The devices transcend status. Two, the venture into the textbook industry not only creates a new revenue stream, it also presents a “need” for the very devices Apple sells. Brilliant.
Due to my somewhat vengeful nature, I am fairly confident that we will witness a day when our college-bound kids forget what an actual textbook looks like, much less having to purchase the required text for 75 times the “resale value” every semester. So if I see any storm clouds or panic selling, I am looking for any drops Apple affords us, to add to an already long position. And I look forward to iBooks 2 and the hopes that my son doesn’t have to pay $300 for a textbook, only to have the college book store give him $17 when he sells it back three months later.
Until next time, from the trading table,
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