I think shares in Apple right now are on sale! So I bought some today at just under $425 a share. Apple's share price has dropped by nearly $300 over the last 8 months. They've taken that company out to the wood shed and put a beating on it for sure. If you read the financial news there seems to be 2 very opinionated groups of people out there. Group A thinks Apple is crashing and it's still headed much lower. Group B thinks at the current valuation Apple is on sale and a good buy based on current fundamentals. Especially if you're a long term value investor and are willing to hold it for many years to let the stock come back. The fact that Apple is going to pay you a 2.5% dividend yield now and I think as much as a 4% dividend yield in the near future just to hang on to the stock is an added bonus in my opinion. It got me thinking that the current market conditions in the Vancouver Real Estate are very similar to people's polarized opinions on Apple. If you're in group B and like the long term fundamentals of owning a home as opposed to renting and realize that owning a principal residence in Canada is the best tax shelter we still have available, then now might be the right time to buy (Long term Owner/ Investor). Or on the other hand, you might think Vancouver home prices are going to crash, interest rates will stay at record lows forever, so you want to try and time the markets to get in at the very bottom (Speculator). Keep in mind that a market timing strategy is very difficult to get correct because you'll never know where the bottom of the market is until it's already gone back up. For this reason very few speculators ever achieve much in the way of financial success. Most become frozen, sitting on the sidelines waiting for their big move that never seems to come. Sure, the odd speculator might get lucky on some random deal but over time the law of averages is working against them like a Las Vegas casino. Just look at the track record of managed mutual funds, hedge funds and private equity managers in trying to time markets. Over the past 25 years less than 15% beat the S&P index in any given year. If 85% of the professional money manages can't beat the index with a managed market timing strategy how do you think you're going to do it? Smart investors don't try and time markets. Instead they do their homework, buy when the valuations look good, then (Here's the Magic!!) keep it for the long term and let time do its thing. Thus giving any short term price fluctuations (which are natural) time to play out. When I pulled the trigger and bought my Apple shares today I fully understood and was more than comfortable with the fact that I had not bought at the absolute bottom. Apple shares could drop another $50 or $75 a share and I'm fine with that because I have no intention of selling the shares in the short term. Apple is a long term holding stock for me that I put it into my TFSA. Real estate should be purchased with the same long term horizon. There's an old saying in Real Estate which says "It's always better to be in the market than on the sidelines". Do your homework and due diligence then decide which group you want to be in.
This entry was posted on April 9th, 2013 by Owen Bigland | Posted in Video Blog