Wednesday, November 6, 2013

Portfolio update: Swapped Apple stocks (AAPL) for Netflix (NFLX)

+John van der Munnik  
Today I officially sold all the shares of one of my favorite companies: Apple Inc. (AAPL) and traded them in for Netflix (NFLX). There's a few reasons for this. First of all, Netflix is a little cheaper than Apple at the moment and secondly and most importantly; I see Apple's growth slowing down. Apple is currently plagued by the competition such as Samsung and Microsoft, and for how long will Apple be able to crank out 'innovative' products that will blow away the competition? In order to sustain its current stock price level, that needed to happen already. Apple stock is still hyped up. Sooner or later traders and investors will see that Apple is severely overvalued. It's already having trouble meeting and exceeding earnings, and if it wasn't for its new iPhone, the company would be losing money right now. Netflix on the other hand, has relatively no competition, if you can call companies like 'Hulu' even competition. Netflix is far superior than the latter mentioned, and what I really like about Netflix is the consistent growth. Let's get technical about it and put it into perspective with a renko chart below.

AAPL Stock Chart

As you can see, AAPL peaked in the summer of 2012, over $700! I remember there was speculation that its stock price was well on its way to $1000 a share. Instead, Apple plummeted all the way under $400 which made me pretty nervous to tell you the truth. This is what I'd like to call a 'rollercoaster stock', which equals volatility and increased risk. I sold while I reckoned it was a good price (I bought it in May this year, on the second dip) and traded it in for Netflix (NFLX):

On the same time frame, Netflix paints a whole different picture; continuous growth and it doesn't seem to stop in the near future. For those who shorted it massively in June - July of last year (look at that volume bar!), see where its price it at now. Again, the main reason for this swap was the whole competition issue. Netflix has pretty much free range in their market, and are expanding into other markets abroad, already with great success.

Risky swap?

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