It is always like that

Do you see any similarity among the following?


Target (see here in 2014)
Walmart (see here in 2015)
Boeing (see here in 2013)
Ulta Beauty (see here in Jan 2018)
Lowes (see here in May 2018)




For one, obviously all of them are gigantic companies with mature businesses. For the other (although not necessarily many know of) they are good quality dividend growers with a long track record. You have already noticed that I link each with my previous blog for them. Yes, that's the point I want to make today in addition to the above two: They have all tanked significantly at some point in the past few years and each time I was pounding the table to advise to buy, not to run! More importantly each time each of them came back strongly from the crash. Boeing was even more than double I believe at its highs. And then the best dividend stock at lest for me, Microsoft, which I was even more than pounding the table many times when it got killed. It has brought me several times more than the initial price I paid almost 10 years ago, without even counting the additional shares I have accumulated over years via DRIP. I have referred to this post many many times but still I think it is one of the best I have written outlining why dividend reinvestment is such a powerful strategy for wealth building.


So why I bring this up today? Well, we are seeing another example now a great company is getting hammered like it would be going out of business soon. Yes, I'm exaggerated a bit but the sentiment is extremely low for it at the moment, making you feel like there is no good tomorrow anymore for it! I'm talking about Apple, one of the best companies ever created in history!! I guess I don't need to tell you much about how great Apple's business is but if you do want to learn more, here is a good comprehensive summary:  "Apple Has the Best Business Model for Generating Cash". No question Apple is a cash cow gushing out tons of money day in day out. Here is the thing, regardless how great a company is, there are always up or down days. No such things as always great without any problems. No difference for Apple. But the market has never changed its style: it always lures people into one direction for as long as possible, making everyone thinking that that's the only direction it will go (either up or down). Then it suddenly changes its course with a mighty force, causing overreactions. The examples I have shared above are just like that. But for savvy investors with a cool head, this is often the great opportunity to buy for such great stocks. And for me, I'm especially interested in great dividend stocks for long term DRIP. Although Apple does not have a long term dividend track record, its underlying business model with a great free cash generation power makes me feel confident that it is also a great dividend stock. The 25% recent selloff has made it quite reasonably priced now, especially factored in its huge cash hoard. I'm pretty sure Apple will follow the same route as those listed above and come back strongly before long!


Just a quick word about my short-term anti-sentiment trades with Apple . I made a quick double a few weeks ago when Apple initially got haircut and then quickly bounced back. As I said when it was around $210, I expected it would get sold off again maybe towards $190. It did but even worse, straight down to below $180. That was the time I got interested again and I got in with a bullish call spread expiring in two weeks (today). I was a bit too early and Apple was almost like hopeless and continued to slide all the way down to  $170 (with intraday below $170 briefly). I thought my earlier calls would expire worthless but I became more interested in it and bought another set of call spreads with better prices. Well, the huge bounce off early this week saved me by pushing my both sets of call spreads into green, of course much greater gains from the later one. So I got great profits from both this week. The contrarian trade against the extreme sentiment has proven itself again it works!