Guest Author - Guido Deboeck

On July 2, 2007 I wrote: “When is the best time to get an iPhone? The best time is when you can get one for free from Apple”. My article continued by providing a specific guideline to benefit from a rise in Apple stock. You recall that I wrote: “Wait till daily volume on the Apple stock climbs higher than 40 million and climbs back to $125.18 (or $125.28 to be CANSLIM correct)”. I stressed that “both conditions need to be met before you take the next step. Then buy, say, 250 shares (or multiples thereof if you cash situation allows). When the price of those initial 250 shares go to $127.78 (2% above $125.28) buy another 125 shares (or multiples of the initial amount). When the price of Apple goes up another 2% over your initial average cost, add another 62 apples.”

Now let’s look at what my trading log shows: On July 2, 2007 Apple stock closed at $121.26. On July 3 both conditions outlined above were met. The volume jumped to 41 million and the price went as high as $127.40. My predetermined trading plan bought 100 shares at $126.58. Two days later the gains on my initial purchase exceeded 2% and hence my predetermined trading plan shot in action an added 500 shares at $130.93. Five days later when a high of $134 was reached another 750 shares were bought at $133.82. Another two days later 250 shares were bought at $133.19. The average cost of all my shares is now at $131.58; the current price is at $138.96 (noon on July 16), which provides a difference of $7.38 or a gain of 5.6% in two weeks time. I will let you figure how many free iPhone’s I can get with this...

My main point is not to illustrate a successful bet but to underscore the value of having a solid plan. The fundamentals of Apple stock had been checked in advance and met all the criteria. Next came the technical considerations: when was the right time to buy Apple stock?

On July 2 a specific plan was formulated with exact price and volume levels that needed to be met. Next, the execution of the plan was followed to the letter – even though the exact intraday timing of the trades did not achieve the price levels initially projected. Then came the monitoring: through the entire 2 week period the Apple stock was watched to see it would stay on course. It did.

Sitting on 5.6% gains your next step should be to have a clear exit strategy. And while Apple keeps performing scout for other stocks that 1/ meet the fundamental criteria and 2/ for which in advance you write down the specific entry conditions. Only by taken all emotions out of trading and “driving” your portfolio like a pro can you expect to achieve great returns.

I look foreword to “play” with an iPhone and hope that maybe one day all our transacting in the markets can be done from an iPhone.