Just for fun

Let's do something just for fun:

You've decided to buy some Apple shares as your 2009 New Year's resolution. After heavy partying you wake up with a hangover on January 1 2009, market's are closed, you wake up again on January 2 2009, your head is clear, your thinking is clear, ok semi-clear and you decided to buy some shares. For 3 months.

So from Jan 2 2009 to April 1 2009 - you had 63 trading days.

During these 63 days volume of AAPL shares trade was around 1.7 billion shares, of course Apple has only 933 million shares, therefore some shares were trade more the once in these 63 days. That's quite normal.

Let's assume you have unlimited amount of money or that you are very well connected with some sovereign wealth funds from the Gulf, which is like the same thing as having unlimited cash available.

A professional buyer, fund, investor with the best brokerage houses would be able to buy around 30% of the daily volume. Let's not forget these were fearful days, beginning of 2009, nobody would think about stocks during this period, but you are bold enough to execute your purchases and you start buying on Jan 2 2009. Since 30% is really an amazing result, let's you buy every day half of that, or 15% of the daily volume, your are a semi-professional, or you just play golf too much and you are lazy to buy every trading day. Your average is 15% of the daily volume.

1.7 billion shares were traded in these 63 days. Just to be safe let's say that you managed to work with a volume of only half of that or 850 million shares. For whatever reason you could "only" buy 15% of 850 million shares. Or you bought 127.5 million AAPL shares.

OK, sounds good. How much did you pay for them.

Let see the average price in these 63 days:

Highest trading day price on average was $94
Lowest trading day price on average was $92

Let's say you were only buying everyday when the prices peaked within that particular trading day. There for you paid $94 per shares.

$94 x 127.5 million = $12 billion with all the costs.

You decided to keep the shares until Valentine's day on 14 February 2012 and you wanted to sell it all in couple of weeks.

The closing price today was $509.46 - you started selling at $500. And for the next 3 weeks the share price doesn't really change much, so your average selling price was let's assume $500.

127.5 million x 500 = $63.75 billion

Your profit 63.75 - 12 = $51.75 billion in just 3 years.

If anybody would do this they would be labelled as the greatest investor of all the time. For sure. $51 billion in 3 years, just by investing is impossible.

Why nobody did it? Well, probably because it was difficult for people to foresee that Apple stock would be worth over $500. However, there is another story on the other side of that coin. People were fearful. People were thinking that the world would come to an end. Yes, they did, I remember watching interviews with analysts from CNBCN, CNN saying this was almost worse than 1929. Anyways, people were fearful and nobody would buy anything. Few did, but nothing to such a scale like described above.

Here is the trick (there are no tricks, but this is really a trick, in a way):

90% of people would rather buy AAPL share today at $509.46 than 3 years ago at $94. I am 100% sure of that. People operate by greed and by fear. Again, we are coming back to the same point. 2009 was fear, 2012 is greed. This is so cyclical already my head is spinning.

Learn how to say no to AAPL share at $500 and learn how to say YES when a good company like that is trading below $100.

Happy investing.

Damian