CASH is KING

Due to the recent sell down, I have sold off almost all of my stocks to lock in my profits. Although I believe in holding on for the long term like what Mr Warren Buffet has always preached, I am a fairly new investor and I believe I will make more mistakes along the way. Thus I would like to lock in my profit now, earn some capital gain and give myself a bigger margin of safety to prepare myself for any mistakes I might make in the future. Will stay sidelined till there are buying opportunities with the cash I have in hand!

I am currently pursueing my ACCA studies and have 4 papers left before I can complete the course. Recently I have completed my thesis writing for Oxford Brookes University in collaboration with ACCA for the BSc (Hons) in Applied Accounting. My thesis topic was to do a Business and Financial Analysis on Raffles Medical Group. Thanks to this thesis report writing experience, I found that I am truely interested in doing analysis on companies. And I hope I could share with fellow investors what I have learned and applied in my stock picking. Thus I will do an analysis on companies that I have identified and see if it is worth investing in them and post it up on this blog to share. This will help me sharpen my analytical skill and continue keeping me interested! However, I will do it after my exams which falls on 10 June as I need to focus on my study first. Maybe I will also share my thesis report after the result is out which falls in September.

 Also I have just bought into APPLE (AAPL) shares recently. My reason being:

1) $140billion of cash in hand - Surely, cash is king! I believe with such huge resources on hand, they could seriously do something about it. Hope they have some exciting new product in line which may be announced in June!

2) Low debt - They have very very very low debt except for the recent debt deal for the purpose of stock repurchasing. The stock repurchasing shows confidence of management in the future of the company. Also, it is cheaper to issue debt than to repatriate the $100billion cash from their overseas operations as it will be subjeted to 35% tax rate! Although someone may argue that it is unethical for Apple not to pay their fair share of taxes, it is totally legal to do so. We are talking about business here and if it is unethical, maybe the governement should do something on revising their law that may encourage companies to repatriate the money, like reducing the tax rate and give tax rebates to companies repatriating the money to re-invest in US.

Furthermore, Apple must find a balance between cost of debt and cost of capital. And currently, cost of capital is more expensive than cost of debt. Thus by issuing debt it is actually a cheaper source of finance for apple.

3) First mover advantage - Apple is the first company that revolutionize the whole industry. It is still producing quality products.  The recent drop in their share price is because people think Apple is not as suprising as they used to be. However, their revenue is still increasing. People are still buying their products. And they will still be producing new quality items. Companies are still copying them. Apple is a brand that differentiate itself from its competitor.

These are just some of my brief comments on Apple. I believe in the future of Apple Inc. Its up to you whether you believe it or not.

Cheers~