A good friend, someone I admire quite a lot, has been a practicing physician for the last 35 years. I am always amazed at how kind, thorough, fearless, tireless, generous, capable, knowledgeable and effective this man is at diagnosing and treating the sick, uplifting the downtoddens' spirit and sense of hope, and never giving up or taking no for an answer when it comes to the welfare of his patients. His boundless optimism is well rooted in preparation, practice, and hard work that never ends.

I asked him what motivated and guided him in his remarkably successful endeavor to uplift and heal the afflicted and improve the quality of the lives he touches, and he told me " I just ask myself what would Jesus do, and try to emulate this strategy." Oh, I reflected, is that all? This memory came to mind when I read the Strategy Lab question recently concerning Warren Buffett and investing in today's fascinating environment. "What would Warren do?" has become almost a religious mantra in itself over the last several decades. True, there is only one Warren Buffett, but as illustrated by John Reese's excellent strategy, the embodiment of the masters' lessons skillfully honed as an elegant infrastructure of stock picking distillations and methodologies is likely to guide us to market-beating returns. And I sense this is just the beginning.

At the same time, as I look at the astonishing array of evolutionary and even revolutionary tools available to the 21st century investor, I can't help feeling a sense of awe and a rush of excitement at the good fortune a small scale investor like myself has, what with all the resource streams emergent and available at this historic time. And also, what could be if I were to simply apply the above disciplines to my investing efforts much more diligently still. Because a relentless, single-minded focus is a major hallmark of the best of the best, ala Warren Buffett. And a Eureka! sense that the time is NOW to actualize this destiny- patient, unyielding, resolute, vigilant. That is a great value of these types of contests and forums. What I see happening, and am duly inspired to be a part of in a more dynamic and rigorous way, is a gathering of minds, and a cohesion and synergy morphing into increasingly tested and verifiable systems of systems, and a real increased opportunity to stay connected and focused thereby. The coalescence and maturation of these systematic approaches and their "proofs" seem to me to constitute a defining moment in modern investing, and a real paradigm shift in the making.

Now that there are social network-style, track-able living records of small investor strategies, trades and returns, the playing field is really starting to level. Indeed, since I have been following, reading, researching and implementing the ideas, suggestions and advice that sites like MSN Money, Motley Fool, The Street, Marketocracy and so on have been facilitating, my returns have not only done better than the market indexes; I am somewhat astonished at my yearly returns these last several years. The Navelliers, Markmans, Kirks, Jubaks, Kams, Heebners and other professional luminaries have consistently racked up some pretty impressive returns for the most part. CGM Focus has been just stunning. And whoa! Warren Buffett's Berkshire Hathaway was up big these last few years. This compounded on top of the long-term returns for long-term fund holders, one could do far worse but not much better. I think increasing concentration of stock picks while increasing volatility and risk, at the very least theoretically, also serves to provide an opportunity to narrow the focus to a few of the very best stock picks from the many thousands at hand. And thereby outstanding overall returns.

Now we have a universally track-able, conveyable, sharable, and provable international database allowing the "small fish" to benefit from the insights and successes of the "big and small fish". Of course, some managers concentrate their portfolio (say, CGM Focus), while others are/ were far more cosmopolitan and enveloping in scope (say, Peter Lynch). The ultimate concentrated portfolio would be a single "bull's eye" hit, like the fortunate folks who bought into Berkshire-Hathaway or Walmart, or a single super-fund like Lynch's Magellan or Heebner's Focus fund..

Concentration is usually a bad idea, unless you happened to choose a few of those stocks/ funds like Bershire Hathaway or CGM Focus, Walmart, Apple, or HDFC in sufficient dollar volume, and ride them through to victory. Indeed, an optimally concentrated portfolio has a good chance of trouncing the indexes. It thus becomes more so than ever the quality of one's choices on any level that becomes paramount. And why the array of support tools as are now available socially in the investing world are so important. The returns of the very best newsletter and fund managers over time range from between 12 to 20%, very rarely arcing above this percentile. Which really illustrates just how difficult it is to beat the market! And yet some are consistently doing just that, and we will get to see in full public view just how long this shall endure, and hopefully become better investors because of it. And in my reckoning, that is a revolution in modern investing. And the allure of this approach is, if one were to place between $25,000 and $100,000 into one or two buoyant funds or stocks ike CGM Focus then watch it grow ten years later into your "retirement fund", you'd be doing the financial "dance of joy". It is similarly in separating out these very few ultra-performers where things tend to get, shall we say, dicey. So buyer beware! Diversification vs. concentration- the proof is in the pudding, but the recipe one of life's great mysteries to solve.

Indeed, Mr. Buffett himself has occasionally ruminated on how grand the opportunities would be to make extremely substantial returns on investment if he were able to operate at a much smaller scale of investing stake once again. By his reckoning, the world would still be his oyster, and his returns would once again have the chance to balloon. Because there are always great emerging companies to discover. And that is one reason Buffett is Buffett. And a few handfuls or so of the all-star great stock pickers of the last decade or two also show us that it is indeed possible to handily beat the indexes despite, maybe even because of challenging, complex and at times adversarial market conditions. Now we get the chance to prove our mettle in a more highly conscious manner.

One manager I am especially impressed with is Ken Heebner and his CGM funds. Also Louis Navellier, although I would like to see his advisory newsletters return to the practice of recommending precise specific stocks rather than a basket from which the individual investor must narrow the choices from within. I have marveled at Jon Markman's skills over a fairly broad spectrum of analytic acumen and strategic development and styles, Jamie Duglosch the "Rational Investor" and of course Warren Buffett, which is why I still own a few shares in his investment company. The recent work of such luminaries as the Gardner brothers and their "Foolish" web-site and CAPS, Ken Kam's Marketocracy, Jon Reiss's synergized Masters approach, Stockpickr, and others have really whetted my own appetite for wholeheartedly-and-mindedly pursuing investing in a more focused and professional manner. It is especially astonishing how MSN Money has matured into a champion publisher of so many of these and many other master investors' "in-sites" and forums, and this has greatly influenced and benefited my own investing these last several years.

I am so very grateful to be able to practice implementing this excellent higher level of investing involvement in this age when so many fantastic professional and fellow amateur investors are communicating, sharing, and forging new paths to communal and individual potential success in this amazing and vital field. I get the feeling we've just scratched the surface! Much gratitude to these illustrious trailblazers for giving us that opportunity to excel at the "real life investing game".

As far as recent trades, I added to my position in YHOO over the last several days. Low 20's was just too compelling a dip to pass up on, and I would not shy away from buying in at these levels for a real investing account. As of today, my stake has risen a cumulative 13% in a short time-frame, and I think it will continue to ascend as the market forces continue to exert a positive pressure on a seemingly beleaguered, yet highly valuable internet company to even higher quick gains. Still, on a fast trade like this, it couldn't hurt to take some profits after such a fast rise in stock appreciation. After all, Bulls make money, bears make money, but pigs get slaughtered- unless, that is, you bought into Berkshire Hathaway and stayed greedy for, oh, say 20 or 30 years!

Regards,
Jeff Kalnitz

Then I watched as the share price was shredded, and failed to buy more after the slaughter, but this was due more to negligence than trepidation. My strong conviction that Clearwire would persevere and prosper remains intact. The difficulty with playing a game as opposed to investing real money is that in the game one is dealing with artificially imposed time restraints.

Fortunately, my negligence resulted in me leaving most of the portfolio intact, and it is therefore evident that CLWR over a broader time perspective made a lot more sense as a (risky) "value" play, and given the assumption of an upcoming merger with Sprint as partially evidenced by the spiking share price.

The potential of this alliance, and the resulting dramatic increase in scale and efficiency of wireless internet access cannot be over-estimated, given proper execution and fulfillment.

The risk is largely assuaged by first, finding an accessible entry point to buy in, and this is aided by cost averaging down with some discipline and set goal posts. Also, it probably will take a few 800 pound gorillas to bring WiMax to profitable fruition. It helps if they are hungry, as is the case here, especially with Sprint fighting for relevance moving forward. That is why I figured they wouldn't let Clearwire slip away, ultimately. That now appears to be the case. And as importantly, this is a very costly technology and could at any time be surprisingly leapfrogged by an even more powerful, cost effective proposition, thereby rapidly souring investor sentiment on the intrinsic value of this merger.

All that considered, I was still willing to take a calculated risk and hold onto a chunk of the stock, similarly as in buying into Sirius Satellite (SIRI) in the mid to low $2 plus range, and time will tell if these were wise moves.

These stocks are to me a bit more speculative than, say, my recent purchase within SLO 2 of Yahoo immediately upon its plunge a few days ago. Already rebounded a lightning quick 8-10% off the lows, its rapid trajectory was alas, fairly predictable. I also see Lenny Dykstra picked it as his "deep in the money" options stock pick of the week on thestreet.com.

Will Sirius and Clearwire provide fun and profit, because, what's a banquet without some alluring appetizers, laden with spicy risk and enticing speculation? Eating too many though, just plain spoils the main feast by filling up on "iffy" calories. So if decisively venturing into such potentially rich yet potentially unsettling fare, modest consumption to overall portfolio percentile distribution prevents the necessity to reach for the antacids, so to speak.

Bon Appetit,
Jeff Kalnitz

I passed up my $5 soy chocolate chai mocha at Starbucks (SBUX) to save more money to spend on my next 3G iphone that I will purchase soon from the Apple Store. Meanwhile my 2 ½ year old daughter already knows how to operate my iphone just from the times she was quick enough to grab hold of it occasionally. In fact, we had to buy her a plastic yellow iPhone looking electronic toy cell phone to keep her happy. But for how long, until she will "need" her very own 4G kitchen sink version iPhone, I wonder? Aapl is now catering to a clientele from 3 to 93 years old. Message for the competition- be afraid, be very afraid!

The Apple Stores I have frequented the last several months leading up to their latest earnings report were frequently absolutely mobbed with shoppers of every age, even while the rest of the malls were near devoid of customers. And yes, those iMacs and Macbooks were flying off the shelves. That's how I knew they would probably beat forecasts and many analyst expectations. Now that the back to school and holiday seasons are upon us (yes, it starts in the spring and slowly cascades forward in this modern world), and the world is beginning to catch on to what aapl has in gestation over the coming next few years, some interesting highlight reels are in store for the Apple Store, which I will highlight in a future article. And how about that Vodafone 10 country iPhone distribution deal announced today!

Well, let's not get too carried away, as aapl is still percentage points shy of its all-time high of around $200 a share. For the purposes of this Strategy Lab Open stockpicking game, it is however only appropriate to take a follow-up gander at the past, present and the potential future trajectory of this comet of a stock, and company. Once again I wonder, can Apple become the biggest company in history by market cap, in the U.S. or even world-wide market. Maybe less far-fetched than ever?

In my last blog article on aapl, with the stock shooting between $175 and $200, I advised taking profits between $175 and $200. For new investors in aapl, I recommended waiting for a substantial pull-back, and to buy incrementally on the way down. These figures turned out to be precise exit points, as was the re-ascent of the stock after being hammered on largely overblown or unfounded fears. How did I know this? A great company for dozens of quarters will usually continue to be a great run company yet again, especially if you're talking about aapl. So, buy on dips, then buy more on further dips, and buy more if it continues to really swoon, all the while monitoring the current status of well-being and engagement of one Steve Jobs.

So recently I followed my own advice by re-loading up the boat with aapl shares for SLO 2 at a cost average of about $117 a share. As of today, it stands at about $185. Just as in SLO 1, a cool 50% or so gain in stock share price in just a few short months! Not bad, not bad. As a trader, it almost seems like bobbing for apples in a barrel thus far!

And now, here we are again, between $175 and $200, and again presented with a rapidly soaring incline off the decline. To schnitzel, or not to schnitzel? Add, subract, multiply, divide, what's an investor to do?

There are a number of similar, albeit more maturing synergistic themes at work here, but recent developments have sharpened the point on some of my views on what aapl will probably do from here. I had written that aapl as a $300 stock was, in my opinion a fairly high probability, but with marked volatility. I now think, more so than ever, $300 will not be an if, but a when, barring tragedy. The target I calculated as the end of 2009/ to mid-2010 seems to me more achievable than it appeared even to an unabashed aapl bull like me. At the $117 level, I would rather have borrowed against the stock on margin than sell shares. Now that it is again approaching $200, I would again be cautious about getting in at this lofty entry level. In the more remote probability that aapl corrects substantially, I could recommend getting in on the dips and still sleep at night with a clear conscience, and for those who took this bull to heart and got in at a much lower cost basis per share, I suggest similar caution, after a brief giddy celebration. As for me, myself and I, since I can assume complete responsibility for my own truths or follies, I will be allowing a few hundred thousand dollars of shares to ride out the stormy seas of this latest adversarial, recession-racked market in my personal investing account. Well, at least until just before the next earnings quarter, and then possibly right though the holiday fourth quarter. This will depend on a few critical considerations, which I will post in an upcoming blog entry. Time and further analysis will tell.

For now though, approximately 50% returns in this challenging market ain't bad at all, and barring or until the next major market correction brings this Apple of my eye sufficiently downward yet again, I'll smile upon both my SLO 2 and personal heady gains thus far over the last 4 and 96 months with aapl the stock, game-and-real time. I will report soon on some thoughts and links regarding the near and intermediate future possibilities of Apple the company and aapl the superhero stock.

Regards,
Jeff kalnitz

Multiple choice quiz (pick one): aapl a "25, 50,100, or 200 bagger"?
Anytime we have a current "25 bagger", and imminently potential "50 to 100 bagger", the stock invites and deserves extraordinary consideration and scrutiny. Such is the case with Apple (aapl). Since aapl has achieved a 25 times valuation increase in a relatively small amount of years, the question is how likely and quickly is aapl likely to double again? And how many more times can aapl achieve this? And is it too late (risk/ reward-wise) to get in on the gravy train? Less than three more doublings could make Apple the biggest company in history, by market cap! Will this happen by 2010? If so, this would inherently become a singularity, so tread carefully if entering aapl stock at current valuations.

Apple understands investor psychology;

Glimpsing that which is hidden just beneath the surface while understanding the masterful orchestration of the interplay between market expectations, current investing conditions, and investor psychology is a major key to unlock the brilliant play aapl stock (still) embodies. And possibly even more significantly at this late stage, instructive in helping us to identify the next stellar stock performer hidden like the near- perfect diamond amongst endless chunks of unqualified lumps of coal.

Look at the recent, ceaseless aapl- intimated rumors and news at any given time to understand just how brilliantly investors expectations and psychology are being played to produce some sweet, uplifting monetary melodies even at these lofty valuation levels. This last few weeks alone have seen the following drivers of upward momentum play out so brilliantly as to place aapl management in a class all their own. Even as market conditions froth over and investor confidence swoons, aapl increases the flow of meaningful information prior to their earnings report in such a way as to limit a major profit taking sell-off of the stock during a tough week for stocks. This may serve to make aapl a catalyst safe-haven for nervous investor monies over the next volatile several months.

Earnings and number of iPhones sold are not likely to dramatically surprise (although they probably will to some extent), therefore it becomes necessary for Apple to brilliantly illustrate the future trajectory of increased sales potential of the iPhone, Mac computers, and so on. Hence, a barrage of breaking news impeccably timed regarding a variety of timely issues. iPhone locked/ unlocked, special secure (safe) iPhone applications development by February, French law (in itself the predictable secret weapon antidote to the "apparent" poison pill/ ATT exclusivity clause in aapl's contract), the release of Leopard (an astonishingly useful upgrade), number of computers and iPhones sold and projected to be sold (in my opinion, still not fully factored in), DRM/ non DRM iTunes, lower iTunes pricing, the increasing likelihood that the video, TV and movie industries will eventually cave in to the Apple juggernaut, and on and on...

All the hot button issues cultivated as worrisome to the future health of aapl are addressed here, so conveniently orchestrated press release/ pageant style as to indicate that aapl is more than ever before way ahead of the rest of the pack at using these hot-buttons to hedge against prevailing investor perceptions and market variables, and propel the stock ever higher. The headlines might psychically question all this as follows; "Apple news blitz- inspiration or desperation?" This is indeed the sign of a great stock, a great management team, and a great continued money-making opportunity long term. The implications are in themselves so vast and far-reaching to the potential increased upside of aapl product sales over the next 12 to 24 months, it would require an entire article to cover these even minimally.

Suffice it to say for now that the company's 36 month strategy is so far advanced beyond the market's ability to currently fully comprehend and quantify the fiscal implications so as to provide yet another opportunity to beat the street handily by stocking up on aapl stock! (But it would be prudent to control one's urges to maintain a modicum of caution as usual when playing a hot stock, even aapl). Aapl compared to most of the rest of the tech stocks is like Crox compared to most of the other "shoe" stocks. If I find myself getting carried away with the giddy prospects relative to my hard earned investment dollars, I like to visualize walking a tightrope over Niagara Falls (some have actually accomplished this) while holding a tiger by the tail to reach a pot of gold at the end of a rainbow.That usually settles me down a bit.

Management is just so adept at making the right moves ahead of market comprehension, it would be hard to envision anything but a continued trajectory of similar wisdom (and their consequent returns) applied to strategies of company growth moving forward near term.

That is why using valuations, P/E, projected sales, or any other single factor alone could not have accurately predicted the stellar rise of aapl the stock, nor is it likely to moving forward. Investor sentiment acts as steroids, pumping the stock up with inflated unseemly muscle mass- that is until the company fails to impress, then look out below!

SHORT-TERM STRATEGY FOR TRADING AAPL STOCK;
As market cap shoots to the moon, we're definitely going out on a limb here more and more, which is why I am selling chunks of aapl off to capture profit and reduce risk after it's latest 55% run-up from a recent "low" of $117. But dream with me for a moment... Apple's stellar run began several years ago when the stock hung out at around $7-8 a share. Now around the recent high of approximately $175, we essentially have a "25 bagger". Any profits locked in now for those of us who started buying in near the $8 level will have achieved the rarest of return multiples. But consider that if aapl continues to successfully "play" the company, the investor base, and the stock as successfully for the next 3 to 5 years as they have so far done, if the stock doubles again we have a "50 bagger", and a second time makes a "100 bagger".

A "100 bagger" would turn $1 into $100 (or $10,000 into 1 million dollars), and yet look how difficult it is to actually identify, and maintain a core holding of a stock to get to this level of returns! Why is that? Because it almost never happens, and is very hard to count on, let alone predict.

Current Owners of aapl;
To those of you who have been following my blogs since aapl was many multiples cheaper, and have accumulated a significant position in the stock, I say this; $175 marks the beginning of a "sell" zone until (if?) the stock reaches $200. Take enough profits to make you feel good whether the stock stalls, falls, or continues its stellar ascent to the investing heavens. Then, sell additional chunks incrementally every 25 points or so, and smile repeatedly.

Potential buyers of aapl;
For those of you thinking about getting into aapl as believers in the company's ability to increase share price substantially over the next year or two, I say use caution. There are so many high reward, lower risk plays I wouldn't chase this one here. Looking at the historical price charts shows that every so often, aapl corrects in a definitive and impactful way. It may come by way of a substantial market correction (There is always the "hope"). Aapl may not hit the ball out of the park next week. Possibly, even probably profit taking post- announcement could occur. These could serve as potential entry points to ride a wave of "optimistic opportunism". Has the easy money been made here?

Well, I look at it this way; this next wave of tsunami- like growth would place aapl as one of the biggest market cap companies that ever existed, and by definition there just ain't that many of those! So be careful, because the #1 most fundamental strategic movement towards making money is not losing a lot of it. Because let's face it, we're not just talking about play money in an investing contest here- we want to be able to use our successes to enrich our portfolios in the real world markets.

To this end, a unified approach to playing this field best serves us in the "real world" of investing. What interests me to a far greater extent at this late point in aapl's game, is finding the next 10, 50 and 100 baggers. Any ideas?

Here are a few revealing aapl links to check out;

http://seekingalpha.com/article/50378-iphone-s-new-business-apps-just-what-the-market-needed?source=feed

http://www.apple.com/macosx/guidedtour/large.html

http://apple20.blogs.fortune.cnn.com/2007/10/21/apples-q3-preview-firing-on-all-cylinders/

http://seekingalpha.com/article/50315-apple-s-impressive-platform-security-for-iphone-leopard-development?source=feed

http://www.thestreet.com/s/apples-macs-gain-market-share/newsanalysis/techhardware/10385313.html?puc=_dm

http://apple20.blogs.fortune.cnn.com/2007/10/21/apples-q3-preview-firing-on-all-cylinders/

http://seekingalpha.com/article/50320-french-law-to-require-optional-unlocked-iphones?source=feed

Regards,
Jeff Kalnitz
jeff@jeffkalnitz.com

Apple (aapl) historically has fired on enough growth cylinders to propel their engine of growth forward sufficiently to power the stock to ever loftier valuations. The question we ask ourselves repeatedly is how long will this dynamic endure?

I think for at least six months, maybe a year or two. The specifics are important and will self-evidently manifest themselves in the hand revealed by Apple to the rest of the "gaming table" participants- investors, competing tech companies, and the analysts who are increasingly getting hip to aapl at the institutional level, and not coincidentally using the products themselves more and more. I don't think the stock is over-cooked yet, because there are forces and factors at play here that in high probability will give aapl a decisive edge for years to come. In fact, aapl is likely to remain a high-momentum growth stock for some time.

Of course, for this to happen the numbers dictate they would almost have to end up being the biggest company in the world by stock market valuation. And that would be impressive indeed considering the relatively tiny market share of overall computer sales they currently enjoy! Then again, they did recently drop the word "Computer" from the name.

I have read many technical analyses of this or that area of this company's prospects going forward, yet few have been able to peer sufficiently into the Apple crystal ball in order to really comprehend the impact their ongoing secret plans behind the scenes facilitate. And so I think it will go with their latest products releases and for at least a few years to come. It is not really a question of IF aapl will sell enough iPhones, iPods, computers, and so on. Nor if they can maintain sufficiently rosey margins and innovations to stay atop and ahead of the competition. Or come up with another revolutionary or evolutionary industry disruptor.

That said, can aapl double then double again in the near-term? I think so, because my experience with the iPhone, MacBook Pro, iPod, iMac, Mac duo-tower, high end Cinema Display and the incredibly smoothly integrated Apple software that keeps it all humming is only now catching full-wind on the seas of emerging techno-lifestyle habits, and therefore being factored into the stock's future trajectory with sufficient gravitus. This company is positioning itself in the sweet spot of the telecommunications and media industry.

After using my iPhone for several months now, and experiencing the reactions of others to my using it- I think the implications of what aapl is doing here go way beyond the current crunching of data analysis, in order to comprehend just how revolutionary and disruptive this company's forays will be to early 21st century communications. This being the case, Apple's (aapl) convergence insurgence will result in ongoing earnings surprises and a substantial stock appreciation over the next 12 to 24 months, barring unfortunate wild-card developments (such as Steve Jobs getting in big trouble over options, etc).

Will kids- teenagers, twenty- somethings increasingly buy iPods and iPhones in impactful numbers? Yes! As will many of their parents, who will also get the family into Mac laptops, desktops, and loads of software. They will download more iTunes, movies and TV shows, and buy lots of accessories. And aapl's market share will continue to grow quarterly. Because they currently have such a small market share, this is good news indeed. And what will be their next big insanely great new tech product? Could anyone foresee the iPod, let alone the original Macintosh computers and earlier models?

In the meantime, you will see more iPhones popping up in consumers' hands and pockets in an escalating sliding scale of consumer purchases, and the numbers will impress. Not only in the U.S., but increasingly around the world, and they will improve with every version thereby selling in larger and larger numbers. They get fashion, they get sexy, and consumers won't be able to resist splurging, by and buy.

And there is a good chance that business oriented people the world over will increasingly snap up the next few versions of the iPhone, which will continue sporting more and more essential new features necessary to the business class of buyers. That hasn't stopped me from using the heck out of my iPhone in ways that have payed me back many times the purchase price as a profitable business communications pocket device in a few short months.

But what we're talking about here first and foremost is Steve Jobs and company's ability to discover, develop and market the next insanely great consumer tech must-have toys and tools to an extent rarely achieved by any other company. And in such a highly fluid and integrated manner that competitors are often left scatching their heads in befuddlement. And Apple is in fact doing this with a promotional acumen that is unsurpassed. In other words, Mr. Jobs understands what it takes to motivate the money each stage through the process from product development, production costs relative to margins and volume, then the ability to make the necessary adjustments to keep the story fresh yet simultaneously dangerous. Execution has historically been near flawless since his triumphant return as company head, even when it initially appears otherwise (see my earlier blog on the iPhone price reduction "oopsee".

The main question in my mind is if Steve Jobs stays healthy and troubles-free, because as long as he is running the show, it will continue to prove itself the greatest investing show on earth of the big cap stocks. It's kind of like Sam Walton or Warren Buffett. Each year and decade that they were, or are alive had been chock full of technical analysis pro or con. Yet, the early investors in Wal-mart and Berkshire Hathaway have just the same seen their original modest investments make them mega-rich via stock capital appreciation with minimal capital gains taxation. These guys just have the magic touch, and never let investors down for long for many years running. I think we are talking about the same rarified level of management with aapl, and that is why after six or seven years I am still comfortable staying very long aapl stock for at least another 6 to 12 months or maybe longer. Of course continuing to sell, taking occasional profits near the peaks, and buying more again during the valley- pullbacks is the way to go as usual.

All the rest of the equation will be handily formulated, calculated, and executed with skills approximately equaling those displayed in the past, and the stock will with high probability continue to escalate relative to the market indexes. In my estimation, this will be the continued reality, while we investors try our best to keep up with the details and fill in the secret missing technical data to comfort us that our decision to remain long aapl remains a viable and hugely profitable enterprise.

I maintain my price target of $175 or above by January 2008's end.

For instance, I evaluated that the market was due for a big correction in August, so I remained 100% in cash close to the first month of the contest. While I missed out on the first 18 points aapl rose by not getting into the market earlier, adhering to my capital preservation/ risk averse approach served me well one more time, as simply by not losing money during this period I handily beat the market while correctly anticipating a pullback.

These last 30 days of stock trading I have achieved approximately a 9-10% appreciation in stocks, with very low volatility and almost all 21 of my stock purchases seeing gains mostly of from 4% to 23%. Ordinarily, this would be phenomenal but I am only placing in the top 20% of contestant returns. An impressive group of contestants! Also a more concentrated and risk-oriented portfolio would have boosted my returns during the 27 days of trading, but my old forceful habits of risk management are ones I don't digress from easily.

However, considering I have incurred no short term capital gains taxation, if this was somehow factored in, I would be placing substantially higher in real world returns overall relative to more frequent traders, and this was done with half the trading days after staying in cash, and minimal trades.

So my strategy worked quite well to achieve my own objectives, yet may not be sufficiently turbo- appropriately charged to "win" the Strategy Lab Open by numbers achieved alone. Still, I am satisfied because I feel I've managed my "million dollars" both prosperously and responsibly so far, and to me that in itself is success. My real-world portfolio is smiling, and hopefully a bit on the safe side in a volatile period for the stock market. Consistency for me is a virtue, and risk-adjusted returns are valid and necessary to my style of investing.

I am thus far resisting the temptation to throw caution to the wind and trade more aggressively, because the more one plays with fire in the stock market, the more third degree burns tend to damage the flesh and bones of one's portfolio. Otherwise, why are returns of even 12 to 15% considered exemplary long term yearly successes? Because, short term, we are mostly all geniuses, but long term there just aren't many Warren Buffets with 20% plus yearly returns. I always like to keep that in mind as I'm getting especially frisky with risky trades.

I'll be posting a follow-up blog on aapl stock soon, in honor of it reaching a new all time closing high recently.

Movie trailer in "that famous movie trailer guy's special voice; "In a world where everybody else is playing checkers, can Apple still play chess at grandmaster level and beat the pants off everyone? Only time, and the well-being of one man holds the answer"...fade to the "1984" TV ad updated for the year 2009.

Or in other words...
"Is Steve Jobs slipping?"

"Is he actually making human mistakes?"

"Will the iPhone miss it's sales targets?"

Even if the iPhone blows past its sales targets, will that be enough to make up for the reduced margins?"

"Is aapl showing signs of cracks in their titanium armor?"

"Does aapl the stock still have legs?"

Or the favorite question I like to occasionally revisit;
"Does any of the above actually matter in the greater scheme of Apple's ongoing achievement of world dominating consistently bankable stock appreciation these last many years since Steve returned to save Apple from irrelevance?"

And the most important and difficult question of all to answer for us SLO contestants (even with a Ouiji Board)- "Does any of this really matter in a contest where patience and foresight are measured more in days and weeks than months and years?"

Well, I guess in the context of a flashy, six month stock picking contest where excessive risk and a microcosmic timetable rule like masters of an imaginary universe- it does, a lot.

In SLO, contestants are trying to out-do the next trader before the deadline, without the inconvenient hindrances of short term capital gains taxes factored in, excessive and unsustainable risk, and no other peoples' real money involved. But from the broader perspective as a person with a longer term strategy for the stock these last seven years, I ultimately ask myself the following question periodically before I pull the trigger and sell off additional chunks of the few hundred thousand dollars of remaining aapl stock holdings I have left in my actual "real world" personal non-IRA investment account;

"Will aapl's stock price be lower, about the same, higher, or a lot higher 1,2, 3 or more years from now?"

In other words, I'll put it this way;

That Steve Jobs, just when the investing world thinks they've got him figured out he shocks the hell out of the investing world yet again! That crazy, foolish, mistakes-prone, once-was-great fallen warrior. Has he finally lost his cool and made a major PR boo-boo; an embarrassing, unscripted, opps-ee gigantic mistake?

It's not like he spends months planning and rehearsing new product roll-outs? (Oh wait, he actually does).

Or that he identifies coming trends and continually refreshes their incarnation just when the competition finally figures out how to catch up? (well, o.k., he's got that one covered too).

Too bad he's not a better public speaker/ promotor for the Apple product line! (Oh wait, he's the best in the business)

And if only he could get the hang of continually shocking investors and customers in surprising and unforeseen ways...(Oh wait, that's kind of what we're talking about here with the endless iPhone speculation, rumours, upward guidance, lowered guidance gossip, facts, UFO sightings and so on.

And if only he knew how to simultaneously guide investor expectations lower while more often than not blowing the numbers away... well, you get my point.

Specifically speaking;
Dropping the price of the iPhone by hundreds of dollars, what's with THAT? Pissing off about a million early adopters who paid insane amounts of money to proudly pay additional insane amounts of money to get locked into a two year contract with Cingular/ AT&T, who often payed even MORE insane amounts of money to end their Verizon or T-mobile cell contracts early to switch over. I doubt it is simply lack-luster sales woes, or a rare careless mistake. To paraphrase another living-on-the-edge public figure..."define Crazy". . Sure, Steve Jobs is crazy- crazy like a fox. Because this is precisely aapl's strategy since before the day I walked into a PC store and bought the only Mac Luggable- I mean, Portable, available at the time- for $5,000 plus tax.

Take a look at the recent articles (if you don't have a membership to RealMoney, do a search in www.thestreet.com for thousands of other related articles)

http://www.thestreet.com/p/_rms/dps/cc/20070905/columnistconversation1.html#entryId10378039

http://www.thestreet.com/p/_rms/rmoney/gamesandgadgets/10367143.html

http://www.thestreet.com/p/newsanalysis/techgames/10378503.html

for a few of the suppositions as to the possible cut-throat business logic behind such moves. Also consider that maybe the number of iPhones sold was actually ahead, not behind projected sales estimates.

Either way, consider the fire this lower entry price-point will fuel resulting in massive additional sales for the back-to-school and holiday season. How the price cuts will assuage the wait-or-get-screwed consumer mindset preceeding what will almost certainly be a new, improved, high speed internet and wireless-enabled version of the iPhone by early 2008. And how the whole broo-hah cleverly camouflages how Mac portables and iMacs are popping up on the most unlikely of work-desks and media centers. And how the larger number sold will fuel increased entry into the expensive and closed-end spending pool that is "the Mac experience"! And how the introduction last week of Logic Studio will further bring the professional world and prosumers into the Apple product line fold by extension.

As I've been thinking for many years, none of these recent so-called controversial developments deter me from pondering- the lower aapl stock dips, the more of a screaming buy it becomes. Remember the "plunge" to $8.00? $55.00? $117.00 (about three weeks ago)? From a low of $55, it closed after this latest iPhone price reduction bizarre announcement and new iPod roll-out "back down" into the $130's, a year or so later. Now that's perspective. The beauty of Steve Jobs "the stock appreciator, ring master" is that he knows how to milk the cash cow while cajoling and guiding it to climb a wall of self-induced promotional wall of worry. Without the watering can of resistance, the seed has trouble pushing through the surface. It's a tight rope act at high altitude for sure, but no one does it better than our man Steve.

Of course the future does not necessarily equate with the past so astonishingly prosperously and I don't have a crystal ball and have misplaced my Ouiji Board, but I still wouldn't bet against Steve Jobs, let alone give up on aapl the stock. Just like I wouldn't play Russian Roulette with an almost fully loaded gun. Hell, even Steve Jobs at times doesn't quite comprehend just what an insanely great turn-around specialist he is. Take a look at this link..."Options Trade Cost Steve Jobs $4 Billion" http://www.thestreet.com/_rms/smallbusinesstech/smallbusinesstech/10362142.html

How about this for another "missed opportunity of the decade" award?...
"Michael Dell declines offer to buy Apple Computer" http://jeffkalnitz.com/journal/index.php?p=88

Here's another link, an investing article I wrote in March 2005 titled "Apple stock is up 600% in two years- what's next?" http://jeffkalnitz.com/journal/index.php?p=62

And for more of the articles I've blogged on aapl the stock, and the culture, http://www.jeffkalnitz.com/journal/

THE BOTTOM LINE?
I've been long aapl since about $8 and change. As I've schnitzeled off occasional profits to reduce the risk of losing my hard-earned investment profits by getting too subjective and thereby "greedy", I have always felt a pang of regret. Indeed, I wish I had simply kept adding to my stake. Because, damn, what a beautiful 5 year chart. And 3 year chart. And 6 month chart! There comes a point when a company multiplies its market cap til doubling and doubling again becomes more lumbering, less plausible. The story gets old (think Microsoft). I didn't think aapl was at that point when Michael Dell was rejecting even buying aapl for a fraction of the value of its parts, deeming the assets near worthless. Nor when Leopard's release date was pushed back to shift resources over to iPhone development. Not even when the iPhone, which I had bought on its first day roll-out, was slashed by $200 dollars. Because after the vast appreciation from under $10 aapl stock has seen, the gift that keeps on giving, in probability still has running room.

What I've always liked about Ken Lam's run in the Strategy Lab contests is his consistency. Many times, the same contestant who topped the charts plunges or experiences unacceptable volatility over the longer haul. And that is the best endorsement one can find as to the impressive benefits that Marketocracy, and contests like this one offer the small individual investor. It might as some infer, be a dangerous passing fad signifying a market top bubble. Or then again, it could be part of an emerging broader trend that will finally allow investors to consistently beat the market. Time will tell.

And I am willing to wager that aapl still has legs, with a price target of $175 by the end of January. Let's see- from a recent "low" of $117 to $175- about a 50% increase in stock price per share in well under 6 months... Not bad stock portfolio overall returns if you can get them.

On the surface, this looks like a very risky strategy, but having cost averaged in below $10 a share, I don't think even at this lofty valuation level I am overly emotional about a stock that has gone from being a hopeless laughing stock to the darling of Wall Street lately. In fact, as my own personal blog entries http://jeffkalnitz.com/journal/ have indicated for several years now, I think there is still considerable upside in Apple, and it is not a question of if the stock reaches $200, but when this will happen.

Remember when Michael Dell famously indicated he wasn't interested in buying Apple Computer, siting that it wasn't even worth the value of its parts at under $5 a share? To me, this served as a strong contrarian indicator for my initial entry level purchase. Once Steve Jobs returned to the company, the stock was primed to climb a wall of worry and doubting Thomases, and now is worth something like twice the market cap of DELL! Ouch.

I think that 5 months from now aapl will be higher than it is today, even after it's most recent run-up. Shorting aapl seems to me too much like playing Russian Roulette, although there is a good chance the stock will pull back after Wednesday's new products announcements.

I have been frequenting the Apple Stores for years now, and this has been a scenario that would make Peter Lynch jump with stock buying joy. Apple just might be the best run retail play in the world right now. Even when the rest of the mall is dead, the Apple Store is usually mobbed. And the difference in the AT&T Stores before and after they found the Apple religion is absolutely astonishing. Everything Apple touches shines with a sheen that looks a lot like a shiny gold bar. With the holiday season upon us (beginning with Wednesday's festivities, and back-to-school buying), we may see aapl reach $175 by year's end, which just happens to coincide with the current SLO's time frame, if I've got that straight. Of course I've been wrong before, just not when it comes to aapl (so far).

2. I wanted to be able to use my thought process to cull the best of my Open picks to improve the performance of my real life stock portfolio. I rely on this money being motivated in real life so I couldn't afford to take this time without translating my successes to the real world.

3. I wanted to fuse value and momentum investing because I see them as flip sides of the same coin. How can one find value without momentum, and vice versa in a way that both preserves and builds capital through stocks while minimizing risk with the very money I also must rely on to pay my bills each quarter?

4. I needed to hone my strategy down to some sound, basic principles that could at least see me mirroring my investment style and practices in my real investing life. I purchase stocks mostly for medium to long term objectives.

5. I don't like being too risky, because when I get too reckless, I lose money, making my biggest investing mistakes. So instead of trying to blow the doors off the returns through "Hail Mary" style trades, I'm using this contest as a chance to hone my skills to assist me in making money in my ordinary investing life. The more challenging part is to condition myself to explain my reasoning before or during the process of making the trades. But I'll try anyway.

I spend a lot of time studying the renowned successful investors, Bill Miller, Warren Buffett, Jon Markman, Jim Cramer, George Soros, Ken Fisher, and the many other all-time greats. I want to learn from both their successes and their mistakes. And I want to mine and emulate not only their best stock ideas, but also their research and insights acumen too. Of course, on that rare occasion when I see a trend or severely under-valued stock play early on, that gives me the greatest satisfaction of all. Hunches and homework are no substitute for fundamentals and a well-grounded integration of methodology and experience, and I try not to forget how hard it is to actually out-perform the market over a longer time period. Otherwise more than a small percentage of investors would achieve this. Humbleness as preventive medicine is far better than as a cure for rash actions.

As it turns out, waiting until a market correction to buy stocks didn't hurt. By holding cash til the end of August, I ended up with pretty much all my money to buy stocks with, and these picks are up collectively about 4%. So far so good, we'll see what the future holds, as I'm sensing September may be a wild ride for investors. I've tried to weigh my sectors according to seasonal and fundamental supply and demands strength factors.

With the recent volatility and investor uncertainty surrounding the subprime big boys' mess, I waited until I had to convert to stocks to stay within the rules to qualify in this contest. Reading the rules, I'm pretty sure I did that o.k. The good part was with 100% cash, I experienced NO volatility during this period, a definite advantage placing me fairly high in the overall rankings.

So far it hasn't turned out to be too bad a strategy. Simply by delaying getting into stock buys, I preserved my capital through the recent bad weather storms. But that is behind me now and it was time to back up the truck.

I also tended to pick the bulk of my stocks keeping in mind that strong performers bought on pullbacks, and some that just were too strong to even have pulled back much would help to buffer me from further volatility unless things just continue to out-right spiral out of control. Now that there is some pin action happening, I tried to diversify sufficiently to not put too many of my eggs in too few baskets, sector-wise.

I'll use up most of the remaining 25% of my cash selectively. A few stocks I have in mind are RIO, VLO, RIG, Chinese stocks on further pullbacks, alternative energy, and possibly some more financials. RIMM is just infuriating, because it's stayed so strong that now I wish I had simply grabbed some, but it just made me take pause at those nose-bleed levels.

Hind-sight is 20/20 as they say. The future on the other hand is more uncertain and the end is always a cliff's drop away so hopefully I've managed risk in a way that will make me feel good looking back that I preserved the integrity of this million dollars seed money, even if it is only make believe. Staying true to principle can be carried over to my real-world accounts no matter how well I do i the contest ratings.

I am writing this blog on my iPhone, and I have done very well with aapl the stock. I would prefer to buy aapl on a fairly substantial pull-back, only I may not have the opportunity to do so. This has been one strong stock recently. The cool thing is I'm in my r.v. At a remote campgound without wireless access. This baby will probably be big like the iPod. Hey, in an important way it IS the next iPod!