This is a clear bold call to buy Apple in the middle of the doom and gloom that surrounds the stock.  However, it is extremely important to buy Apple here the low risk way.  The low risk way is to follow the ZYX Change Method.

We are in an environment where the noise from talking heads about Apple is deafening.  The obvious question is why you should listen to the signal from the ZYX Change Method at this time.  The answer lies in the track record.  The track record of this method is public and can be easily verified.  Specifically, we recommended to our subscribers to accumulate a full position in Apple at an average price of $131.  We have already taken profits on 80% of the position; the last profit was taken at $610.  Even though we were inundated with requests from subscribers to recommend buying more Apple stock in the $500 to $700 range, our record is public that we did not do so.  Instead we were busy taking profits.

In evaluating a track record, the trades that are not recommended are as important as the trades that are recommended.

The Low Risk Way

The low risk way is to follow a rigorously analytical probabilities based method such as the ZYX Change Method.  A full discussion of the ZYX Change Method is beyond the scope of this article.  However, some of the elements of the method as they specifically apply to Apple stock are described below.  Most Apple investors and those contemplating a new investment in Apple should be able to use these elements to their advantage.

  • Instead of buying all at once, scale in a buy zone.  Scaling in simply means buying in tranches. Last year after taking profits we told our subscribers that the buy zone in Apple was $443 to $477.  Now the market conditions have warranted changing the buy zone to $423 to $491.  The stock closed at $485.92 after trading as low as $483.38.
  • One of the principles underlying the method is that nobody knows with certainty what is going to happen next.  Therefore it is best to use probabilities of the stock reaching various points in the buy zone.
  • When the buy zone is wide, due to market conditions, it is best to divide the buy zone into subzones.  For our subscribers, we have divided the buy zone into three subzones and provided the probabilities for each subzone.
  • Aggressive investors can start accumulating near the top of the buy zone.  Conservative investors should wait for a deeper excursion into the buy zone with the knowledge that they may miss the opportunity.
  • Under present market conditions, we will limit the new position in the buy zone to 35% of the full core position size.  Full core position size simply means the desired total size of the position when all scaling in is done.  Full core position size is determined by desired diversification and desired risk control.
  • According to The ZYX Change Method, the probability of Apple stock decisively falling below $423 and staying there is only 20%
  • It is best to focus on risk adjusted returns, i.e., returns in excess of those returns commensurate with the risk taken.
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