These days Apple Computer seems to dominate conversations around the watercooler and has been the most widely held stock for quite a while.  For too many investors, not only is it their favorite company, it is by far their largest holding.  Apple’s revenue increased 10X in the past decade thanks to its innovative products and creative marketing and its’ shareholders were rewarded handsomely.  It’s hard to imagine a repeat over the next ten years and as of this writing Apple’s stock has dropped 30% from its recent peak, far under-performing a broadly diversified portfolio of world-class companies.  Its co-founder, creative genius and driving force (Steve Jobs) is deceased and its second largest market, China is now slowing.  Apple Computer is a great company and one that most investors should own.  However, you have to wonder if a young entrepeneur in the mold of Steve Jobs, Bill Gates or Sergey Brin is working on an idea that may one day make Apple yesterday's fad. 

Many people think they can pick which few companies will be the big winners over the long run and are willing to bet the farm, or in Apple’s case, the orchard on their own intuition or some Wall Street analyst’s research report.  Unfortunately, most are late to the party and buy in after a fast growing company’s meteoric rise.  For those who buy in early, they rarely possess the foresight to sell out at the top and will ride that favorite stock back down into the ranks of the also-rans.  We constantly stress the risks of being over-concentrated in any stock or sector, yet too many people simply can’t resist the temptation to put all of their eggs in one basket or pardon the pun, all of their apples in one bushel. 

Many of the world’s leading companies have left investors’ portfolios tattered and bruised at best and mortally wounded at worst.  Their dominant market position did not protect them from being over-taken by tougher competition or newer technologies.   Did those investors who were emotionally attached bail out before their favorites got left in the dust of the economic engine we call the stock market?  Not likely.  Although Apple may very well maintain its dominant position and its stock price may recover, I wouldn’t bet my retirement on it.  Nothing against Apple, it’s just that I wouldn’t bet my retirement on any one, or even a handful of companies.  I’d rather rely on the wealth that hundreds of companies are striving to create every day through their world-class products and services, including Apple. 

Happy investing.