When it comes to investing, knowing when to buy, sell, or hold a stock can mean the difference between making money and losing it in the market. However, making the best decisions for your investments can be challenging. Fortunately, investors can minimize risk by weighing both the pros and cons of a given stock before deciding how to act. Today, we'll take a closer look at Apple (NASDAQ:AAPL) and evaluate whether investors should buy, sell, or hold the iDevice giant.

Let there be no mistake: Apple is one of the most innovative companies of our time. The bears will tell you that Apple's lost its edge. But the truth is, Apple continues to innovate within its established product lineup. Think: retina display, battery technology, Siri, and user interface.

One of the key things binding customers to Apple is a uniform integration of hardware, software, and third-party apps into its different products. Apple's iCloud is a great example of this because it wirelessly syncs and stores your media content (music, contacts, apps, calendars, etc.) on all of your iOS devices. Therefore users are less likely to move outside Apple's ecosystem to an Android or Samsung device.

Based on research from "Ask Your Target Market," Computer World reports that "87% of existing iPhone users plan to buy a new iPhone in the next six months, and just 9% intend switching to Android." Strong demand for Apple's iPhones should help drive sales of other iOS products as well.

Heading into the holiday shopping season, new product launches, including the iPhone 5 and iPad Mini, bode well for the tech giant. The updated iPhone version continues to generate record demand, in spite of recent supply constraints and criticism surrounding Apple's new mapping technology. On that note, let's look at what the critics are saying and why investors may want to sell shares of Apple.

As a shareholder, I know firsthand how hard it is to stand your ground, while the bears are screaming sell, sell, sell! Negative headlines, lowered profit guidance, and a management shakeup are just some of the many headwinds the company recently endured.

The mobile industry is a particularly challenging market when it comes to maintaining dominance. Technology companies are under tremendous pressure to continually innovate, lest they become irrelevant. Just look at what happened to Research In Motion (NYSE:BB). In 1999, RIM invented the first BlackBerry smartphone and revolutionized the mobile industry. Today, the company's stock has lost more than 90% of its value since its mid-2008 highs. The once iconic BlackBerry maker's failure to adapt, paired with a series of bad decisions from top-management, led to its downfall.

While Apple is far from following in RIM's footsteps, rivals with deep pockets including Google (NASDAQ:GOOGL), Samsung, and Amazon.com (NASDAQ:AMZN) are gradually catching up. Therefore, if Apple wants to remain on top for years to come, it needs to continually add innovative features to its products. Competition in the tablet segment is also heating up. Amazon, Google, and Microsoft (NASDAQ:MSFT) all offer compelling alternatives to Apple's iPad device.

Amazon's Kindle Fire brings the heat in terms of pricing strategy. That's because Amazon sells the tablets at a slight loss and instead counts on content consumption to drive sales. Meanwhile, Microsoft stole the spotlight earlier this year with the debut of its Surface tablet. Preorders of the device completely sold out last month both in the U.S. and the U.K.

With tough competition in key segments such as smartphones and tablets, Apple needs to be on its game going forward. However, some analysts worry that without Steve Jobs at the helm, the company may struggle to uphold its creative edge. But before we jump ship, let's review why investors should consider holding Apple shares.

During the past few months, the Mac maker has made some major changes to its business. For starters, Apple recently divorced itself from Google's (NASDAQ:GOOGL) Mapping service in favor of its own maps technology. The switch didn't go quite as smoothly as Apple had hoped. In fact, Apple CEO Tim Cook issued an apology after initial complaints about the company's new mapping application got out of hand.

Separately, Apple continues pouring money into its ongoing legal battles around the world with other tech heavyweights, whereas a better use of cash would be to amp up research and development, and focus on product innovation. These shifts in strategy are part of the reason the stock continues to dive deeper into bear territory. However, not all is lost.

Apple shareholders have a lot to gain by sitting tight. One of the biggest issues Apple is facing right now is production constraints for its newest iPhone. Foxconn CEO Terry Gou said the company is struggling to keep up with the massive demand for the iPhone  5. All things considered, that's a pretty good problem to have. Record demand is key, considering the iPhone accounts for about 53% of Apple's total revenue. Moreover, as Apple catches up with demand, investors should see a significant sales boost in the quarters to come.

The not-so-obvious choice
What's the deal with Apple? That's the billion-dollar question these days. Though the stock has been extra volatile in recent months, let's not forget that Apple is one of the most powerful brands in the world -- innovative products and legions of loyal customers abound.

Still, no investment is without risk. Apple may face more challenges today than it did three years ago, but it remains fundamentally strong. The stock is trading around $550 a pop, with an attractive price-to-earnings ratio of 13. The reality is: Apple has billions in cash on hand, not to mention zero debt to its name. Shares are down more than 12% this month, but from where I'm sitting, this creates a buying opportunity for patient investors.

I plan to take advantage and add to my position. But if you're not as confident in the stock, I encourage you to instead check out the Fool's new premium analysis report on Apple.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.