I have an investing journal I keep. Before buying any stock, I write down why I'm buying it, and what would make me sell it. On July 10, 2010, I wrote my three main reasons for buying Apple (NASDAQ:AAPL), and two things that would signal it was time to sell my Apple stock.
- Apple continues to produce gadgets that are user-friendly and have high utility.
- Apple has an enormous potential to expand abroad, especially in the smartphone division of the company.
- Apple's past leads me to believe they will continue to innovate and create new products that will create demand.
And when I had to consider what would cause me to sell my Apple stock, I said I would do so if:
- I try an Apple product and after one hour of fidgeting with it, I don't understand why anyone would buy it.
- All of the future products are just simple regurgitations of past products.
Time to take another look
It's been 3.5 years since I first wrote this out. Since then, Apple shares have done very well, beating the S&P 500 by over 40 percentage points. But upon revisiting this list, I'm forced to stop and wonder if Apple's best days are behind it.
I have little to worry about on two fronts. Apple continues to produce user-friendly and high-utility products. Though it doesn't have the highest ratings in the industry, Apple's iPhone 5s has excellent reviews from Consumer Reports, and it remains a recommended purchase by the magazine. I have no problem understanding why someone would buy Apple's products.
And when it comes to international expansion, Apple has definitely delivered. Take a look at how each geographic segment has increased sales between fiscal 2011 and 2013:
Furthermore, even though details are still being ironed out, Apple's partnership with China Mobile promises to be a boon for both companies. China Mobile has been building out 4G networks across select Chinese cities, and expects to sell 100 million 4G smartphone devices next year.
So what's the problem?
When it comes to final products offered on the market, innovation seems to have taken a back-seat to regurgitation. When Steve Jobs was at the helm, Apple redefined a number of industries, including music (iTunes), MP3 players (iPod), and cell phones (iPhone). It also single-handedly created a new market for tablets with its iPad.
Since then, all we've gotten are improvements upon these mainstay items. I won't argue that the iPhone 5s is more functional than the first iteration, or that the iPad Air is remarkably convenient. But there's a monumental shift that seems to have taken place, where the company is happy to simply make incremental changes to its products instead of innovating entirely new ones.
On top of that, Samsung seems to be making incremental improvements in their smartphones that are at least on-par with Apple's. Every day, the company becomes more and more of a threat to Apple.
What I need to see in 2014
Quite simply, I need to be wowed next year -- the same way I was when the iPod, iPhone, and iPad came out. I need to be convinced that the company is still innovating and swinging for the fences. I need to see something that I never knew I absolutely needed until I saw it.
Even if that doesn't happen, Apple still might be worth owning: it has tons of cash coming in and on the balance sheet, as well as one of the strongest brands in the world. But I'm the type of investor that believes in investing with innovators, and I have no interest in owning part of a company on whose best days are behind it.
Apple, I've got big expectations. You're on the clock.
Fool contributor Brian Stoffel owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and China Mobile. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.