Brian Bailey Preface to the Revised Edition

Apple bought me an iPhone

I had no plans to get an iPhone. Really.

Not for at least a year. I was determined to wait for the 2.0 version, but our family had a small dilemma. Lori's cell phone network was being turned off by AT&T and she was literally being forced to get a new phone. Not that it wasn't time - she often referred to her sturdy, nearly 4-year old Nokia as her Fisher Price phone. The perfect phone for her was the one I had, the Blackberry Pearl. If we were going to buy a new phone, along with the dreaded 2-year contract, we didn't want to spend the money on a temporary replacement.

As further proof that I have a wonderful wife, Lori repeatedly told me to go ahead and get the iPhone, especially since I have spent the last 3 years almost getting an iPod. The phone was so expensive, though, I just couldn't justify it. Then I had an idea.

Why not let Apple help me buy an iPhone? I have carefully watched Apple's stock over the past year. My money sat on the sidelines while the stock doubled. Right before the iPhone was released, I was convinced that stock already reflected the incredible hype and anticipation and could only go down. Despite the overwhelming evidence that the product actually met and even exceeded expectations and that the launch had been widely successful, I ignored the temptation to invest. The stock shot up after the release.

When AT&T announced its earnings last week, including information about iPhone activations, and Apple's stock dropped nearly 7% in one day, I knew this was an overreaction and the perfect opportunity. Apple was announcing its own quarterly numbers the next day and there was no doubt in my mind it was going to report an incredible quarter. I bought the stock minutes before the markets closed and waited for the announcement the next day.

The earnings report was fantastic and the stock made up the previous day's losses and continued to rise. I held it until early the next morning, sold it just below its peak, and picked up an iPhone later that day. In those 36 hours, AAPL rose $13 per share, almost paying for the phone in full. Since then, the stock has fallen over 5%.

I can't say I recommend this strategy, as there is obvious risk and little inconveniences like taxes and commissions. In fact, my story is probably one more sign of a market peak, since I have previously shown no talent for timing the market. Nevertheless, I really like the idea of profiting from Apple's success. It makes our relationship seem more mutually beneficial.

More on the iPhone later, but it is truly amazing. I have never smiled and laughed so much while using a device. It's beautiful, simple, and dramatically different than anything else.