If you’re considering buying shares of Apple, CEO Tim Cook has some advice: think long-term.
“If you’re a short-term trader, do not invest in the Apple stock,” Cook said at the TIME100 Summit in New York on Tuesday. “Because if you’re doing that, you’re trading at a different time horizon than we’re investing in. We invest for the long term.”
Cook referred to several of the company’s values-driven initiatives, including the development of accessibility features and its commitment to reducing environmental impact, as examples.
“Doing good is creating shareholder value in the long term. It may not in the very short term,” Cook said. “Our interests are not aligned to the short-term trader.”
Like many big tech companies, Apple has lost market value this year. As of Tuesday, its stock was down 18% since the beginning of 2022. Over the last one-year period, however, it’s up 17%. Over the last 5 years, it’s up 299%.
“I’m sure there are still people that are in Apple stock for the short term,” Cook said. “I’m not naive enough to think that they aren’t. But we try to be very clear that that’s not how we run the business.”
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Why Apple Stock Matters to Regular Investors
Even if you’ve never bought shares of Apple and don’t want to, the company can have a big impact on your investing portfolio.
It dominates the S&P 500, the source of some of the most popular index funds purchased by everyday investors within their 401(k)s or IRAs. These low-cost funds track the performance of the 500 largest companies in the U.S., but they’re weighted based on proportional market value. Since Apple is the biggest American company by market share, it currently accounts for 7% of the index, more than any other company.
Companies in the S&P, including Apple, may go through periods of volatility or declines in value. But over the long term, the S&P 500 has always gone up. There hasn’t been a 20-year period in which the S&P 500 did not gain in value ever since it began in 1872, according to research from personal finance site Measure of a Plan. As old companies fail and new ones emerge, the S&P 500 is reformulated to reflect the current winners of the stock market.
That’s why personal finance experts recommend sticking to low-fee index funds and holding them for the long-term. You can use a smaller amount of money to invest in individual companies that you believe are positioned for long-term success. That way, you can share in the long-term growth of companies like Apple without having to make any risky bets.
Tim Cook would approve.
