• Sharebar

Could be an ugly day for those of us (like myself) who are long AAPL at higher prices. The stock is off nearly 30% in the past 90 days, and I'm reading about the next support levels being somewhere in the $460 range. I know this has a lot of folks panicked, but here's why I think the glass is half full.

I own the stock at an average of $590, and it's currently at $499 pre-market. At the risk of delivering a fairly pedestrian analysis of the situation, the fundamentals of the company haven't changed since I started buying it. Therefore, it's time for me to average down. Don't be sore, buy some more, right?

I happen to believe that AAPL is under such intense selling pressure at the moment because so many institutions own it so much lower, the fiscal cliff is threatening to raise capital gains rates, and they might as well sell it and lock in the profit while avoiding the fiscal cliff risk at the same time. On top of that, plenty of hedge funds need the winner by year end, so they're probably pulling the flowers and letting the weeds grow.

Is that wishful thinking on my part? I don't think so, but perhaps you can convince me otherwise. AAPL is still sitting on an ungodly amount of cash and trading at 11 times earnings. They have a number of absolute game changers in the pipeline (if everything works out) so there's explosive potential upside to be had over the next 12-18 months. Maybe we all end up kicking ourselves this time next year for not buying more under $500 (assuming we get to do that this week).

Or am I wrong? I'm actually thinking of taking profits on some GOOG and rolling that into AAPL. I'm not crazy about the idea but if we get another ~$20 drop in AAPL today I might have to. What do you guys think?

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Comments (41)

  • Nefarious-'s picture

    I am sorry, but can you please tell me what "game changers" apple has in the works? They have been relying on apple fanboyism for years now without releasing anything even close to revolutionary or game changing.

    You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

  • In reply to Going Concern
    Nefarious-'s picture

    Going Concern:
    Nefarious-:
    I am sorry, but can you please tell me what "game changers" apple has in the works?

    Perhaps a logo that isn't based on a fruit.

    That is how unoriginal Apple Inc is. They stole their name and their logo from The Beatles record label that was formed in the 60s.
    http://en.wikipedia.org/wiki/Apple_Records
    http://en.wikipedia.org/wiki/Apple_Corps

    You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

  • MFFL's picture

    How can you use a single event such as how they chose their name and logo over thirty years ago at inception to characterize a company as massive as Apple? Steve Jobs chose to use an Apple as name and icon for his company because he liked The Beatles, so 36 years later when he is dead, everyone in charge of the direction of the company must be "unoriginal"?

    "Well that's even more than less than unhelpful." - Jack Sparrow

  • In reply to MFFL
    Nefarious-'s picture

    MFFL:
    How can you use a single event such as how they chose their name and logo over thirty years ago at inception to characterize a company as massive as Apple? Steve Jobs chose to use an Apple as name and icon for his company because he liked The Beatles, so 36 years later when he is dead, everyone in charge of the direction of the company must be "unoriginal"?

    I have never liked Apple or anything they do.

    Not really sure what your point is here - if anything, you just solidified mine as to how unoriginal they are.

    You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

  • West Coast rainmaker's picture

    The company is kind of ridiculous right now - 12x trailing PE, while MSFT is at 14.55x (admittedly, that is partially attributable to MSFT's dividend). They have over 120billion in cash - this provides tremendous flexibility.

    Steve Jobs was a very effective leader, but one man does not make the largest company in America. To think AAPL will fail without him is to fall victim to the "great man" fallacy.

  • Ovechkin08's picture

    Correct me if I'm wrong but didn't Apple and a load of other Tech firms lobby for changes to the revenue recognition policies of revenues from hardware and software sales made together? I think it use to be the case that if you sold Hardware you booked the revenues today but delayed revenue recognition of the software sales over a few years? I think Apple's earnings were boosted by this change which makes the P/E ratio look lower than it should be under the previous revenue recognition rules.

  • Nefarious-'s picture

    I love how sensitive apple fanboys get when you show them how shitty and unoriginal apple is.

    You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

  • Working9-5's picture

    It is starting to look tempting even for a Apple hater like me. If it continues to slide towards new years I'll start loading up on every 20 dollars down.

    CNBC sucks

    "This financial crisis is worse than a divorce. I've lost all my money, but the wife is still here." - Client after getting blown up

  • In reply to West Coast rainmaker
    Babyj18777's picture

    West Coast rainmaker:
    To think AAPL will fail without him is to fall victim to the "great man" fallacy.

    Fallacy?

  • In reply to Babyj18777
    West Coast rainmaker's picture

    Babyj18777:
    West Coast rainmaker:
    To think AAPL will fail without him is to fall victim to the "great man" fallacy.

    Fallacy?

    Well it's debatable. It isn't technically a fallacy - more a cognitive error. But we, as a relatively individualistic culture, like to latch onto individual stories as opposed to team-based stories.

    There's no denying Jobs was a great CEO. But he was supported by a great team of designers, programmers, hardware engineers, etc.

  • onemanwolfpack's picture

    The stock is now trading at an all time low P/E; no material news since the last earnings release (other than AAPL release a bearish guidance, which they are famous for blowing out of the water) and the stock has still fallen 20% = I'm buying before market close

  • Going Concern's picture

    For the $500 you need to spend to buy one share of Apple, you can get a shiny new Windows PC or notebook that has a full two mouse buttons and can run basic spreadsheet software.

  • phcap's picture

    Some clarifying points:

    1) AAPL is the most held stock by HF worldwide, imagine the potential damage of margin calls
    2) Plot AAPL on a long enough time scale and you will see nothing more than parabolic growth
    Calculate the weight of AAPL in the Nasdaq (MCAP and earnings), the results should not surprise you
    3) Impact of reports such as http://www.scribd.com/doc/117055974/Citi-AAPL-Downgrade

    When I saw the previous thread on the frontpage during the weekend I wanted to comment "hell yeah I am short too", unfortunately the topic was to go .. long...

    Good investing!

  • In reply to Nefarious-
    kyleyboy's picture

    Nefarious-:
    I am sorry, but can you please tell me what "game changers" apple has in the works? They have been relying on apple fanboyism for years now without releasing anything even close to revolutionary or game changing.

    If the tv that they are working on is anywhere similar to the experience that is so simple on our ipads and Iphones then it will absolutely revolutionize tv. TV sucks a huge dick right now , they are hard to use and not really advancing at the rate that other technologies are. The TV market is largely dead and if apple can change the way it works it will be a big deal. It would be an all in one entertainment system that is very very easy to use and connect to other devices.

    I

  • In reply to kyleyboy
    Nefarious-'s picture

    kyleyboy:
    Nefarious-:
    I am sorry, but can you please tell me what "game changers" apple has in the works? They have been relying on apple fanboyism for years now without releasing anything even close to revolutionary or game changing.

    If the tv that they are working on is anywhere similar to the experience that is so simple on our ipads and Iphones then it will absolutely revolutionize tv. TV sucks a huge dick right now , they are hard to use and not really advancing at the rate that other technologies are. The TV market is largely dead and if apple can change the way it works it will be a big deal. It would be an all in one entertainment system that is very very easy to use and connect to other devices.

    I

    If that happens, all they plan on doing is merging a TV with their apple TV box, which is nothing more than a TV addition that google already rivals with google tv.

    I am not sure what kind of TV you have, but smart TVs already exist and enhance the viewing pleasure a lot. This is the exact type of blind thinking I am talking about. Apple is putting out a tv to rival the smart TVs that Samsung already has on the market. Nothing revolutionary here at all.

    You want to know what is revolutionary? The ISP that Google is creating and has rolled out as a test sector in Kansas as a warning to the rest of the ISPs in the country.

    You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

  • kyleyboy's picture

    Edmundo Braverman:
    Could be an ugly day for those of us (like myself) who are long AAPL at higher prices. The stock is off nearly 30% in the past 90 days, and I'm reading about the next support levels being somewhere in the $460 range. I know this has a lot of folks panicked, but here's why I think the glass is half full.

    I own the stock at an average of $590, and it's currently at $499 pre-market. At the risk of delivering a fairly pedestrian analysis of the situation, the fundamentals of the company haven't changed since I started buying it. Therefore, it's time for me to average down. Don't be sore, buy some more, right?

    I happen to believe that AAPL is under such intense selling pressure at the moment because so many institutions own it so much lower, the fiscal cliff is threatening to raise capital gains rates, and they might as well sell it and lock in the profit while avoiding the fiscal cliff risk at the same time. On top of that, plenty of hedge funds need the winner by year end, so they're probably pulling the flowers and letting the weeds grow.

    Is that wishful thinking on my part? I don't think so, but perhaps you can convince me otherwise. AAPL is still sitting on an ungodly amount of cash and trading at 11 times earnings. They have a number of absolute game changers in the pipeline (if everything works out) so there's explosive potential upside to be had over the next 12-18 months. Maybe we all end up kicking ourselves this time next year for not buying more under $500 (assuming we get to do that this week).

    Or am I wrong? I'm actually thinking of taking profits on some GOOG and rolling that into AAPL. I'm not crazy about the idea but if we get another ~$20 drop in AAPL today I might have to. What do you guys think?

    mundo I agree with you on most of what you said, Apple is certainly undervalued but I think you are forgetting the fact that as of now until they make more progress on the Apple TV there are simply and positively no catalysts what so ever. Apple is going to be having a pretty slow couple of months sorting out all the costs and margins issues as well as manufacturing issues.. I think we will see apple go down to the 400 range and then that will be a screaming buy opportunity if they sort out the margins . There is simply no reason to buy too early here. I think it's worth waiting and buying a shit ton of as time goes on.

    Apple, if I had to guess, will probably be doing a lot of acquisitions for this TV of theirs. Probably lots of things that compliment music applications and buying out more rights.

    That's just my view

  • In reply to Nefarious-
    Going Concern's picture

    Nefarious-:
    kyleyboy:
    Nefarious-:
    I am sorry, but can you please tell me what "game changers" apple has in the works? They have been relying on apple fanboyism for years now without releasing anything even close to revolutionary or game changing.

    If the tv that they are working on is anywhere similar to the experience that is so simple on our ipads and Iphones then it will absolutely revolutionize tv. TV sucks a huge dick right now , they are hard to use and not really advancing at the rate that other technologies are. The TV market is largely dead and if apple can change the way it works it will be a big deal. It would be an all in one entertainment system that is very very easy to use and connect to other devices.

    I

    If that happens, all they plan on doing is merging a TV with their apple TV box, which is nothing more than a TV addition that google already rivals with google tv.

    I am not sure what kind of TV you have, but smart TVs already exist and enhance the viewing pleasure a lot. This is the exact type of blind thinking I am talking about. Apple is putting out a tv to rival the smart TVs that Samsung already has on the market. Nothing revolutionary here at all.

    You want to know what is revolutionary? The ISP that Google is creating and has rolled out as a test sector in Kansas as a warning to the rest of the ISPs in the country.

    Their Apple TV box is the worst product I have ever purchased in my life. It literally disconnects every three seconds, which is the same situation for like 95% of users. There are hundreds and hundreds of pages on the Apple forums with people begging them to fix their defective product, but unfortunately peoples cries for help fall on deaf ears.

  • In reply to Nefarious-
    kyleyboy's picture

    Nefarious-:
    kyleyboy:
    Nefarious-:
    I am sorry, but can you please tell me what "game changers" apple has in the works? They have been relying on apple fanboyism for years now without releasing anything even close to revolutionary or game changing.

    If the tv that they are working on is anywhere similar to the experience that is so simple on our ipads and Iphones then it will absolutely revolutionize tv. TV sucks a huge dick right now , they are hard to use and not really advancing at the rate that other technologies are. The TV market is largely dead and if apple can change the way it works it will be a big deal. It would be an all in one entertainment system that is very very easy to use and connect to other devices.

    I

    All they plan on doing is merging a TV with their apple TV box, which is nothing more than a TV addition that google already rivals with google tv.

    I am not sure what kind of TV you have, but smart TVs already exist and enhance the viewing pleasure a lot. This is the exact type of blind thinking I am talking about. Apple is putting out a tv to rival the smart TVs that Samsung already has on the market. Nothing revolutionary here at all.

    You want to know what is revolutionary? The ISP that Google is creating and has rolled out as a test sector in Kansas as a warning to the rest of the ISPs in the country.

    Yes, google fiber is very revolutionary, part of the reason I own google. However it will be a while before it scales. Too expensive.
    However apple is not an unviable investment either. I happen to have a smart tv as well. It is nice but it is not as easy as it should be.

    The reasons that the apple tv will be better in my opinion
    1. Easier to use then other smart tvs- Everyone can use it, even old people, and it is apple people know apples brand, all apple products work the same, it's just familiar and it makes sense. No use in having all kinds of bullshit functionality if you don't need or know how to use it
    2. Connected to other apple devices, meaning music, movies on itunes, which will create more revenue, and potentially all the apps as well just think about it, they could make displaying information so much easier to where you can almost use your tv as a computer that could be controlled from your phone., maybe they will make it to where you can start playing games like angry birds on your tv using your iphone as a remote or something. Could be very interesting and potentially replace console gaming if they do it right.

    Also because of this increased connectivity to other devices seamlessly people will probably use their tv's more often. 35% of people use their tv each day. I haven't watched actual television in over a year because there is never anything good on and I don't want to feel like i'm on a schedule. I'm sure most of you can agree with that being an investment banker or trader. You come home and you've missed all the good shows. Then you have to wait to see them, you could have recorded them but that takes time also. Cable sucks. Maybe Apple will get rid of scheduling on tv and just let you click on the episode and watch it. With regular ads of course but instead they are hosting the files for the tv shows.

    But of course, none of this matters until we see what is like.
    I'm expecting something good. Tim cook is not steve Jobs but he has the resources

  • In reply to kyleyboy
    Nefarious-'s picture

    kyleyboy:
    Nefarious-:
    kyleyboy:
    Nefarious-:
    I am sorry, but can you please tell me what "game changers" apple has in the works? They have been relying on apple fanboyism for years now without releasing anything even close to revolutionary or game changing.

    If the tv that they are working on is anywhere similar to the experience that is so simple on our ipads and Iphones then it will absolutely revolutionize tv. TV sucks a huge dick right now , they are hard to use and not really advancing at the rate that other technologies are. The TV market is largely dead and if apple can change the way it works it will be a big deal. It would be an all in one entertainment system that is very very easy to use and connect to other devices.

    I

    All they plan on doing is merging a TV with their apple TV box, which is nothing more than a TV addition that google already rivals with google tv.

    I am not sure what kind of TV you have, but smart TVs already exist and enhance the viewing pleasure a lot. This is the exact type of blind thinking I am talking about. Apple is putting out a tv to rival the smart TVs that Samsung already has on the market. Nothing revolutionary here at all.

    You want to know what is revolutionary? The ISP that Google is creating and has rolled out as a test sector in Kansas as a warning to the rest of the ISPs in the country.

    Yes, google fiber is very revolutionary, part of the reason I own google. However it will be a while before it scales. Too expensive.
    However apple is not an unviable investment either. I happen to have a smart tv as well. It is nice but it is not as easy as it should be.

    The reasons that the apple tv will be better in my opinion
    1. Easier to use then other smart tvs- Everyone can use it, even old people, and it is apple people know apples brand, all apple products work the same, it's just familiar and it makes sense. No use in having all kinds of bullshit functionality if you don't need or know how to use it
    2. Connected to other apple devices, meaning music, movies on itunes, which will create more revenue, and potentially all the apps as well just think about it, they could make displaying information so much easier to where you can almost use your tv as a computer that could be controlled from your phone., maybe they will make it to where you can start playing games like angry birds on your tv using your iphone as a remote or something. Could be very interesting and potentially replace console gaming if they do it right.

    Also because of this increased connectivity to other devices seamlessly people will probably use their tv's more often. 35% of people use their tv each day. I haven't watched actual television in over a year because there is never anything good on and I don't want to feel like i'm on a schedule. I'm sure most of you can agree with that being an investment banker or trader. You come home and you've missed all the good shows. Then you have to wait to see them, you could have recorded them but that takes time also. Cable sucks. Maybe Apple will get rid of scheduling on tv and just let you click on the episode and watch it. With regular ads of course but instead they are hosting the files for the tv shows.

    But of course, none of this matters until we see what is like.
    I'm expecting something good. Tim cook is not steve Jobs but he has the resources

    This is all speculation and poor speculation at that. You are waiting for Apple to come out with a product that already exists and if it is anything like their TV box, it is going to be another huge disappointment from the company. There is a solution for everything you listed above on the market already in both Smart TVs and Google TV as well as simply having a laptop with an HDMI out port or a DVR from your cable service provider (which is almost standard now a days anyway).

    All of that aside, all of this will be powered through their massive pile of shit software, iTunes. The most oppressive and restrictive software there is.

    No, sorry, I don't buy any of that shit and I certainly won't be buying any Apple. Their company and their products are perfectly defined by apple maps. Garbage.

    You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

  • In reply to Nefarious-
    MFFL's picture

    Nefarious-:

    I have never liked Apple or anything they do.

    Not really sure what your point is here - if anything, you just solidified mine as to how unoriginal they are.

    My point was it's absurd to characterize an entire company over the way they chose their name over thirty years ago. It's a very weak argument..I'm not an Apple fanboy, and I'm not arguing for or against them being original or unoriginal. My point was if you're going to try to support your claim that they're unoriginal, do it by pointing to their products, or the direction the company is going. It is ridiculous to cite the way their founder named the company in 1976 as evidence for how unoriginal the current leadership is in 2012

    "Well that's even more than less than unhelpful." - Jack Sparrow

  • In reply to MFFL
    Nefarious-'s picture

    MFFL:
    Nefarious-:

    I have never liked Apple or anything they do.

    Not really sure what your point is here - if anything, you just solidified mine as to how unoriginal they are.

    My point was it's absurd to characterize an entire company over the way they chose their name over thirty years ago. It's a very weak argument..I'm not an Apple fanboy, and I'm not arguing for or against them being original or unoriginal. My point was if you're going to try to support your claim that they're unoriginal, do it by pointing to their products, or the direction the company is going. It is ridiculous to cite the way their founder named the company in 1976 as evidence for how unoriginal the current leadership is in 2012

    I said that in my other posts - me pointing out the lacadasical selection of their name was simply to show how truly unoriginal they are - even their name is stolen.

    Try and keep up.

    You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

  • MFFL's picture

    I saw that, and that's why I didn't criticize your other posts. I don't see what part of this you are having difficulty understanding. You gave an extremely weak piece of evidence to support your argument, and I commented saying that was a really dumb wait to support your argument. What about that doesn't make sense?

    "Well that's even more than less than unhelpful." - Jack Sparrow

  • In reply to West Coast rainmaker
    seabird's picture

    West Coast rainmaker:
    The company is kind of ridiculous right now - 12x trailing PE, while MSFT is at 14.55x (admittedly, that is partially attributable to MSFT's dividend). They have over 120billion in cash - this provides tremendous flexibility.

    Steve Jobs was a very effective leader, but one man does not make the largest company in America. To think AAPL will fail without him is to fall victim to the "great man" fallacy.

    How notable is it that they will never repatriate the 100b+ they have in bermuda given the tax situation in the US in valuing them? Just saying that you would only be able to collect 40 cents on every dollar after the tax rates rise next year on dividends for everything they are holding outside the us.

    "...all truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."

    - Schopenhauer

  • In reply to West Coast rainmaker
    Babyj18777's picture

    West Coast rainmaker:
    Babyj18777:
    West Coast rainmaker:
    To think AAPL will fail without him is to fall victim to the "great man" fallacy.

    Fallacy?

    Well it's debatable. It isn't technically a fallacy - more a cognitive error. But we, as a relatively individualistic culture, like to latch onto individual stories as opposed to team-based stories.

    There's no denying Jobs was a great CEO. But he was supported by a great team of designers, programmers, hardware engineers, etc.

    Standard Oil without John D. Rockefeller? Microsoft without Bill Gates? Tesla, SolarCity, and SpaceX without Elon Musk?

  • BTbanker's picture

    This is why I will never invest in tech... Even the almighty Apple is fucking shit up.

  • In reply to phcap
    meabric's picture

    phcap:
    Some clarifying points:

    1) AAPL is the most held stock by HF worldwide, imagine the potential damage of margin calls
    2) Plot AAPL on a long enough time scale and you will see nothing more than parabolic growth
    Calculate the weight of AAPL in the Nasdaq (MCAP and earnings), the results should not surprise you
    3) Impact of reports such as http://www.scribd.com/doc/117055974/Citi-AAPL-Down...

    When I saw the previous thread on the frontpage during the weekend I wanted to comment "hell yeah I am short too", unfortunately the topic was to go .. long...

    Good investing!

    This is a case where paying out a special dividend two months ago would have broken the institutional profit-taking --> margin call cycle. If they have a decent December quarter look for a nice January bounce though.

    It annoys me that there are no equity 401k funds available to me that aren't 10%+ AAPL and I can't trade individual stocks.

  • In reply to kyleyboy
    veljones69's picture

    Haha did you really say TV's are hard to use and then complain about recording shows because that takes time? You were coming up with some of the bitchiest excuses to be an Apple fanboy I've seen in a long time! Haha. But seriously, recording a show allows you to watch something you DIDN'T have the time to watch during it's initial airing. Kind of ruins your argument. And if TVs were so hard to use....nevermind you pointed out that you don't even watch TV so that explains that dilemma.

  • In reply to kyleyboy
    BanditPandit's picture

    kyleyboy:

    mundo I agree with you on most of what you said, Apple is certainly undervalued but I think you are forgetting the fact that as of now until they make more progress on the Apple TV there are simply and positively no catalysts what so ever. Apple is going to be having a pretty slow couple of months sorting out all the costs and margins issues as well as manufacturing issues.. I think we will see apple go down to the 400 range and then that will be a screaming buy opportunity if they sort out the margins . There is simply no reason to buy too early here. I think it's worth waiting and buying a shit ton of as time goes on.

    Apple, if I had to guess, will probably be doing a lot of acquisitions for this TV of theirs. Probably lots of things that compliment music applications and buying out more rights.

    That's just my view

    don't ever say fucking use the words "screaming buy" for anything or i'll fucking kill you myself

  • mojo12's picture

    losers average losers, right??

  • ladubs111's picture

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  • In reply to sandsurfngbomber
    Nefarious-'s picture

    You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

  • kshu's picture

    When utility becomes concave
    and outliers cease to be brave,
    think of the CAPM twist:
    that return grows as does risk.