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 andat 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?