Koodauw said:
Seriously, buying a stock when its at an all time high. Prob not the best of Ideas.
Buy low, Sell high. Basic rule.
You bought high, very high. I just hope it goes up in your case. For a period of 2 years though.... your prob gonna lose some money.
There's a million different ways to look at Apple stock, each with a different valuation of the stock. I'll spell out 3 different scenarios, and the original poster can decide which he thinks will happen-
1. (Worst Case) Apple has hit a ceiling with iPod sales, so after 1 or 2 more decent quarterly earnings reports, the stock no longer is a Wall Street darling. On top of that, Apple isn't able to make any kind of budge in PC marketshare, giving investors even more reasons to give Apple the cold shoulder. Apple drops to the thirties by mid-2005, and mid to long term prospects for the stock are very flat..
2. (Optimistic But Quite Possible and Perhaps Even Probable) Long-term prospects and strategy are still questionable, but in the short term people still cannot get enough iPods, and Apple continues to sell as many as they make for the next couple of quarters. Although the Street is expecting good numbers, Apple is conservative enough in their guidance numbers that they still deliver a great earnings report next quarter, sending Apple stock into the mid 60's. On top of that, Apple has great debut sales of the G5 iMac (not only is it a great new model, but there was a lot of pent-up demand after no G4 iMac sales for 2 months.) On top of that, G5 supply problems are finally taken care of by IBM, further increasing Apple sales this quarter. Then at MacWorld in January, Steven Jobs announces the G5 Powerbook, shipping within the quarter. This sends the stock even higher, as the Street knows that notebook sales are one of Apple's strengths, and a G5 notebook will drive a lot of upgrade sales and create some new customers as well.
So there's a lot of great news that represent tactical wins for Apple, in terms of driving Apple sales and profit. The long run is still in doubt (as always), but in the short term the stock continues to climb, and anyone that is already in can place a stop order to lock in profits.
3. (Best Case) All this talk of the 'halo effect' actually comes true. Out of 100 Windows users, 14 or 15 walk into an Apple store to check out iPods and see what the iMac hubbub is about, and 2 or 3 actually decide to "switch". Although this is a relatively miniscule percentage of total Windows users, Apple's market share goes from about 3% to about 4-4.5% in the USA. This is a blip in the overall scheme of things, but means at least 35% increase in Apple computer sales, and 50% greater net profits. Apple takes advantage of this momentum, and finally creates a marketing campaign that really speaks to Windows users, and finally creating some true momentum for the Apple platform. iPod sales are still appreciated by investors, but the real buzz is now centered around the Mac, which is the "new iPod".
Depending on which scenario you think will occur, Apple is either 1) grossly overvalued and ready for a fall, 2) priced about right for a momentum stock, with still some room for growth in the next couple of quarters, or 3) even now a buying opportunity if you believe in the Mac.
Some may consider scenario #3 impossible or highly improbable, but I think it's at least a tantalizing possibility/ opportunity (and part of the reason why the stock is so high now.) I bought at $34 literally the day before the G5 iMac introduction, and am pretty confident that I will be holding for at least 3 more months (meaning that the stock will continue to rise during that time, albeit more slowly.)
