Steep drops in AAPL. WHY?

[~Shard~]

I held AAPL stock when it was at $21 and sold at $40 back in October - a nice profit, although hindsight is always 20/20. I then shorted it at the end of November at $67, got a little nervous when it climbed above $68, but then took my profits yet again at $64 early this month - a nice profit for such a short term trade. For now though, I see AAPL going lower if anything, but I am not sure on the timing yet on when to short again. 2005 is going to be an interesting year for the markets, and I plan on capitalizing on it just like I did in 2000...

 

[Dave00]

(1) AAPL is definitely overvalued. The current stock price anticipates tremendous growth over the next few years - which may or may not happen.

(2) December/early January is the worst time to sell, and the best time to buy. Mainly because you'd be doing the same thing as everybody else. Lots of people sell in December in order to write off losses, and tend to buy back the same stocks in January. So if you sell now, you miss the big jump that always happens in January.

(3) Allowing your natural gut urges to take over will get you killed in investing. Everyone knows you should buy low and sell high. But what this reallly means is that you should buy when it's going down, and sell when it's going up, which is the complete opposite of what your gut tells you. Your gut tells you when it's going down, get out before it goes too low. Your gut tells you when it's going up, get in and get on the gravy train. The best time to buy is when there's nothing but bad news, and vice versa for selling. Right now, the news is almost overwhelmingly positive for AAPL - iPods selling like hotcakes, etc. Which means it's a good time overall to sell - but I'd never sell this time of year. The good buys in the stock market are where there's been lots of bad news. For instance, Merck is at its lowest price in something like 9 years, but everyone's afraid of buying because of the anticipation of lawsuits re: Vioxx. Mark my words, over the next 10 years it'll have a huge return.

(4) Stock picking is fun, but on average a losing proposition. 70% of mutual funds - which are run by people who do nothing but study stocks - do worse than the indices. For important money, pick an index fund and forget about it.

Dave

 

[rdowns]

I completely agree, that's the way I invest as well. Some of my holdings are very long term (7+ years), some are long term (2-3 years) and some are short term <1 year). In fact, you could say I have my investing portfolio and investing strategy, and then my trading portfolio and trading strategy. I do day trading a lot, and just pop in/pop out of stocks. That way I can bring in a few hundred $$$ a month, sometimes more sometimes less, but I always have my longer term holdings as well. Diversity and balance is the key. And greed will get you nothing but trouble.

My long term money is with my financial advisor's company and I speak with him frequently. We did 14% growth in 2003 and just under 19% this year.

I have a play account that I grew from $7,500 to just over $18,000 this past year. Apple funded a good part of that. I do a little day trading (look for good buying opportunities like Pfizer late last week, early this week) but I have always done well by investing in what I know and researching and reading like crazy. I also avoid bandwagon jumping, that will kill you. Buying stocks may be a gamble but no reason to just roll the dice.

 

[~Shard~]

My long term money is with my financial advisor's company and I speak with him frequently. We did 14% growth in 2003 and just under 19% this year.

I have a play account that I grew from $7,500 to just over $18,000 this past year. Apple funded a good part of that. I do a little day trading (look for good buying opportunities like Pfizer late last week, early this week) but I have always done well by investing in what I know and researching and reading like crazy. I also avoid bandwagon jumping, that will kill you. Buying stocks may be a gamble but no reason to just roll the dice.

I have a similar style and view of things - sounds like we're both doing some of the right things, at least, judging from your previous success and mine....

 

[Hoef]

Hail to ~Shard~ and rdowns, good to see more like minded fundamental technical day short long term traders investors !!

 

[IJ Reilly]

i never said investing in a single stock wouldn't yield any return. obviously, not everyone can get a 500% return. and "using their own knowledge" is very overrated, imo. for every amateur investor who thinks he/she's the hot one "in the know," there are 10 ivy league PhD grads at goldman sachs spending every ounce of their energy trying to beat everyone else.

And I never said everyone could make a 500% return, let alone all the time, but by the same token, my choice of sinking a substantial amount of money into Apple wasn't a random act, especially when it was selling for only a couple dollars above liquid assets (and way below book value). For a long while, the markets were treating Apple like a company that was ready to file for bankruptcy, even though they were reporting profits. It didn't take a whole lot of vision or knowledge to see a money making opportunity there. I don't give a hoot if 100 ivy-league PhDs are trying to beat me. I just want to make some money. Just because they also do doesn't mean I can't.

 

[IJ Reilly]

(1) AAPL is definitely overvalued. The current stock price anticipates tremendous growth over the next few years - which may or may not happen.

(2) December/early January is the worst time to sell, and the best time to buy. Mainly because you'd be doing the same thing as everybody else. Lots of people sell in December in order to write off losses, and tend to buy back the same stocks in January. So if you sell now, you miss the big jump that always happens in January.

(3) Allowing your natural gut urges to take over will get you killed in investing. Everyone knows you should buy low and sell high. But what this reallly means is that you should buy when it's going down, and sell when it's going up, which is the complete opposite of what your gut tells you. Your gut tells you when it's going down, get out before it goes too low. Your gut tells you when it's going up, get in and get on the gravy train. The best time to buy is when there's nothing but bad news, and vice versa for selling. Right now, the news is almost overwhelmingly positive for AAPL - iPods selling like hotcakes, etc. Which means it's a good time overall to sell - but I'd never sell this time of year. The good buys in the stock market are where there's been lots of bad news. For instance, Merck is at its lowest price in something like 9 years, but everyone's afraid of buying because of the anticipation of lawsuits re: Vioxx. Mark my words, over the next 10 years it'll have a huge return.

(4) Stock picking is fun, but on average a losing proposition. 70% of mutual funds - which are run by people who do nothing but study stocks - do worse than the indices. For important money, pick an index fund and forget about it.

Dave

(1) Actually, Apple's current price reflects roughly 35 times forward earnings (last I checked), which is just about where it's been selling for some years now. The stock's price fairly accurately reflects earnings growth projections -- which of course means they actually need to meet these forecasts, but we're looking at some predictions of exceeding them now, so the current market valuation isn't nearly as precarious as some are saying.

(2) If you've made money on a stock, this might be an excellent time to sell, especially if you've got some offsetting losses to report. We're actually enjoying the traditional "Santa Claus rally" at the moment. Tax selling will probably hold off until next week. Also, nothing always happens in the market. Believing it does is a great way to get burned.

(3) I own some Merck, unfortunately, which I bought long, long before the Vioxx thing. It's been going down pretty steadily for years now. I'll only mark your words about the guaranteed profits from investing in this company if you'll promise to make up the difference if it continues to go down.

(4) That's good advice, IMO.