The other day I was watching one of the stock market shows where Apple stock (AAPL) was discussed. One analyst was asked if he had a position in Apple to which he replied “No”. He was then asked “Why?” He replied with a question “I was stupid?”
There are other indications that show he is not the only one. Late last year, in one of the better known financial TV shows, one of the analysts said he was getting out of AAPL at around $365/share. Yesterday it closed above $585/share. A few weeks ago, that same analyst proclaimed he was shorting AAPL. A few days later he defended position saying that he had been prudent and had limited his losses. Now I don’t have to look any further than the mirror to see another stupid person. About two years ago I decided to add to my long Apple position by making short trades in my IRA. The good news is that I have about $50,000 in profits over the two years. The bad news is that if I had just bought and held on, in that same period, I would have had $150,000 instead.
I have been an AAPL investor since 2007. My position in Apple, like many who have been long term investors, because of its growth, has become a very significant portion of my holdings. Because of this I spend at least a couple of hours a day reading about the company. And it seems to me that recently the attitude and mood regarding Apple stock has improved significantly. So what has changed? Why are we all feeling so stupid about what we should have done regarding Apple stock? Now, there is no question that the the mood of the general market has improved, but not to the degree that Apple has experienced. I submit that the biggest issue, as usual, that was weighing down the stock price was “uncertainty.”
There are other contributors to the uncertainty, but the biggest contributor was Steve Job’s health. Prior to the passing of Steve Jobs, his health was discussed ad infinitum making the stock very volatile. Probably every investor or potential investor knew that Steve Jobs was very sick. A large percentage thought that when he died the company would fold. Others, who did not believe the company would fold, did think that the stock would plunge at first and then after several quarters it would likely rebound. We forget what a weight that this situation had on Apple stock. And it is hard to imagine that the stock has risen over 45% since Steve Jobs passed away on October 5th, 2011. I think now, without this uncertainty, the analysts are focusing on the fundamentals of the company and are now wondering why we were all so stupid.
Since the analysts are now studying Apples markets, profits, P/E ratios, etc., they are coming up with glowing reports. Now, some analyst are saying that it is conceivable AAPL market cap could go to $1 trillion. It’s like they have just discovered a company that was already there.
Tom Koger is a MacDailyNews reader who submitted this article via our contact page this morning.
Has Steve Jobs become too much of a liability for Apple shareholders? – December 17, 2008