“CNBC’s ‘Mad Money’ host and analyst Jim Cramer on Tuesday evening spoke about the tech stock trade and specifically targeted Apple. According to Cramer, tech stocks are defenseless against things that ‘hammer’ their value — they have no dividends, buybacks or takeover prospects. ‘Apple probably has the best prospects of any tech stock out there,’ Cramer explained,” MacNN reports.
MacNN reports, “Metaphorically, Cramer said that hammering Apple stock is much like ‘shooting Apples in a barrel.’ He believes that because Apple offers no dividends, no guidance or any buyback — no defenses. ‘Any short seller can rumor down any stock without a buyback,’ he asserted; it’s so ‘pathetically easy’ that all a person has to do is lift up a phone and tell their friends and brokers causing a chain reaction.”
MacNN reports, “‘Understand, all of these stocks [I think] are valuable,’ stated Cramer, ‘I picked Apple because it has the best prospects and it’s still getting creamed.'”
Full article with screen cap of Cramer shooting apples in a barrel here.
Missed it the first time? Correct the mistake. The elevator is coming down to pick up the stragglers who couldn’t or wouldn’t see it before. But, they see it now. Have patience while we get down to their floor and they finally climb aboard.
Related article:
Cramer’s Mad Money advice: keep Apple Computer, dump Microsoft shares – July 05, 2006
Cramer: ‘I have never seen a systematic, multiweek bear raid like I have on Apple Computer’ – March 27, 2006
The poeple who manipulate the stock prices as described in the article are just as guilty as ‘Inside Traders’ and ‘if’ the wankers could be identified and caught should be prosecuted just the same way.
I’m losing my money as fast as I can! This year I’ve shed $45,000.00 by holding onto AAPL.
I really have trouble seeing the point of buying stock that doesn’t pay a dividend. Such stock has no intrinsic value. It’s worth is based solely on what someone else will pay for it. In other words, it’s no different from a baseball card.
Think about it: Unless you intend to accumulate enough of AAPL to have a say in running the company, what are you actually buying? Just some paper that you hope someday to sell to someone dumber than you, who hopes to sell it to someone dumber still. It’s no wonder tech stocks are so unstable.
Stock speculation is a fool’s game. Put your money into index funds. Invest in the whole economy.
Jim’s Right:
1. Apple tells NOBODY what is going on. People who tell you they know something are full of it – surely you’ve noticed this by now?
2. The only thing you can put much faith in is objective supply chain checks (for current sales), and the odd nugget that is dropped by offshore manufacturers regarding new Apple contracts (but Apple is shutting them down, too).
3. What the market isn’t getting is that the ipod growth has, indeed cooled, FROM A GROWTH RATE PERSPECTIVE, but are still hot and growing, just at a reduced rate, and, most critically, Mac sales are up. As a results, Apple will, in my view, exceed expectations and pull in > 5.0B sales this quarter.
But this is from a fundamentals perspective – the actual growth expectations etc.
4. The techicals (the recent trading trends) in Apple are ABSOLUTELY dreadful and have been for months. For a variety of reasons, mostly not based on fact, Apple stock is trending downwards. Now I think it will get a nice pop next week, but traders MUST be unemotional about things like this. As the saying goes “don’t stand in front of a freight train, don’t try and catch a falling knife”. And Apple is a freight train going down/a falling knife right now.
I wish I had some spare cash; I would make a play on Apple July 55 call options (I’m assuming the July option expires on the Friday of the week Apple reports). But I don’t…
5. Anybody who invests in a stock without putting a market stop order is doing the automotive equivalent of driving without brakes. This is madness, although very common.
What this means, is, if you, for example, right now, buy Apple at $53, put in a market stop at, say $49, or at some very near point but no lower, than, say, $47. The rule for a market stop is that if the stock ever hits (in this example) $49, your stock will AUTOMATICALLY be sold at market, that is at the prevailing price, GUARANTEED. If this fails to happen, call your broker and demand a fill – they will do it, for free – its one of the rules of the exchange.
Now here is the big point: if apple goes up by, say, $5 to, say, $8, change your stop to $53. If it goes up another $5, raise it again, all the way up. This way, you GUARANTEE (lock in) your profit. When it takes a significant drop, boom, your stop will kick in, your position will be cleared and you will (worst case) have capped your losses or taken out your profit.
Remember: you cannot argue with the market. If it goes down, you were wrong. Period.
6. If you think the stock is a super deal, wait until the market agrees with you (it starts to trend up, and buy. If you had bought at $85 under this approach you would have had a stop at around $80 and lots of cash (but no stock). You should consider a purchase now, based on Mac completing the Intel transition, but you would have to weight that off against GARBAGE technicals. In other words, now, its very speculative. Now if Apple starts rising and holds above, say $60 for a month, then I would say the technicals are ok, and buy big time.
Plus, remember that August, Sept (especially) and Oct suck for the market.
end of Stocks 101
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disclosure: my spouse holds apple, and I haven’t made at least $10 million on the market. but i’m working on it
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(the point here is to be very careful about stock market advice from people other than, say Warren Buffet (who by the way, should avoid fraternizing with convicted felons, and giving them money, but I digress))
“I really have trouble seeing the point of buying stock that doesn’t pay a dividend. Such stock has no intrinsic value. It’s worth is based solely on what someone else will pay for it. In other words, it’s no different from a baseball card.”
Not true.
It doesn’t matter whether a stock rewards you by price appreciation or by paying a dividend. If taxation is not taken into account the amount of money you would get either way (on long term averages) will be the same.
With taxes considered, it’s actually better to have a stock which increases in value and does not pay a dividend because of the more favorable tax treatment of capital gains.