On Wednesday’s CNBC Stop Trading! segment, Jim Cramer “called Apple (AAPL) the ‘buy of the century’ at a recent $90, saying he believes its iPhone device will capture the lucrative ring-tone market. ‘Buy the heck out of Apple,’ he counseled,” TheStreet.com reports.
Full article here.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. He is also the host of CNBC’s “Mad Money” and CBS’ RealMoney Radio With Jim Cramer, and the author of several books, including Jim Cramer’s Real Money: Sane Investing in an Insane World. Cramer also runs Action Alerts PLUS.
A frequent contributor to Time magazine, Cramer also writes about the stock market for New York magazine, was a founder of and former columnist for SmartMoney magazine, and helped found American Lawyer magazine. Cramer worked at Goldman Sachs from 1984 to 1987.
Cramer graduated from Harvard College in 1977, where he was president of The Harvard Crimson. He was a journalist for four years before earning a law degree from Harvard Law School in 1984.
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I am a small investor and use that principle in making decisions. It has paid off well, not just with Apple. Maybe you have a lot of evidence that you’ve used to arrive at your decisions (share, please), but otherwise, the stock reflects sentiment with regard to Apple’s perceived growth. It DOES have far to move, because there is no ceiling. The question is whether this growth is real. I believe it is– Apple has not been granted any slack. Following them since the dark years shows that.
I believe– as do others– that they are seeking out new markets. Not only are their current product lines gaining favor– and sales– but they are poised to leverage all of this good favor for future sales of yet unreleased products. I work at a university that had a hand ful of macs and ipods just a few years ago. Now, both are everywhere. I’ll take my chances on what I see. This company is not done getting bigger yet.
I appreciate your view. Such a stance will always protect you from losses. But this is a game of understanding what could be, both good and bad. I know I have a handle on what’s coming. Perhaps we should meet here in six months and test our theories?
6502, we seem to be slightly out of sync here with our posts.
Very few investors purchase thousand lots of any stock today; hundreds are the norm. So, was 100 X $400 = $40,000 too much to invest in Google?
When AAPL splits (and it most certainly will next year), would you buy 100 shares X $50 = $5,000?
Randian asks: “Would you, or would you not, have bought Google last year at this time, given your stance with AAPL?”
To the average investor – a resounding NO, due to the prohibitive cash outlay and risk factors involved in that much outlay. No, I absolutely would not (and did not) have bought @ approx $335.00 last year at this time. Again – the initial cash outlay would be the defining factor. How did I not answer this in my last post?
In regards to the Crowley quote: I put that in there because, in the end, people are going to do what they want no matter what is said. I have no affinity for the man.
If cash outlay were a huge issue, then why not buy Lucent at $2.50. Sure how much one can spend initially is a concern, but growth and public sentiment are others.
I personally hope AAPL won’t split. There are plenty of shares out there.
I have one share of aapl, you know the company that sells the cert but I now have 24 as my ringtone . . . my advice . . . listen to MDN they get it right . . . and MDN folk are just as obsessed with all things Mac as I am. LoL 2 you all.
R says – “I appreciate your view. Such a stance will always protect you from losses. But this is a game of understanding what could be, both good and bad. I know I have a handle on what’s coming. Perhaps we should meet here in six months and test our theories?”
Yes, everyone has their own comfort level when it comes to rick factor. Sure, check back in 6 months and we’ll see where we stand. I will never try to justify if my particular strategy caused me major future gains.
Randian says – “When AAPL splits (and it most certainly will next year), would you buy 100 shares X $50 = $5,000?”
IF AAPL splits, I will assess at that time and that time only. If I were absolutely pressed for an answer today, I would say NO. Why? Because I cannot assess a FUTURE possibility. It defies logic.
R says – “If cash outlay were a huge issue, then why not buy Lucent at $2.50.”
R, if initial cash outlay is not an issue for you, I suggest you buy 10,000 shares of AAPL ASAP. Your reasoning above could be applied to ANY low value stock so I’m not following. Please clarify.
Dude, the example was to prove a point. Cash outlay is is ONE factor to pay attention to. ONE.
If I hadn’t been starting grad school when Apple started it’s 500% climb, I’d be thinking about how to retire. So much for education. And conventional thinking.
For the cash poor, buying .7 shares of something that goes up is a heckuva’ lot better than avoiding it altogether.
R says – “For the cash poor, buying .7 shares of something that goes up is a heckuva’ lot better than avoiding it altogether.”
That is faulty logic when it comes to the stock market. Should I buy 1 share @ 1.00 that may climb 100%, or, should I avoid that stock and buy ten shares of a DIFFERENT STOCK @ 10.00 for a more realistic 10% gain? If I do the latter, and both stocks climb as predicted, I just made 500% more than you.
Everyone has their comfort level of risk Vs. gain. If you are comfortable buying AAPL now, then by all means do so. I personally am not. This does not mean I think their products are inferior to the competition (EXACTLY the opposite actually). This is a straight-out matter of money, and has nothing to do with my loyalty to Apple’s offerings.
Do what thou wilt.
If we have the choice of knowing exactly what’s going to happen, we should do that. If we don’t, we weigh our options and proceed. Growth is growth.
6502, you know as much as I do it’s about the perspective that works for you. If you don’t think Apple is a good investment now, then what is? We’re all in this together, dude.
I don’t invest in Apple because of Apple loyalty. I invest in them because I see the tangible results of non-Apple users experiencing and adopting their products unlike ever before. I don’t invest on allegiance.
I will do. You, too, as will everyone. We all do. So again, if you have some insight– do share, please.
‘buy of the century’?
What century? Everyone knows Apple’s best days are behind them, ending at about the Apple IIgs. Now Microsoft has the superior Zune which is blowing sales expectations away and Apple will wish they were selling ringtones.
Payback is a bitch, isn’t it Apple? Copy Microsoft long enough and people begin to notice where the true innovation comes from. Nice try Apple. Say hi to MSFT on the way down.
Your potential. Our passion.
Ringtones seem worthless to me, but the reality is is that they are big money. As a matter of fact I just heard Cramer on the radio today talking about this subject and he mentioned that Verizon sold 200,000 copies of a ringtone of Beyonce’s lastest song JUST LAST WEEK ALONE.
Cramer sounds like a sharp guy, although I’ve never followed his advice so I don’t know what his record of success is. But his reasoning strikes me as sound.
PS — MacAddict had a clear tutorial on creating and loading ringtones from your own music collection a couple of issues ago (don’t remember which). Maybe the article is online. I used the process to pull a segment from an Art of Noise song that has a telephone ringing in it with a singer singing “telephone, telephone, telephone”. I like it.
6502: “That is faulty logic when it comes to the stock market. Should I buy 1 share @ 1.00 that may climb 100%, or, should I avoid that stock and buy ten shares of a DIFFERENT STOCK @ 10.00 for a more realistic 10% gain? If I do the latter, and both stocks climb as predicted, I just made 500% more than you.”
Depends what you do with the other $99. The example you just posed is the same as saying: invest $1 at 100% growth and $99 at 0% growth or invest $100 at 10% growth. It completely depends on what your goals are. Just because a stock is high does not mean anything. It has to do with the percentage change. AAPL could go from 90 to 120 or I could put my money in a different stock that goes from 3 to 4 and I will make exactly the same amount of money. If I bought GOOG today at 484 and it goes up to 645, again, I will make exactly the same amount of money, regardless of the number of shares I buy. It has to do with the amount of money you invest.
I read your link about the Law of Diminishing Returns and it has absolutely nothing to do with the stock market. It has to do with the fact that natural systems do not always scale linearly. If I am painting a room, I can do a pretty good job in 5 hours. If I add another 2 hours, it will look a little better and each additional hour will make it look slighty better yet, but after 7 or 8 hours, the difference in each additional hour isn’t really that noticeable and any extra time will not accomplish anything worthwhile. I am still putting in the same effort, but the return is not as good. This is because there is a maximum on how good it will look. There is no maximum for stocks. If there was, why would anyone invest in the biggest stocks out there? According to your theory, they aren’t going to make money anyway, yet they have huge sums of money invested in them. I may be wrong, but the link you mentioned didn’t refer to the stock market. I would be interested to see a better formulation of the Law of Diminishing Returns as it relates to the stock market.
Interesting, Jim was at GS exactly when I was. I’ll have to check the old directory to see where the blowhard worked. Musta been a bond trader.
As far as someone stating that Jim ran a “hedge fund”, I would point out that the concept of “hedge fund” as we know it today, did not exist in the mid-80s.
Lots of people went on to bigger and better things were at GS back then. Corzine who ran the gov’t trading desk went on to become Gov’ner of N Jersey, and Bob Rubin, who ran IB became Treas Sec.
I had a stock broker from a major company, who told me I was nuts to buy Apple. I called him right after I watched the Keynote where Steve introduced the colored iMacs (my gut words to myself were: “We’re BACK!” Then I got home an called to buy stock (these days I do it myself on line).
When he made fun of me, I said “Well see, just buy it.” Hope he’s thinking about me, where ever he is. He’s not my broker anymore I’ve decided they don’t know any more than I do. If they did, they’d all be on a yacht drinking martini’s and wouldn’t be sittin’ at a desk being a cubical broker for some company.
I’m going to buy more tomorrow. Made that decision this morning. Was waiting today to see if it dipped to 89 so I could get a better deal, but it didn’t.
“anyone with half a brain can do free ringtones”
I know that. You know that. But the vast majority of people DONT know that nor do they have the basic computer skills outside of surfing the net and playing games to be able to do it. Not to mention, most people don’t have the patience to spend 3 minutes on it.
BUY BUY BUY!
@ Zune Tang?
Um, what?
I think a point is being missed here–the above article is most likely aimed at people who are already serious players in the stock market game and can therefore pretty painlessly ‘buy the heck’ out of it. This isn’t aimed at the average joe who has to more readily take diminishing returns into consideration.
I just wish I’d bought at $7 when I was considering it.
MacRaven,
Having worked on Wall Street myself, I would say that traders are herd animals. They rarely know anything about the companies they’re recommending, beyond what a handful of “analysts” (who also live in New York, and rarely set foot in an Apple store) have said.
Then, you have the chart fetishists, who pore over a stock’s history like they were reading an astrology plot or an Oija board, and pretend that they’re better informed than those of us who have first-hand experience living and working in the SIlicon Valley.
I only buy shares in companies for which I’ve been an employee, a customer, a vendor, or where I know the senior management personally. Buying and selling stocks based on broker’s recommendations is no better than shooting craps in Vegas.
-jcr
“Buy of the century?” Illogical. The century has barely begun. Using the phrase this early in the 21st century means nothing else could be the buy of the century until one nanosecond into 2101.