Why betting against Apple will backfire

Apple Store“Apple Inc. (AAPL) hit another new 52-week high today as it traded above $110 earlier this morning. According to historical price data, Apple has actually been hitting a new 52-week high each day for the previous nine trading sessions. Does this mean Apple is overvalued, technically overbought and shortable? Maybe in the short run it might be due for a profit taking fall, possibly testing the century mark, but it is difficult to believe that any downturn would be more than short term,” Thomas writes for Ant & Sons.

“It is almost like shorting Google Inc. for a few days hoping to catch a few points. In the short term you might make out fine, but in the long run, you never want to bet against a company that continues to dominate and increase its market share in the search area while launching new products virtually every day. As “old fashioned” as it might sound, a buy and hold strategy works well for such growth companies,” Thomas writes. “The same can be said for Apple.”

Full article here.

[Thanks to MacDailyNews Reader “digirati” for the heads up.]


  1. Yup, buy and hold for Apple share holders. This sounds like solid advice for at least the next three years. I also think we may still see a rubberbant effect in Apple sales in the next 1-3 years, where all of the thinking and considering being done by potential switchers right now, will all of a sudden happen. Another way of saying it, I believe that Apple has yet to realize its real market value from the sale of what it does best – Make one of the best personal computers and operating systems in the world.

    Go Apple!


    Apple is changing so fast that the street has missing the boat.

    If your can buy and hold the stock for more than a year just buy buy buy

    the game has changed

    quality will win ….. you can’t screw the world like m*&^&soft; did

    hold on forever …. but that is only a small part of what apple has planned

    Apple dropped computer from the name and said the first 30years was just the beggining … they are not bragging

    hold on kiddies


    I will be adding to my position as soon as the money clears

    AAPL HAS already made me + 50% in less than a year

    it can do the same for you and then some

  3. Don’t look now, but looks like the short term party is over…down over $2.

    I agree, from personal experience that betting against Apple is a losing proposition. I trade the stock and its options heavily. Made tons on long or call positions, lost losts on short or put positions.

    Last week, I sold some calls for $16,000 profit (buys lots of iPhones). Thought so much of my prowess that I dumped $5,600 into put options. I’m now down $4,700 on these (was more earlier today before the drop).

    Oh well. Live to trade another day. Apple will not see a serious drop in its stock price until Steve Jobs leaves.

  4. Any dips between now and Christmas in APPL stock will be profit taking, and minor corrections. Nothing in the short term is going to drive this stock down to any serious extent, and plenty of things will be driving it up through the roof.

    Just my 2c.

    MDN “down” as in MSFT is going “down”, APPL is going “up.”

  5. I don’t plan to sell, but I want to see this in the $90s (or even below) some time before the end of the summer. Apple always tanks during the spring/summer, in preparation for a nice fall/winter run-up. It could use a good short-term dump to clear out any wimpy new buyers.

  6. I had quite a few shares of GE stock thanks to old options that were getting ready to hit the 10 year mark and expire so I cashed them out last June and dumped them all into APPL. Screwed my taxes up this year, but when I purchased APPL it was around $54 a share or so. So needless to say, it was well worth it. I have since dumped more and more money into APPL over the year and I believe my ROI is somewhere around 60% currently. (I don’t know ANYONE who would turn down 60% ROI over the course of 11 months)Would be higher but I purchased a good bit before their release of second quarter earning statements. Seems to me with the way APPL is headed I will continue to put money into it even when it’s over 100 a share.

    Who knows, if they don’t split for the next two months perhaps when they do split I will be in the 7000 share club!

  7. Professional traders today easily gained more than $2 by shorting the stock near the $110 mark.

    Once the momentum is lost in a stock, it’s hard to get it back.

    The best AAPL can hope for is a sideways consolidation, and a bounce leading up to WWDC and the iPhone release.

    But in late June, after WWDC and the iPhone release, expect a sell-the-news reaction, which will drop the stock price.

    The next major catalyst after that will be several months away, in the lead up to the Christmas buying season and Macworld Expo in January 2008.

  8. With AAPL as with all other stocks the price reflects future expectations of growth.

    At $110, there’s an assumption in place that Apple will increase revenue by a factor of about five times, all other things being equal.

    So when looking at a stock you can’t say, it’s $110, but the price will be so much higher when Apple’s revenues increase massively the future. It won’t. That growth has already been taken into account in the $110 price.

    So for the price to increase a lot, investors have to not only see all the growth that they’re expecting and then even more again.

    What you can be sure of is if all that expected growth doesn’t materialize, say Mac sales remain flat, and iPod sales don’t appreciably increase, and the iPhone is less successful than expected, the price will plunge. Remember today’s scenario calls for 5x growth just to justify the current price.

  9. AAPL

    pricedin is the very reason I am doing so well

    last year apple made zero on

    apple tv

    his math should be explained because 5 x stupid is as stupid blogs

    the story is

    Apple is kicking new market ass

    If iphone fails it will still add a rev spike for the 2 years

    iphone will not fail, let me say that agin! IPHONE WILL NOT FAIL

    I am getting 2

  10. “Forget technical analysis. I believe investor sentiment is the most important indicator of a stock’s direction.”

    Who’s talking technical analysis? Those numbers are based on the fundamentals.

    And your approach could best be described as the lemming approach to investing.

    In the short term investor sentiment may drive the price, but over the long term the fundamentals always drive the price.

    “his math should be explained because 5 x stupid is as stupid blogs”

    I could try to explain, but you would be incapable of understanding, and wouldn’t believe me anyway. That is to say, if you don’t know already know the basics of how to derive that result yourself, you have a lot of learning to go before what I would show would convince you.

    “iphone will not fail, let me say that agin! IPHONE WILL NOT FAIL”

    It doesn’t have to fail for Apple to have a problem. It just needs to not result in a 5x increase in Apple’s revenues. That is to say, the price already reflects an expectation that the iPhone will be hugely, knock the ball out of the park successful. Things would go badly for the share price if it were just merely very successful.

  11. Pricedin,

    I’ll bet the wide screen iPod, that surfs the net over WiFi and uses Skype, has not been factored in.

    I’ll bet the plain jane iPhone, that is free with a 2 year subscription, has not been factored in.

    I’ll bet that the soon to be successful movie subscription service from Apple has not been factored in.

    I’ll bet the big increase in DRM free music sales has not been factored in.

    I’ll bet that Jobs’ one more thing out of the blue that wows everyone all over again has not been factored in.

    I’ll bet a computer market share north of 15% has not been factored in.

    Apple is on a roll and most of us know it even if you don’t.

    Put your money where your mouth is and short Apple stock.

  12. “I’ll bet a computer market share north of 15% has not been factored in.”

    Well I bet you’re the only person who has ever thought of these things. Apple stock will go through the roof now that you’ve let that out.

    To get 5x the revenue, Apple would have to sell 5x as many iPods and 5x as many Macs or some other mix of devices. That would be iPods for every adult in America each year, and ~25% of the American computer market. Do you really think people really haven’t factored in that Apple will need to do products in the future that are different to the ones it does today to reach the lofty growth that the current prices requires?

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