“Apple has won the hearts and minds of the younger generation in recent years, with its ubiquitous iPod opening the door to market share gains for its less popular desktop computers. Rival Microsoft has responded with the Zune, an odd device trying to challenge the iPod’s near monopoly on teenage coolness,” Alan Farley writes for RealMoney.com.
MacDailyNews Note: According to RealMoney.com, Alan Farley is a professional trader and author of The Master Swing Trader. Farley also runs a Web site called HardRightEdge.com, an online resource for trading education, technical analysis and short-term investment strategies. He’s also the author of The Daily Swing Trade, a premium product that outlines his charts and analysis.
Farley continues, “Of course, the Zune will never threaten the iPod’s sales dominance, but you can’t fault Microsoft for trying. Indeed, the company has been in the knock-off business for generations, trying to mimic the best ideas of other companies rather than use originality or creativity to book its immense profits.”
“It’s no secret that Apple’s stock has wiped the floor with Microsoft’s shares in recent years. While the pride of Redmond, Wash., is still trading within the narrow boundaries of a six-year range, Steve Jobs’ garage project has marched up to all-time highs. And Apple has gone absolutely ballistic this quarter, ahead of the late-June release of its long awaited iPhone,” Farley writes.
Farley writes, “So now is the perfect time to sell Apple and buy Microsoft.”
“Say what? Why would I recommend exchanging a rocket ship for a pellet gun? Let’s put it this way: It’s likely that Microsoft will outperform Apple by a wide margin in the next six to 12 months,” Farley writes.
Full article here.
Farley then goes on to explain how he’s arrived at his conclusion that “now is the perfect time to sell Apple and buy Microsoft.” It’s by looking at the patterns in Apple’s and Microsoft’s stock price charts. Of course! We should have known. Farley provides charts with lines superimposed all over them and everything.
Known as the Elliott wave principle, it’s based upon the highly specious art of looking at charts and trying to divine the future of stock prices. In other words, it’s nonsensical fantasy for the weak-minded that sometimes happens to “work,” but oftentimes doesn’t. Visit any horse track in mid-week during business hours to see people following similar “systems.” It ain’t pretty, but it’s a heck of a lot less ugly than trading Apple shares for Microsoft.
Might there be a “sell-the-news” reaction when Apple’s iPhone is finally released? Perhaps. Perhaps not. Waves on a chart won’t tell you. How many can they make, how many can they sell, what’s the profit margin, etc. are much better, more concrete items about which to speculate.
Looking at pretty pictures is no substitute for understanding future prospects, company fundamentals, product and profit potential, sales trends, leadership, etc. Furthermore, if you base your stock buying and selling on looking at pretty pictures, not only are you nuts, but you deserve to fail.