5 reasons to sell your Apple stock

“A bubble is a bubble. People can see them clearly in retrospect but seem unable to see them before they implode,” Clem Chambers writes for Forbes. “Apple’s stock price is a bubble.”

Chambers writes, “As far as I can see Apple is valued by a logic all of its own, where the upsides are valued to the max and the downsides are written off–this is classic bubble thinking.”

5 reasons to sell Apple:
1. Apple is Apple because of Steve Jobs. Steve Jobs is gone… Great men do not have great successors.
2. It’s a toy company. A toy company can’t be the U.S.’ most valuable company for long…
3. You have too much of Apple… If you have your only fortune tied up in Apple, because you have ridden this amazing stock up to these crazy levels, you should top slice your position at the very least (that is to say sell half). Think of it as taking your retirement early.
4. The chart says so. If it looks like a bubble and acts like a bubble, it’s a bubble.
5. The cab driver is tipping Apple. When cabbies are talking about taking out Ninja loans to buy Las Vegas property, you know the real estate boom is over.

Chambers writes, “Let me be clear: I wish the best for the NY cabbie with his Apple stock. I hope Apple bounces back and smashes its way to $1 trillion of market cap, but gravity and hope are not best friends.”

Read more in the full article here.

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

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Mr. Cook’s Wild Ride: Options market sees big earnings move for Apple – April 23, 2012
The Mighty Fall: Five cautions for Apple stock enthusiasts – April 23, 2012
All eyes on Apple as Cupertino powerhouse reports Q212 earnings tomorrow – April 23, 2012
Remember: Apple’s quarter is 13 weeks vs. holiday quarter’s extra 14th week – April 23, 2012
Apple to webcast Q212 earnings release conference call on April 24 – April 20, 2012

44 Comments

  1. Concerning his item 5, it’s not an original thought…

    WHEN THE SHOESHINE BOYS TALK STOCKS IT WAS A GREAT SELL SIGNAL IN 1929. SO WHAT ARE THE SHOESHINE BOYS TALKING ABOUT NOW?

    By JOHN ROTHCHILD
    April 15, 1996

    (FORTUNE Magazine) – JOE KENNEDY, a famous rich guy in his day, exited the stock market in timely fashion after a shoeshine boy gave him some stock tips. He figured that when the shoeshine boys have tips, the market is too popular for its own good, a theory also advanced by Bernard Baruch, another vested interest who described the scene before the big Crash:

    “Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me tips and, I suppose, spent the money I and others gave him in the market. My cook had a brokerage account and followed the ticker closely. Her paper profits were quickly blown away in the gale of 1929.”

    http://money.cnn.com/magazines/fortune/fortune_archive/1996/04/15/211503/index.htm

    1. @ Thelonious Mac: You sir are in the wrong business by posting such intelligent comments on MDN. No sarcasm intended. You ought to be writing your own blog or column somewhere. I’d be among the first to subscribe.

      Oh wait! You already do and I just subscribed.

      Thanks for the above quote and link.

      1. TMac’s post is well written. It expresses a simple contrarian concept. When everyone is gung-ho about a stock, then the stock price will tend to become overinflated. If investors are leveraging themselves to buy the stock, then the asset pool supporting that stock will soon become exhausted and the fear factor will increase. At some point fear will overcome greed and people will begin to take profits. Leveraged investors will bail as quickly as possible and the stock price will tank. But no rule of thumb should be followed blindly. An investor needs to reason, and not just react.

        The reverse is often true, too. When everyone is dissing a stock its price will be depressed, very possibly below fair value. But it is wise to remember that not every cheap stock is a good value. Even a cheap stock can be overpriced.

    2. You are describing a scenario where the whole market was overinflated. Of course a macro economic failure could bring down AAPL but Apple itself is in no way a bubble. If Apple crashes then everything crashes.

    3. I have posted before about RCA- the glamour stock of the 1920’s that at some point stopped going up because of sound fundamentals and kept inflating because people expected it to- amateurs in the market, not pros. There are more than a few parallels between RCA in the day and Apple today.

      I was fortunate enough to buy into Apple in 2001 and kept buying through $320/share or so and have not added to my position since. I rang the register at $402 late last year and taken a chunk of money off of the table- my gains are locked in regardless what the balance of my Apple holdings do as the taxes are paid and the money is out of the market.

      Some background on the market of the 1920’s can be found here:
      http://eh.net/encyclopedia/article/Smiley.1920s.final

    4. The so-called bubble is just a correction to AAPL stock value which has been held down for over a year. Some people assumed AAPL would follow a straight curve up, but in fact it should be going up by 55% a year as it has done for several years now.
      OK, at 640 the correction was realized and there was even some overshoot, but 560-600 is what the current value should be.
      One correction that is still due to happen is the undoing of the drop at the end of 2008, which happened for no reason at all (in contrast with other companies, who sold LESS), because Apple was doing business as usual, with quarterly results that trumped everything seen in the past.
      So maybe AAPL may spring right back to 640 and more, to compensate for that. AAPL hasn’t suffered from the crisis… AT ALL. Why isn’t this reflected in the stock value?

  2. What a dipshit. How does it look like a bubble? What does he think an appropriate PE would be for AAPL? These clowns keep uttering the same nonsense year after year on every Apple pullback. Will they ever wake up? Doubtful.

    1. Apple certainly isn’t in the traditional bubble territory of the dot-com era. But compared to Hewlett-Packard or Dell, Apple could seem like a bubble based on P/E. However, Apple’s revenue and EPS seems rather solid. I guess everyone is entitled to his own opinion but I really amazes me that some people are so clueless in life. They have such strong beliefs in things that are so easily proven wrong.

      I don’t get that “gravity and hope are not best friends” thing. I don’t see what one has to do with the other at all.

      I would have to agree that if Apple crashes, likely everything crashes, but Apple would still seem to be in the best position to haul itself back up again faster than probably any other tech stock due to a loyal customer base and abundance of cash. I’m sure Apple could run on its cash reserve alone for a couple of years.

      1. Where you should stand depends on a number of things and the same rules will not apply to everybody.

        1- Some are playing short term on margin and could seriously get their asses kicked if a hard downdraft hits the market. If the market hits a downdraft, lots of Apple stock will get dumped for margin calls and/or panic selling regardless of how solid Apple’s position might be.

        2- Long term Apple looks pretty good, but overpriced in light of the world economy and the spaces they operate in. Long term, I would be looking for a correction to bring the price down to more realistic levels and have taken some of my long term holdings off of the table.

  3. People only see bubbles in retrospect? I see a couple right now.One is AMZN and the other is Facebook which hasn’t even gone public yet. Hows that for Prospect?

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