Is Apple’s plummeting stock price the canary in the coal mine signaling another economic downturn?

“Every financial era has its signature stock. It’s a company that defines an era. For market bulls who own stock in Apple (AAPL) that could be bad news,” Jeff Macke writes for Yahoo Finance. “Since early October Apple stock is down over 20%. Recently the S&Pc500 started a slide of its own, dropping 7% from recent highs. The question for investors isn’t whether or not Apple stock can regain its mojo, but whether Apple is the canary in the coal mine signaling another economic downturn.”

“Long-time Apple bull Todd Schoenberger, managing principal at The BlackBay Group is concerned. ‘Apple is a true proxy of the global economy,’ he says in the attached clip,” Macke writes. “If Apple is slowing down it could be an ominous sign for spending worldwide.”

Macke writes, “It’s a leap but flagging passions for all-things Apple may be a sign that the economic recovery has already come and gone. At the very least stock market participants are voting with their feet. It’s a risk-off world as investors brace for the unknowns of fiscal cliffs and global risk. Unless Apple can find a way to get traders excited again the company’s great bull run will be over.”

Read more in the full article here.

MacDailyNews Take: Apple last quarter posted quarterly revenue of $36.0 billion and quarterly net profit of $8.2 billion, or $8.67 per diluted share, Apple Inc.’s all-time record for the September quarter.

55 Comments

    1. I’m pretty damn close to doing that myself. I keep waiting for the bounce since I’m already a paper loss, but external factors are trumping any rational thought people might have on AAPL.

      1. Listen you guys, “I surrender,” or “I can’t take it any more,” are bad reasons to sell a stock. Do some research, do the math, have a good reason to make any transaction. Historically, this is not a big sell-off (see below), and when I hear people say they sold because they couldn’t take it anymore, then I know we are at, or close to, a bottom.

        1. Thats what the manipulators want to do. Push the ordinary investor past the breaking point. When you cant take it anymore and sell at a loss thats about when it will turn around. And when it does you will be afraid to buy back in because it will look like a temporary bounce but most likely you will never get a chance to get back in. The best thing to do is just grit your teeth and hold on. It will pay off bigtime in the near future. There is nothing fundamentally wrong with the stock.

        2. Yeah, I’ve been telling myself that the last $150 thankyouverymuch.

          You’re playing this logically, well the market isn’t logical, especially now, but hasn’t been for ages (otherwise AAPL P/E would be much better, no?), so you’re being gamed as much as I am.

          1. When the market treats a stock illogically it is temporary. Eventually it always comes down to fundamentals. Earnings and growth. Apple will report a blowout first quarter and their P/E will go right back to 15. Believe me I have been where these guys who surrendered are and have done what they did. I learned this lesson the hard way.

      2. Dead cat bounce. I hope you weren’t one of those that listened to Andy Zaky and his call for a $610 Apple bottom to start buying. Those independents probably have no actual money invested and just like to play around with theoretical charts and stuff. It ain’t Monopoly money I’m using and I’m not letting them put me into the poor-house with their clueless guess-work. Best to start buying when there is at least some upward trend in motion. I sure pity those who bought Apple on margin at $610 hoping for a quick rebound.

        How far can Apple’s P/E actually compress? Lord knows. It’s already buddies with Cisco and Oracle and I can’t even remember the last time they came out with something original. Apple shareholders have a lot in common with Annie Cruz. They’re all getting it every which way and still begging for more.

        1. Andy Zaky has about the best track record of any Apple analyst. Under normal circumstances his bottom call of $610 would have been accurate but in this particular case there were macro economic factors that added to the selloff. Anyone who bought on margin hoping for a quick bounce was basically making a risky bet. But I bought more in the low 600’s and there is not a doubt in my mind that i will make money on those shares.

        2. I didn’t listen to Andy, I bought in a few months before it went to 700. Way too late in the game, I know, but I didn’t have money to spare before, and only have a token number of shares anyway.

          1. If you hold on you will make money on those shares or worst case break even. Don’t even bother watching the stock everyday. That will only encourage you to make the wrong decision. Apple will begin making an upward surge in mid to late December.

    2. Today is option day and I have held of till this point. I do not believe I will ever sell all of my Apple stock. But, I will not let it get cut in half again. It will go back up, but I hoped the $530 level that was bounced in March and May this year would be the turning point.

  1. Records from my portfolio show these sell offs:
    Earlier this year, down17%
    In ’08-’09, a drop of 59%
    ’07-’08, down over 40%
    ’06, it fell almost 41%
    ’00-’03, down 82% (when I bought)
    After every one of these sell-offs, the stock has recovered and skyrocketed higher.
    So far this time it’s down around 26%.
    As brokers like to say, trees don’t grow to the sky, but this company’s upward story is not over.

    1. Spot on m.
      Even if you look to 2011, aapl was bouncing between 300-400 all year. At that time everyone was frustrated that the stock was not growing at the same rate as profits. The stock finally broke out at the beginning of 2012.
      The market is irrational because it operates to make money for those who can move stock prices up and down. Aapl will eventually go back up once the brokers start pumping it again.

  2. Citizens voted for “four more years”. Given the current economic blight I would guess US will have to bear the same and then some. Those too stupid to understand simple economic principles two weeks ago will have to endure a “crash” course.

    1. After eight years of the Bush Depression that conservatives pretend never happened. Bush spent $10 billion a DAY on his illegal wars and hid it from the budget. Stop blaming Obama. You are lying!

      1. …and trillions of dollars spent on failed 20th century social experiments to eliminate poverty. The end result, a nation of illiterate, dysfunctional, unemployable, greedy, self-serving malcontents sucking the working people dry to feed, cloth, and house their worthless carcasses.

        Also, Obama hasn’t pulled out of Afghanistan so what’s your point?

        1. Thanks for clarifying your views, do you speak for all GOP voter?

          Lets summarize your position shall we?

          1. Poor people are worthless because they are poor.
          2. Fighting War (KILLING people) is more admirable than feeding people.
          3. Deficit spending is a-ok as long as it isn’t to feed people, it is best when done to kill people.
          4. Ignore facts which run counter to your narrative, win by denial..

      2. And stop blaming Bush, he’s been long gone. I know no conservative that didn’t criticize Bush for his overspending, but the worst of it came when the dems took over both houses over congress. And while the war in Iraq was not the best thing, it wasn’t illegal, he waited a year n half and got congress approval to do so. The bottom line is government is over spending all of our money and will sink ALL us if it doesn’t change course.

        1. The bulk of our debt was created by two wars that were not only not paid for but taxes were lowered simultaniously something that has no historical precedence. Couple that with an economic collapse caused by lack of financial regulation that allowed for too much leveraged betting by wall street which caused federal revenues to plummet and the need for welfare and unemployment benefits to rise. It will continue to be the fault of the Bush administration until the concequences from that disaster are resolved. You cant say the Republicans would have fixed it faster when what they were proposing was more of the same policy that enabled it in the first place.

  3. Higher taxes, lower taxes, they’ll both have realistic impacts, but unfortunately the stock market is not governed primarily by the economic realities of individuals (rich or not). It is controlled by big companies and investors who if they decide they want the market to do something they’ll make sure it happens.

    When you have analysts spewing out stuff that anyone with even half a brain can see is nonsense (stock price being directly linked to demand) then it shows that the system is pretty laughable. Sadly it affects everyone regardless of whether they own stock or not.

  4. This is ridiculous. If Apple is the canary in the coal mine, the economy is going gangbusters. If Apple stock is the canary in the coal mine, wall street is destroying the economy.

    1. Wall Street seems to be trying to destabilize the economy. The hedge funds are playing only for themselves and not supporting companies. They’re scaring and hurting smaller investors who would maybe invest in companies. I would honestly expect individual investors to buy on current company fundamentals and not expectations years from now. The hedge funds are trying to alter investor’s perceptions of certain companies for their own gains.

  5. I’m curious would happen if Apple decided to put down say $20 billion on buying back stock today? What would something like that do to the price and the market? I’m imaging that a lot of these guys who have driven down the price and are banking on riding the wave back up may be left out in the cold under such a situation.

    Or is this even possible for Apple to do? When they do buy-backs does it have to be over an extended period of time, do they need to give notice etc ? Don’t know but have been wondering about this recently given that Apple has already stated their desire to do buy-backs, along with the recent drops in price.

    1. Heck, we’ve been blaming hedge funds and stupid analysts all this time for the larger-than-market-average drop in AAPL, now you’ve got me wondering if Apple themselves are doing (or not doing) a few things to accelerate the drop so they can buy back more shares with the $10B they’ve allocated for a buyback. That buyback’s over 3 years, though.

      1. Of course it would be a one-time bump. The question I have is how large of a bump would it be and how would that affect any manipulators who are literally banking on the ability to drive the price down and then ride the wave back up.

        As far as Apple earning more than $20 billion, that’s true but doesn’t address the point. I don’t think Apple has said they’d put $20 billion into stock buybacks but it’s in the ballpark. (I think it’s $10 billion over three years). My question is what would happen if it happened all at once. If it is able to destroy the manipulators at their own game, then I’d say it would be worthwhile, even if it’s a one-time thing.

        To go further on your comment about Apple earning more every quarter, which seems to suggest it wouldn’t be a big deal for them to drop $20 billion (something I disagree with). Assuming what you say is correct, then it begs the question as to why Apple isn’t more aggressively putting more money toward buy-backs?

  6. Only a fool would write an article talking about how people are losing their taste for Apple products right after they just reported their best 4th quarter ever. Am i in the Twilight Zone or what?

    1. Yeah, what kind of fantasy world does this writer live in when all signs point to outrageous continuing demand for Apple products? It’s like saying something negative just for the hell of it when facts point otherwise or Fandroid speak.

  7. Please write again when we run out of your money…..you can then apply for welfare….ok….your understanding of economics is truly laughable….really it is better to say nothing a have people think you a stupid than to post here and prove it….the majority has spoken….3 or 3 million….get over it and move on….

    1. With a $4 trillion hole to fill, not even Apple designed truckloads of cash is going to help.

      And yet, the Bonfire of the Vanities continues burning long into the night, even when it’s blindingly obvious that increasing the debt mountain will consume everything down to ashes.

        1. You are such a douche, go back to the 50’s where you belong. The red scare is over.

          I know you reTHUGlicons like to rehash old ideas over and over again hoping that yesterdays failed idea will miraculously work today but this is getting tiresome. No real idea’s, just non-stop ad hominem attacks from the party of no ideas.

  8. Well, it’s down $200 now. I hope you took profit when it was up. If you did near its all-time high you’re in great shape. There should be appreciable upside in the near future. I’m not sure that it will go to $700 soon but when it does that’s an extra $200 per share you will make. Way to go! If you didn’t and rode this all the way down you might as well hold on and hope it goes back up. Here’s hoping that the next time Apple or any stock runs up very, very high that you take your profit. Better luck next time.

    1. Selling at every new high only makes sense depending how many shares you have and how big your gains are. It could very easily backfire on you. What if the downturn is only $50 and then it goes on to a new all time high? Now you have to pay capital gains taxes and if you want back in you have less money to buy at a higher price. The way to play Apple is to buy and hold the bulk of your position and trade with a small percentage of your shares. You can also make decent money with covered calls when you time it right.

      1. Every new high? That’s hardly what we’re talking about here. It was the all-time high. And of course, I’m not talking about someone who just bought Apple at $695. But I think you understand that. And no, the way to trade is not to hold the bulk of your shares. Don’t you wish you had sold your bulk of shares at $700? I did. That’s quite a tidy profit. Even if it only goes up to $600 from here that’s a lot of cash. Buy-and-hold really doesn’t work as well as taking your profits occasionally and buying back again. It just doesn’t. And yes I understand taxes. Everyone who did not sell at $700 or $705 sure do wish that they had. I’m not talking about daytrading, swing trading or market timing. I’m talking about that occasional time when you know you should cash out and then be patient and wait to get back in. It’s why you invest, to profit. Paper gains are just that paper gains. But I understand, if I was a buy-and-hold investor down $200 per share I guess I would say the same thing. But boy, it sure is going to be painful for a lot of buy-and-hold investors to watch Apple go back up. Realizing they’re not for participating, rather they are just trying to get back to even. But I’m with you on calls. It’s all I’ve used for a few years as AAPL is just too expensive for share purchase. And the profit is so much better with options. Good luck in your investing.

        1. My point is if someone has 1000 shares that they bought at $150 and they sell at $700 they have a $550,000 gain. That is easily a $100,000 cap gains tax. Now you have $600,000 left to buy back 1000 shares. If the stock only goes down to $630 you lose. And thats even if you manage to pick the bottom.

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