Jim Cramer: ‘It’s simple’ to figure out when the Apple stock sell-off will end

“By now, you’ve probably hear a dozen reasons why Apple is selling off,” Lee Brodie reports for CNBC.

“There’s the law of large numbers – that is, Apple’s market cap is too big for its own good. Then there’s chatter about Steve Jobs and whether Apple can innovate without him,” Brodie reports. “But Jim Cramer says none of that matters.”

Brodie reports, “‘Apple is going down for one simple reason. The vast majority of people who own the stock have big capital gains, and those gains will likely be taxed at higher rates next year,’ said the Mad Money host. ‘I expect the selling to go on as long as people have big gains,’ he said. ‘Conversely, it should let up when you can’t get the tax break anymore.’ (i.e January).”

Read more in the full article here.

[Thanks to MacDailyNews Readers “Fred Mertz” and “David E.” for the heads up.]

41 Comments

    1. Apple on the 24th of January 2013 will announce the best quarter in the 36 year history of their company, and that will not be enough Ha..Ha..Ha..There will some other Wall Street excuse. It never ends.

  1. So let me understand this. If we go over the fiscal cliff capital gains taxes go from 15% to 20%. So people are selling now that aapl is 20% off its highs to save 5%?

    Wouldn’t it be a wiser investment to hold it another month or so? It will appreciate by more than the 5% you’ll save in taxes by selling today

    We have some real rocket scientists working on Wall St.

    1. Joe, you sell and re-buy. Your current profit will be taxed at this year’s rate. The (paper) gains you (might) have going in to 2013 won’t be nearly as much if you have to sell at the higher tax rate. Some of us were still holding AAPL shares we bought when it was in the $20’s…before the splits. Those are shares you want to get rid of. But you simply buy in again as soon as feasible.

      1. Capital gains taxes is one of many times a person should take their profit and wait for a better reentry point. The most recent being $706 per share. And I know it’s easy to be a buy and hold investor but for the long run you’re better off learning to take profit. It’s just that simple. Learn that occasionally, as in an all-time high, you just have to take your profit. How could you not? It looks awfully sweet to me right now. So you are absolutely correct HG, more than you realize.

    2. If you bought 1000 shares in 2003 at $7.50 per share, that is your cost basis. Subtract that from a share price of let’s say $697.50 on the day you chose to sell for a capital gain of $690.00 per share or $690,000.00. 15% of $690,000.00 is $103,500.00. By selling before 1/1/13 you can pay $103,500.00 in taxes, or you can wait and sell after 1/1/13 and pay $138,000.00. Most people choose to save the $29,500.00.

    1. That would SUCK big time. Really so I’ve held on to a stock for 12 years waiting for a payoff and the government just holds out it’s hand to take a huge share they definitely don’t deserve? When does the general populace ever get the chance to build a nest egg if the government insists on taking too much of it? By doing this the government ensures that people have to keep working and also depend on government when they can no longer work. A vicious cycle.

      1. My understanding is that you get taxed at 15% if you’ve had the stock for 3 years or more (I think). But if you recently paid for the stock and then sold it, you have to pay a much higher rate of around 40%. The lower rate is to ensure that people invest in a company and not constantly flip stocks for sheer profit.

        I could be completely wrong on all of the above, but that’s what I remember finding out when I was considering selling my APPL stock. (I bought most of it–though not enough of it–when it was $17 a share.)

    2. I’ve never heard of 44%. 20% is the highest I’ve heard for capital gains. There is a lot of fearmongering going on and I think a lot of people are buying into that fear which is holding back aapl and the general market as well.

  2. I remember coming to this site durring the golden age of Apple. MacOS vs Windows. IBM vs Intel. What’s the next desktop going to look like.
    Now it’s all about politics, fiscal cliffs and stock prices.

    1. No way this is tax selling. If you want to capture cap gains, you sell and then immediately buy back. If you have a loss, you sell and have to wait 30 days to buy back to avoid the “wash sale” rule. If you have a loss, tow options, sell to capture the loss and buy QQQ to capture a portion of the upside?? or wait until after Jan, if rates your loss will be worth more – or you may be back to a gain. This started with end of quarter fund rebalancing, then funds capturing gains/losses before end of fund FY (Oct 31), then the election sell off followed by the games/naysayers who got out and now want back in cheap. What has changed since Sep: Super successful iPhone launch, successful iPad mini launch, new IMacs, new Ipad (4), earnings that were above Apple’s forecast, iPhone roll out in 100 plus countries, supply issues mostly resolved, dud launch of Windows 8 and MS tablet. On the negative side, there was the maps FUD, (way overblown). 2 Senior executives leaving (good riddance). No “special dividend”, which would cause a pop for the speculators, but would see a big drop the day it wend ex dividend. The we have the Cramers of the world putting out FUD, the politicians clueless, and the technicians yelling “death cross”, Apple’s chart is like RCA in the 20’s or MSFT in 2000. Never mind that MSFT was selling at 30 X earnings and self destructing with no innovation for 10 years. RCA invesnted color TV, i think and maybe a victrola? but that is about all I can identify. Enough ranting. Do wish I would have cashed out at $700 in retrospect. That was my target for mid 2013, but I got greedy.

  3. There’s a problem with this explanation. Why aren’t all of the other stocks selling off too like Google? Apple isn’t the only company on the market effected by gains now is it. More B.S. from the Anal-ists!

    1. Because Apple is a much older company, and there are people sitting on original (4x split) shares from pre-Mac days that have gained a boatload of value, as well as the shares that have tripled even in the last few years (up to 10x gains in 3 years, if you timed it right). Of course they’ll sell now to maximize that profit, then start over later with even larger share volumes.

      But the time to get out is passing. The cheap shares are being flushed and we’re seeing mostly the people who bought in later and can no longer make a real profit (and the people who won’t sell Apple regardless).

      When the deal is announced (or not) things will start to adjust toward growth again. But probably not as meteoric as before. There will be a rapid return of value, and then back to the same old unpredictable AAPL behavior of general increases with occasional big sell-offs.

  4. If you sell before Jan 1 you will
    have at least 15% less capital working for you next year just
    when the cross-bow lets go if not sooner. If you are in a capital gains tax State subtract another 4%-5% from you capital. If you need to redeem some of those new 2013 gains, prepare to pay higher short term taxes.
    “Stay the Course” crew members.

      1. I don’t hate him, I mistakenly believed him the first time around and VOTED FOR HIM. My optimism faded damn quick. He didn’t fool me twice. I vote for who I think will do the best job, not by Political Party lines. Voted for Clinton once as well. So stuff your hate comment where the sun don’t shine. Typical hate from your end if someone doesn’t agree with your stand.

        Even a bunch of my rabid liberal friends are disappointed in a lot of what Obama’s done or not done depending on which one I talk to. That surprised me most of all.

      1. I hope that’s the case. But I know too many who are out of work but able to work. They either A.) admittedly aren’t bothering to look for a job enjoying their government paid vacation, or B.) are desperately looking but can’t get a job because there are so few. I get posts from them all day long on Facebook. Which I read at the end of the day because thankfully after MY Obama term layoff I was able to get a job though for far less pay, same case for others I know. Either no job or job with less pay if you do get one.

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