Apple stock due for a substantial correction

“I am fine with Apple’s (AAPL) cash position and find David Einhorn’s lawsuit as well as his plan for ‘iPreferreds’ as gimmicky,” Scott Ryan Anderson writes for The Motley Fool. “I do not believe that the adoption of any such plan would ‘unlock’ value anymore than a 10 for 1 stock split. The announcement of such schemes would create a short-term bounce from the same type of investor who would get excited if you offered to give them ten $1 dollar bills for a single $10 bill.”

MacDailyNews Take: Over time, though, the results of a significant split might be a different story.

“The informed investors can account for the cash and speaking for myself, I am content with Apple investing the cash,” Anderson writes. “If I wanted the cash so badly I would buy a bond or a utility.”

Anderson writes, “Even from the rational perspective of a private market investor, Apple is due for a correction – and that correction should easily put it at a minimum P/E of 16-17 times earnings based upon the long-term average P/E multiple of the DJII (with earnings around $750 per share).”

Read more in the full article here.


    1. 100% agree!! Has anyone ever wondered why Warren Buffet does not split BRK.A (today $152,800 a share)? I would guess that he trying to keep as many idiots out of the stock as possible.

      1. How can you compare Berk to Apple? Take a look at Berk’s 52 week climb and superimpose it with Apple’s 52 week decline. Be reasonable, please. Everyone wants Berk. No one wants Apple. Those P/E’s should be transposed. Berk looks like it could be valued as a fine tech company. Apple’s P/E make it look to be trying to pump oil from dry wells. Apple will never in a million years come close to being worth that much a share. Everyone on Wall Street positively adores the Oracle of Omaha. Everyone on Wall Street absolutely hates The Tim Reaper.

        Berk-H has never been considered a doomed company. Apple has never been known as anything else. Comparing these two companies makes no sense at all.

      2. Yes, you mentioned BRK.A. However, he DID split BRK.B. (Which is actually what got me interested in it — yes, splits are MEANINGLESS, but because others think they’re useful, I have bought before a split and sold soon after, for a profit.. This time, I still have my BRK.B shares.)

    1. That was funny. It would be even better if you added “a tweet from a head fund manager with options from an undisclosed source who is standing in the office of the SEC”. That is what really moves Apple’s stock!

  1. Last summer I made $7,000 on AAPL and bought a top-of-the-line MacBook Retina and a canon camera and expensive lenses. Then I bought an iPhone 5 64-gig and lost $11,000 on AAPL. I thought it would be around February for AAPL to be back up. I guess I’ll have a little more Tim Cook patience. But I’m not buying another product unless it goes back up. And I may not buy any more stocks until the SEC has these hedge-fund criminals under control. They are worse than the predatory lender banksters!

    1. I also made some good cash on Apple. I rode the wave from 50 to 360. With a few buys (and unfortunate sells) along the way. And the stock bought a lovely iMac or three.
      But I made every buy with stress and reservations because I knew it could tank at any moment. I knew I was playing with fire.
      There is no such thing as free risk-free money.

    2. Paul, don’t make the mistake of thinking anything Tim Cook says or does will have any effect on the STock price. Tim is the CEO of Apple, NOT AAPL. Tim cook has as much to do with the stock price as WOZ has to do with Apple product design, which is to say, none.

      Cooks job is to get Apple to produce great products. If you are mad about the $11,000 dollar hit your stock took, don’t blame Tim Cook. Get the attention of the SEC.

    3. I hope you are young and in good health because you may have a long wait ahead for Apple shares to go “up”. Wall Street seems pretty intent on getting Google to $1000 just to spit into Apple’s face when the stock hits $400.

      No one is going to touch those hedge funds. The whole market would probably collapse if it weren’t for them constantly moving phantom funds around. I’d love to see how much money hedge funds make from companies that are hardly worth anything. It must be completely like Margin Call.

  2. Wall Street wants another stock split – a big one (10-1 would be nice) to attract more mom & pop investors. Then, after the bubble is set, the big investment funds will stage another massive decline, scaring the mom & pops to take a big loss.
    Rinse & repeat.

  3. I read somewhere yesterday that Apple is allowed to issue only a certain number of shares, and that even a 2-for-1 stock split would increase the number of outstanding Apple shares beyond the allowable limit. No one seems to be mentioning this issue in all the talk about stock splits.

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