Apple’s march to the world’s first $3 trillion valuation carries virus-risk warning for the broader market.
Kriti Gupta for Bloomberg News:
Apple Inc., whose shares serve as a real-time proxy for risk sentiment toward the pandemic, is near a $3 trillion market capitalization. If history is any guide, that milestone may signal a technical correction is ahead, for both the stock and the broader market.
When the iPhone-maker reached $1 trillion in market cap, a roughly 40%, months-long drop in the share price followed. At the $2 trillion mark, the stock faced a bear market with a 20% slump over a period of weeks.
The ripple effect in those episodes went beyond just Apple. Huge gains in big tech stocks tend to drive the S&P 500 to record highs, with the benchmark potentially setting its 70th record close for the year today. But those market drivers can spur big selloffs too.
MacDailyNews Note: For Apple to hit the $3 trillion market cap milestone, its share price would need to reach $182.86.
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IF the current rise in AAPL is partially driven by 🦠 risk (because Apple has shown resilience to its impact)… THEN there may be a drop at some point in 2022. The 🦠 in its current prominent variant has devolved into something more contagious but less dangerous. It’s become equivalent to a cold (or less) to most of the general population. The fear campaign continues, but will likely soon end as politicians and media decide to “declare victory” on COVID. So, some money may move out of AAPL at that point. However, AAPL lows are higher than previous lows, followed by higher highs 📈
Stock does not just go up. There will be consolidation periods, retraces, overall market bear drops, business gets flat for a period etc etc. The lesson to learn is “The stock market is a transfer of wealth from the impatient to the patient”, Warren Buffett.
Apple is a buy it and put it away company. Don’t be effected by this year’s up and down.