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John Gruber points out that iOS (AAPL) software tends to focus on executing the obvious "must-haves", rather than truly ambitious feature development. That's a commendable strategy for a popular brand, especially now that Steve Jobs is gone. CEO Cook is defending a cash cow who has reached maturity; it's less about growth and more about protecting the cow.

AAPL stock alpha, like iOS, is centered around the low-hanging fruit. So long as bulls can protect the basic "must-haves" within the investment case, the bears are going to shine only on rare occasions. Thus, as a sophisticated long-term investor, you should center your trades around fluctuations in the must-have investment case. This disciplined centricity is how you pick the low-hanging fruit.

But that's hard for some to fully accept. Whether we have backgrounds in physics or economics, we learn that there is "no such thing as a free lunch". So we need a narrative, an explanation, to understand the low-hanging alpha that is AAPL. Allow me to provide a narrative for you.

Apple is so successful and has made so much cash and made such a compelling investment case that it has exhausted the low-hanging capital. There is literally not enough money in the investment universe for Apple's market capitalization to be appropriately appreciated. But this is a short-term problem -- money will catch up to it in the long term.

Let's take a look at the short-term. JP Morgan (JPM) just reported a 2-Billion-Dollar trading loss. Ostensibly it was a bungled bet. But what if it was a prudent insurance policy on a Europe meltdown, and it's only a matter of time before it proves prescient, like the subprime shorts all over again? If so, Apple is still a strong pick, as was shown in 2011. Apple stock is safe like Gold (GLD), except it isn't a para-political bubble. Risk-off (OFF) could paradoxically help fix AAPL's money-flow problem. For more details to illustrate the extent to which Apple is under-bought, see this extensive breakdown from Paulo Santos.

Or consider this point from Jonathon Gollub via WSJ. Apple is so big--roughly 1/20th of the S&P 500--that institutional investors have to consider two versions of the market:

one for the companies that make up the S&P 500, and another for what he calls "S&P 500 ex-Apple.

A lot has been written about how markets are vulnerable to movements in Apple alone (Apple is big relative to the market norm). The market is correlated with Apple movements; Apple is over-represented in indexes, etc.

But few consider the corollary: the market is small relative to Apple. When Warren Buffet agreed to buy $5,000,000,000 of Goldman Sachs (GS) in 2008, it was a big enough deal for Rajat Gupta to immediately see an insider trade and execute within minutes. But on today's Apple scale relative to Goldman in, this 5BB would be only 1BB. So no insider, including Warren Buffet, can move Apple with the same scale as they can move other stocks. Moving Apple is as comparable to moving the S&P 500 as it is to moving News Corp (NWS) these instruments exist within three separate gravity situations. Apple is too big to be overbought.

We could dig into the numbers, and emerge with the intuition that Apple is roughly 2% of institutional investment capital, and that's a huge number considering diversification standards. But I think the most effective metric is just comparing Apple's behavior with that of the average stock. With all of the beating RadioShack (RSH) has taken in earnings and media, it still sports a 16 P/E. Clearly the investment community has higher expectations for Apple. Yet Apple trades at a lower multiple. Unless you think the smart money is secretly in love with RadioShack, this type of weird market cap behavior signals that Apple is too big to be fairly valued.

So overall, AAPL shares are likely to beat the market via acquisition at this time. Apple resides within a top-tier of technology. Technology is where wealth comes from in civilization. Apple has a very modest forward P/E. These factors show the fundamental case: Apple is the low-hanging fruit for those who look at the big picture. And, Apple is big enough that insiders have a diminished advantage because their information is relatively small.

If you have any doubts about Apple being a low hanger, just look at how Intel thinks about it:

Our job is to ensure our silicon is so compelling, in terms off running the Mac better or being a better iPad device, that as they make those decisions they can't ignore us," Intel Chief Executive Paul Otellini said.

Companies like Facebook (FB) and Google (GOOG) have a reputation for actively discovering non-obvious partnership opportunities. Contrastingly Intel (INTC) implies that the prudent course with Apple is to hit them over the head with a technology that they "can't ignore"; Apple only responds consistently to the obvious. Is this sour grapes from Intel, a company who has been roughed up by mobile/cloud paradigms? Probably. Is Intel still correct? Probably. Apple embodies the low hanging fruit. Pick it while you can.

When Google makes driverless cars, you will be able to play Angry Birds on your iPhone while driving to work. Siri, which is bringing a new era for voice recognition, has done so mosty by offering an entertaining diversion that you can show off to your friends. These anecdotes characterize Apple: impressively unimpressive. It's an alternative asset class, like Timber (CUT), except for the information age.

Source: Too Big To Be Overbought: Pick The Low-Hanging Apple