Why is Apple So Disconnected From Its Fundamentals?

| About: Apple Inc. (AAPL)

I love Apple (NASDAQ:AAPL). Many people express this sentiment but I love Apple for a completely different reason than most. It has simplified my investing life. Apple is my favorite stock because it always over shoots its fundamental support level. People get so excited and goofy about the stock that they give up when all reason for either gains or losses have been met and the stock just keeps going up or down.

From its high of 202 right after Christmas to it recent lows near the end of February below 120, the fundamentals of the stock did not change. So how does the stock go from 50 multiples of earnings to 27 multiples in less than 2 months? The answer is that Apple is not a company - it is a movement, almost a religion. People get into a crazed state when the tech community finds something it likes or does not like about Apple. The stock moves out of proportion to the news. Everybody is so attentive to Apple that it overshoots any reality check. Comments on Google Finance about how a 50 multiple of earnings is not too high to pay for this company show that financial reason has no place in the minds of the Apple investors.

So my advice is to wait for the momentum to really start going and then set the short. Let the tech geeks and their followers bring the stock to a very over bought level and watch it drop.

Disclosure: Author has a short position in AAPL