As I have been skimming through various financial news sites and listening to finance channels on cable over the last few days, I have been surprised by the chorus of negativity singing about Apple. They even appear to be harmonized. We have already pulled back intraday very close to the 100 DMA on Tuesday the 9th of October, and that is a low Apple has seldom hit in the last few years. It has gotten there after Steve Jobs passed away, when his cancer returned, and only a few other times. Time to panic and sell, or time to back up the truck? I think it is time to buy.
Studying History Helps
Most of us vividly remember the panic, gloom, and negativity present in the financial press in late '08 and early '09. It was frightening to look at your accounts, and it was even scarier to listen to CNBC. But, as an exercise in learning, go to your favorite charting screen and look at some of your favorite companies. SBUX, AAPL, TJX, XOM, JPM, WFC, you name it, whatever you like. It doesn't take long to see that most of these stocks are up several hundred percent in the last 3.5 years! In fact, for the overwhelming majority of us, early 2009 was the greatest stock buying opportunity in our lifetimes, and by a large margin. Fear and negativity are usually necessary if you want to get a great price. Doug Kass, Mark Hurlburt, Jon Friedman, and many others have all published negative comments on Apple very recently, as well as some of the "experts" on CNBC. This is what it takes to produce a correction without a change in fundamentals.
Speaking of Fundamentals
Apple has just released a huge new product, the Iphone 5. It is thinner, lighter, twice as fast as its quick predecessor on apps, and roughly 10X faster on data (with LTE); it has a better screen, and roughly the same great battery life and the same price. Think back a year. The 4S was none of those things, although the camera and processor were upgraded. Investors were not excited. There was only the Ipad 2, and Steve Jobs had just passed away. I might also add that the general market was in the tank, cowering with fear. Many pundits said Apple had lost its way, and the stock corrected deeply. However, after Apple blew the doors off of the holiday quarter, the stock exploded higher. And it was an explosion. This year the economy and market appear to be better in the US, and the phone is a revolutionary step forward, the biggest overall performance jump of any Iphone (when data, CPU, and graphics are considered.) It is selling so fast Apple can't keep up. Apple has pointed out that each new generation has sold as much as the previous generations combined. Let's think for a minute. Do you really think they have only planned to sell as many as the 4S? Is it likely they would be saying they were sold out if they weren't really sold out? Would they be installing the same screen in lower margin Ipod touches if they were really short of screens for the phone? Let's not forget that we could be looking at a new Ipad "Mini" soon, along with a whole closet full of new products. I don't ever recall so many new Apple products rolling out in quick succession. Apple could sell close to 100 million IOS devices in the holiday quarter alone!
Apple's new product pipeline is primed and pumping. New and exciting phones, Ipads, laptops, Ipods, desktops, and who knows what else are now, or will soon be shipping. While the economy is pretty anemic, it appears to be better than last year. They should sell a mountain of new products, and consequently, you can take advantage of the chorus of negative articles and interviews that are currently playing at the Apple Horror House.
Disclosure: I am long AAPL.