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Awesome & Disastrous (from

|Includes: Apple Inc. (AAPL)
Awesome & Disastrous - New category on this blog! Every once in a while I will comment on things people might have overlooked. And other times, I just want to criticize ideas I think are nonsense.

Twenties on White
Creative Commons License photo credit: Darrren Hester

Awesome: I subscribe to a lot of investment blogs, from value, growth to dividend related. Donaldson Capital: Rising Dividend Investing is one of them. There is a recent blog post long-term investors should check out.

People call themselves investors just because they bought shares of a company but have no idea how to select the right companies to invest in. This causes unnecessary excitement or panic when the stock price fluctuates:

“Most people have no idea of how to identify a safe company. Therefore their only measure of the value of the company is the current selling price of its stock. If it’s going up, it’s valuable. If it’s going down, it’s trash.”

People don’t realize how amazing the great payoff is for dividend stocks. Stocks like P&G and Nestle have increased dividends every year for over 56 years and 20 years, respectively. Each of their average annual total return is over 10%! The price of the stock might go down or stay flat for months but you still get the dividend quarter after quarter! Don’t be greedy and only look for 10-baggers (stocks that increase by 10 folds).

Creative Commons License photo credit: slowburn?

Disastrous: Now that the Market Cap. of Apple is bigger than Microsoft, it is going to lag the overall market?

“Condolences may be sent to Apple’s investor-relations office at the company’s Silicon Valley headquarters. Why condolences? Because, far more often than not, companies that are at the top of the market-cap rankings proceed to lag the overall market.” - Contrarian take on Apple vs. Microsoft

Foolish, just foolish. Sometimes, ‘investors’ generalize trends way too much and neglect the fundamentals!!! The fundamentals are what people should be studying when evaluating a stock! Speculations on future products and amazing earnings are not factored in the stock price. With earnings growth rate over 50% and the stock trading at 21 P/E, it is definitely not overvalued in any sense.  Not only that, but for the following FACTS:

1. 1 Store in China now but 20 more by the end of 2011.

2. New iphone version 4 coming out on June 7th – will be the best app phone on the planet so increasing demand.

3. Extremely high demand for the new ipad around the world.

4. Adaptation of the Mac, iPhone and iPad in the enterprise level and amount youngsters.

5. 2nd in terms of highest # of unique visitors on its retail site in the US so demand is not lacking at all!

6. Significant growth in China and Europe for iphone and Mac computers (and will continue for a long while)

Read the contrarian article 5 years from now and laugh about the poor judgement which purely based on the size of the company. The philosophy of too big isn’t always better doesn’t apply to EVERY stock. Analyze it yourselves people! Don’t just follow general historical trends. It doesn’t always work!

Disclosure: Long Apple