Date: September 4, 2012

Apple in the Spotlight… Again

It’s been a while since I mentioned Apple, but the action of late deserves comment.  After peaking in April with the broad market, the stock declined into May with the broad market.  But when stocks declined further into early June, Apple did not follow suit by making a new low.  Rather, it formed a higher low than it saw in May and that was the first clue that it was ready to rally again.

This week, Apple made an all time high at almost $675 before reversing on Tuesday.  In the short-term, the odds favor some downside, possibly into the $630s, but over the intermediate-term, there should be some upside left before the final peak is seen later this year or early next.

As I have written about before, each and every bull market has at least a single story stock or more.  2007’s top was Google.  2000 was Yahoo and a host of other Dotcoms.  We researched back to the 1929 peak and found similar mesmerizing stocks in every bull market.  Of note, each and every story stock declined by at least 40% when all was said and done.  I believe the same lies ahead for Apple, everyone’s favorite company. 

Just like with Google and Yahoo and IBM and RCA and GM and Zenith, the masses always think that this time is different.  The story stock has no competition and rules the world.  There are always reasons why the stock won’t be like its predecessors.  I get that every time I speak publicly about Apple.  Sadly, investors will be left holding the bag without a plan. 

Don’t expose yourself to that kind of risk.  Put a plan together on when and why you should sell or hedge the position, possibly with options.  Profits are a great thing!  Keep what you have earned!!


Paul Schatz, President, Heritage Capital