Kiss of death: GOOG $2,000 & AAPL $300

Yeah but when Apple reaches $260 just remember to thank your pal Beltway Greg. The eye in the calm of the storm and it looks as if the gorilla is safe.

Beltway Greg.

Greg,
$260 some day, but not this year. Besides, you downgraded to $259 ;-)

Solid article, next time be sure to reference other rational/anti-cheerleading articles like mine back when AAPL was $200:

http://www.bloggingstocks.com/2008/01/03/apple-aapl-bring-on-some-caution/

Tim
http://www.timothysykes.com

How did you manage to be so right Sheldon. The recent history of Apple is that pessimists were always being embarrassed.
But I don't know what to make of it right now. I predict that in 6 months AAPL will be between 80 and 160. Don't know if it'll hit 200 ever again. That's a new view.
Why did it fall lately? Besides some economic concerns. Did brokers decide that the iPhone would not be the phenomenon?

A few thoughts GSLV,

1) The iPhone is not the only thing in the market place. Many business people prefer the RIMM Curve and on the lower end, you can get LG phones for 'free' with service. The last time we signed up we were offered five free phones. The iPhone cannot be equated with the success of iTunes. There are dozens of phones to choose from.

2) iTunes has been nothing less than a smashing success. But there is some competition and it's growth rate has slowed.

3) The size of Apple in terms of capitlization stunts any companies growth rate eventually. In Apples case after staggering growth the past few years it is to be expected.

4) When Apple stock was going up you had momentum players in the market and retail investors too. The momentum guys abandon ship in a hurry just on a rumor. The retail investor is always plowing into companies that are in the news, not becuase they have a clue about value. I held ISRG for three years before anyone heard of it. Now Motley Fools and Cramer and others have jumped on the bandwagon and its price has some fluff in it..so it too is affected.

5) The stores are a smashing success too. But it does not matter how well they do increasing them by 15% to 20% this year cannot mathematically produce a 50% increase in value. People speak about it as if it could.

6) So if items one through five cannot get you the growth rate to sustain the stock price, that leaves laptops. Apple has strong momentum in this space and a great line of products but even a 50% growth rate, which it cannot do, does not lift the whole company 50%.

7) So to review, all else aside, for the growth rate to increase and propel the stock as some would have you believe then the average return of all divisions has to equal the 50% growth. But if no divisions have that rate of growth then you simply cant average that amount.

Sofor everyone's blabbering about how great Apple was I just did not see the numbers adding up.

I agree the iPhone is not the phenomenon. I agree about momentum. But what caused the momentum and what ended it? To me it was hope about the iPhone being the next phenomenon. One quarter's missed expectations and such a deflation?
I can't be bothered thinking about profit margins etc.
I don't know but were you also naysaying AAPL the last few years?
I myself don't see what can cause Apple to multiply again right now, but in this game you never know.

Not naysaying about company, just the momentum. Hard to keep up. Apple very clearly became a momentum stock where investors were willing to pay higher and higher P/E ratio meaning pay more years in advance for earnings than was warranted.

I have no crystal ball just a very simple view of investing. I make lots of mistakes. However, I have to understand what I'm paying for and why. Furthermore, It has to be based on my sense of the market not someone elses.

Jut like Paris Hilton. She has made herself something to talk about. People criticize but still pay up...not me. Shes not all that..

I don't know what to make of this statment: "I can't be bothered thinking about profit margins etc.

Excellent call on these two stocks, Sheldon. I hope that anyone who bought Apple after reading Mr. Yared's article didn't buy too much.

Haha, sold at $650 when I saw something that said "Why I sold at $740" in a Google ad... ironic. :D

AMAT's been doing great though!

Please remember, the iphone story has closed only for the populus. there is another open land for the business user. Physicians alone are clamoring to get this device if more medical software is provided; other businesses are salivating if the I/T department can deploy the device.

The growth rate will accelerate. Let's not forget the "hobby" which is also catching on; and the yet to be released device which, if priced correctly, could blow the socks off the iphone, palm, rimm, eee pc and just about everything that's out there now.

I believe that you are using figures for products that exist right now! That is a mistake, but I am happy that you have suggested a 160 marker for the next 6 months. I believe that we could see that in 9 months, during the Christmas run-up. The 200 marker may come once the sdk is released and more software developers jump on board. Remember it just takes 1 killer app to make a device. Windows was Excel/office. And the list goes on.

rickw,

Thank you for your comments but you are one of the reasons the $200 stock price was not sustainable.

1) If the I phone was to increase sales 100% in the next two years it would not increase Apple growth enough to make the stock be worth more by itself.

2) You assume all the competition is standing still.

3) You place your hopes on future invention. You could say the same thing about many of our leading companies. That is a huge leap of faith the rest of the market is not willing to make. The Mac Air laptop is a great example of a fine product that will not drive revenue like the iTunes did. In addition you should consider that Apple has had several flops over the years.

4) You do not support any of your aspirations and good will for the stock with even the slightest "napkin" scribbling to explain any financial metrics whatsoever.

What I mean by not being bothered by financials is I can't believe that quarterly variations in those things can explain the drop, or be a great reason to expect major stock movement. Like others say, it's in new killer products that might "take over the world" like iPods and the Microsoft system in the 1990s. Aren't we waiting for another phenomenon like that!
Maybe AAPL will keep gradually rising again, maybe it won't.
Anyway I assume that for the past years you have also thot AAPL would not rise, while it kept on year by year. So you made a good call this time by luck of timing?

gslv,

Examine your comments. There is no next killer app for Apple. You are banking on, hoping for them to develop the next thing.

It does not work that way. They created several new successful products and have developed them nicely. They will expand on them and improve them, but it is far more difficult at current scale to continue to expand as you envision.

The market does not see it and thats why the stock dropped. Apple has not shown anything in the last several opportunites, that got Wall St. excited.

You and other Apple fans have far to unrealistic expectations.