Tuesday 23 April 2013

What will happen to Apple 2moro? A stock that drops by half in 6 months

Dear Friends,

We retailers always like something that falls in price by HALF just 6 months back. And you know what? One of the world's top 3 largest market capitalization companies, with the most cash reserve companies in the world, Apple, happens to be one of the them.

Such an unfairness to the world of stocks? Why on earth does Apple deserve such fate? A fall in price by half 6 months back is UNIMAGINABLE! I am sure no analysts on earth would have predicted this outcome. $697.80 in September, $385 is lowest reached yesterday!

Welcome to the real world of stocks, where fundamentals may not count much. Even one of the greatest hedge fund managers, David Einhorn is hopelessly wrong this time. But he got money to hold through this.

The world of stocks sometimes discard the fundamental balance sheet. It takes into account of
earnings expectations, forecasts and estimates surprise.

This is Apple's past few quarters earnings results and surprise. In the last 3 quarters, it has 2 of them in negative surprise territory, with the 4th quarter beating the expectations by only a miserable 2%. That is a complete failure to this company given its tremendous performance in past 4th quarters. Where have all the christmas rally gone? The previous year, it beats by 30%, but not last year.

The stock hence plunged!

But the good thing is stock market can be extremely forgetful and forgiving too. One quarter is enough to forgive Apple for its sluggishness in execution. Hope it happens 2moro evening when Apple issues its first quarter results.

This stock deserves a chance. A good quarter is all it takes to get the fund managers to buy it up again, will it outperform Google this quarter?

My strategy is to buy buy BIG into this stock when I-TV is expected to be released, hopefully by this year. $700 isn't a problem should it happen. I am just worried that Tim Cooks don't know hoe to rush for a new product like what Steve Jobs always does.


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