Declining Apple (AAPL) Equals Opportunity

Apple (AAPL) is not dead just yet. The recent drop has spooked many people. For those people who did not buy into the insane amount of hype surrounding the company this provides a great opening. No stock moves uniformly in one direction. Apple’s huge rise in share price over the last few months needed a cooling off period. The longer and more dramatic the rise, the bigger the drop.

I think there is a buying opportunity here. Apple does still have popular products, and I think that the reason that the iPhone 5 kind of sort of disappointed was for two big reasons. First, it is all the annoying analysts out there with more clout than brains. Two years ago I was getting emails for gold at $5000/oz. Even some “respected” analysts that get on those TV and web shows who sell a ton of books said stuff like that. Maybe more sober at $2500 or $3500 an ounce. Either way they were wrong. If they say eventually punch them in the face. Its been a few years and we’re in the same range. They projected the iPhone 5 would sell like the secret to eternal life. It ignored macroeconomic headwinds. The source of that might have been the success of the 4S.

However, I think the second reason the iPhone 5 was slightly lackluster compared to the 4S sales-wise is because everyone got the 4S. Economic headwinds and a changing consumer culture probably played into the psychology of “Wait for the next one, crazy, you don’t have any money or a job!” I think Apple will do well into the future. I do not know what they have up their sleeve, but it will be a quality product. The dividend will increase, and Apple will be a fantastic long-term investment. Apple is well covered so I am not going to go into it too much.

Just do yourself a favor and try to get your own knowledge and read analysts for a facts-based not goal-based perspective. What I mean is read the article for the tidbits about fundamentals or technology or sales. Do not read them for their targets. I always try to avoid targets for long term stuff. Only options should have targets because they expire.

Take a look at this graphic that someone sent to me. It gives a nice little overview of the iPhone universe, and really puts the absurdity of analyst projections in clear light. I mean I cannot decry them enough, because it is as if they have lack of understanding for outliers. They extrapolate based upon an outlier. No wonder the iPhone 5 did better than the 4S, but failed to meet expectations. I mean can you believe that nonsense? It beat the previous one but fell short of expectations? What were they basing their expectations on? Probably the sales of the 4S. However, the 4S crushed expectations, but it did not signify a trend. One data point does not make a trend. And two data points that wildly diverge also do not signal a trend.

This graphic does a good job of showing that. Remember the graphic is not giving a projection but graphing projections. Just want to make sure that I give them credit, because they did a good job, but those experts responsible for informing us were utterly useless. Now those experts are worried about a peak. However, just because Apple is not an insane growth stock does not mean that it cannot organically grow business and provide a nice return now that it is not as much of a bloated mess.

Stay tuned for further posts regarding my hatred of so-called experts. I don’t claim to be one. I give this to you all this for consideration, and I think Apple will do well. However, I am not making definite projections on the future. I cannot predict what is going to happen tomorrow in my life. Forget about predicting the company’s course. I do think they were absurd in their projections, and had I been keeping up with them I think I would have warned against tripling the projection from the previous time. Even if sales were strong that is not a guarantee that all those people will buy yet another phone the year after. Remember, you don’t get it for $200 bucks a year later! Apple needs to disclose how many first time iPhone buyers they are winning over. This info might be out there, but I do not follow Apple closely. Owners are mostly on a 2 year upgrade cycle.