Analysts and short-term holders of Apple Inc. (NASDAQ: AAPL) have focused almost exclusively on the company’s 20% drop in share price over the past three months. But how many holders have owned the stock for only 90 days? An examination of trades likely will not tell that. But longer term owners have nothing to complain about; Apple’s shares have risen well over 200% during the past five years.

Corrections in Apple’s stock price have happened a number of times before. So have sharp recoveries in the stock price. The past may not be a perfect measure of the future, but its value should not be rejected completely. Share spikes and sell-offs have accompanied worries about management and product dominance before. Apple’s ability to innovate and introduce wildly successful products have mitigated drops and sparked new rallies.

One of the largest corrections in Apple shares happened between December 2007 and March 2008. The stock fell from $200 to $125. The iPhone had not established itself as the premier smartphone in the industry. Apple still relied primarily on iPod and Mac sales. The Mac had not moved to the top of the PC market, at least based on retail price. The iPod’s rapid growth rate had slowed some.

Apple’s stock suffered another big dip, along with a sell-off in almost every stock, between the summer of 2008 and spring of 2009. The share price fell from $175 to $85 over that period. However, between fiscal 2008 and 2009, Apple’s revenue rose from $32.5 billion to $49.2 billion. Net income rose from $4.8 billion to $8.2 billion. That hardly constitutes a reason for the nearly 50% correction.

There have been two other corrections during the past two years. One ran from October 2011 to November 2011. Shares dropped from $422 to $363. This might be described as the “Steve Jobs” correction, as he left the company and then died.

Apple’s iPhone 5 correction earlier this year was based on anxiety about when the product would launch and whether its sales could outstrip those of the iPhone 4 and iPhone 4s. The stock fell from $634 in April to $530 in May. As the iPhone 5 launched, shares rallied back up to $700.

Apple may be down 20% recently. Good holiday sales, and perhaps yet another major product launch, could drive shares well above $700 again. If so, it is just a repetition of something that has happened over and over again. Long-term holders of the stock still have reason to rejoice.

Douglas A. McIntyre

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