On April 21, I wrote a piece called, Five Signs That Apple Is A Bubble. As I wrote, the company was trading at US$600 a share. By the time my article was posted on Forbes.com, the share price was down to US$570. Yet two days later, the stock was up to US$615.
A few weeks later on May 14, I wrote another piece called, Four More Reasons Why Apple Is A Bubble, when the tech giant had fallen to US$562.
More opprobrium was to follow.
Of course, by October, Apple hit US$700 a share.
APPLE: A FALL TO US$250?
I still believe Apple will fall as far as US$250 sometime in the next five years--unless a miracle or high inflation changes the rules.
If you think Apple is amazing and is going to US$1,000, you can save your Zantac and click off now.
If you're an Apple fan and you simply know Apple is the most amazing company on earth, destined to redefine both economics and markets, then... good luck to you. It could happen, after all.
I don’t think so.
Most people would say if they believed a share was going to drop by more than half in the next few years, they would sell it. That’s wrong. You simply cannot know what a share is going to do, you can only guess.
My--not for the first time--guess is Apple has already seen its 'top.' Yet I admit I haven’t been on top of any mountain recently. The last time I scrambled up and down one, however my stone tablets came back blank.
As such, my opinion here is simply one of many 'what–if' scenarios. When combined, these amount to a 'field of probabilities.'
If you have a lot of Apple stock, remember this: you simply need to have sound, real reasons to keep hanging on.
As an investor, or, for that matter, a trader, you should have a balanced approach to your positions. This sensible approach will then protect you enough to allow you to ride out the uncertainty.
Many holders of Apple stock are breaking basic investment rules, however. These investors should sell.
Here's five scenarios that--if applicable to yourself--mean I believe it's time to sell some, if not all, your Apple stock.
1. You don't know why you hold Apple, apart from the fact you think it is going up.
This should be your golden rule on any stock. If you don't know the answer to this question then you shouldn't own the stock, period.
2.You work in Apple-related businesses and all your net wealth is tied up in Apple.
You should never tie your independent wealth to your work if you can at all help it. This is why most insiders always unlock stock when they can. As the old saying goes, “trust in god but tie up your horse.”
3. You only hold Apple stock.
Holding one stock is a painfully risky way to handle your money. Sadly, there is bound to be many doing just that, just like all those novice investors who wanted 'in' on
Putting all your stock dollars in one stock is like riding a motorbike without a helmet. You can do it, you may well get away with it even if you come adrift, but it's not a smart idea.
4. You can’t afford Apple to fall much further.
Never, ever put yourself into an investment you can’t afford to lose. Failure in investing is inevitable. You must spread your investments no matter what, as I talk about in detail in 101 Ways to Pick Stock Market Winners. It’s a matter of 'gamblers ruin'--you should aim never to risk a catastrophic loss from an investment that would hurt your 'real life.'
Sadly, people do this all the time.
5. Apple is a giant chunk of your portfolio and every time the stock ticks up or down, it's either heaven or hell for you, the investor.
You really don’t need this kind of roller coaster ride. It is not good for your health or your portfolio. Top slice your position until it’s a friendlier size. Reinvest your profits in finding the ‘next Apple’ ...it's sure to be out there.
Meanwhile, Apple's current chart looks worrisome to me. Panic could potentially set in, which would be horrible. Though we might also get that 'bounce' in price Apple investors are hoping and praying for.
As quarterly results for the tech giant are ever-diminishing--and meanwhile, every week that passes sees the launch of a company in competition with Apple. Unless the iPhone5 is considered mega; the mini iPad the next 'miracle product' then I'm afraid the situation is not going to get better for Apple any time soon.
Clem Chambers is author of the Amazon best selling investment guides 'A Beginner's Guide To Value Investing' and 101 Ways to Pick Stock Market Winners. Also CEO of leading private investors' site, ADVFN.com his new financial thriller is available for pre-order now. Visit www.clemchambers.com and follow Clem on Twitter: @Clem Chambers
