patrick.net

Please do. I'll be happy to take the other end of that trade.

If you believe that shorting the most successful, profitable, largest, company is a smart way to build your fortune, you are a speculator not an investor.
This is not the way to build your wealth over time.
Warren Buffet for example emulates my little old lady neighbor who is richer than god. She bought blue chip company stocks many decades ago and now she's worth millions. But, she's 90 now so she's going to pass this huge wealth on to her children.

Apple will have many headwinds in the next few years.

-If the student loan bubble stops growing at the rate of the last couple of years it will hit Apple hard. Many of those loans are buying macs and iPads.

- Amazon is a lot cheaper for devices and content. I own an iPad but buying movies from iTunes is a lot more expensive than Amazon.

- Apple cloud is weak in comparison to Google and Amazon.

- Do not underestimate Windows 8 tablets.

Shorting Apple is dangerous but could be very rewarding at these levels. we could see Apple go down to 250-300 in the next two years if student loan growth slows down or reverts.

treatmentreport says

-If the student loan bubble stops growing at the rate of the last couple of years it will hit Apple hard. Many of those loans are buying macs and iPads.

"Many"?

The biggest demographic buying iPads is 35-44. Your argument is not convincing.

There are about 6 billion people who want to buy an Apple product. They are in countries with no debt. This means Apple will sell ever increasing numbers of everything. This means more profit for Apple.
Windows tablets won't have any significance.

Tesla. It's a cross between Solyndra and DeLorean. And for good measure, like Solyndra its got the (Cool and Hip) dotcommer schtik AND like Solyndra it is located in Fremont.

Vicente,

I believe that student loan is one of the "headwinds". If you look at the explosion of student debt and Apple sales in the last three years there is a pretty good correlation regardless of demographics. Apple has always been strong in education and I don't think this time is any different.

Clambo,

Using your argument. There are about 7 billion people that want to buy a Mercedes. That means more profit for Mercedes.

I agree that there a lot of people that want Apple products but the products are expensive and people will settle for cheaper alternative (device + content). Same with Mercedes, many people want them, but many can only afford Ford focus and the like.

treatmentreport says

If you look at the explosion of student debt and Apple sales in the last three years there is a pretty good correlation regardless of demographics.

Could be.

But isn't the US market kinda like a gnat on the back of an elephant?

The difference between Apple products and Mercedes is obvious: Apple sells many products that many of those 6 billion people can afford. Which device depends on many things. I don't know about an entry level Mercedes.
You cannot buy the same yacht the Sultan of Brunei has. You cannot buy the Gulfstream Jet a gazillionaire owns. You can't buy all Armani clothing, you can't afford a penthouse apartment.
BUT: you can own the same cell phone, same laptop and same iPad that the richest people own.
Everyone thinks that the "poor" or "developing countries" cannot afford to buy trinkets like Apple gear. The truth is the opposite: these people usually don't make much money but they also have no debt. They simply save up to buy the products they really desire.
Apple is unique because the consumer desire for them is so strong from time to time it's like a mania, but they sell lots of stuff.
Apple also makes money all over the place. Shoot, among the 25 billion apps downloaded, how many did Apple get a 30cent cut from? That's easy money.
I would not short a stock like Apple, but there may be some others out there that could fall. Netflix comes to mind immediately.

There is a great deal of assymetry between being long and being short. When you are long you can just get a cheap stock and wait, if the market takes forever to correct you can just hold on and collect dividends. It does not work at all this way with shorting an overvalued stock.

I consider going long in stocks I believe are 20% undervalued. I consider going short stocks only if I think they are 100% overvalued.

At 16X earnings APPL is nowhere near my shorting level. Incidentally, AMZN does feel 100% overvalued at 100x earnings.

treatmentreport says

Same with Mercedes, many people want them, but many can only afford Ford focus and the like.

You heard what happened to Gucci and dozens of other luxury brand makers? Or what happens to a lot of underground 'cool' 'cult' bands when they bust into the mainstream?

They often lose their ability to impress, and then nobody wants them anymore.

If everybody had a Mercedes, it would no longer be a status symbol.