patrick.net

I would not short Apple for two reasons: I can't see Apple failing for the few quarters at least - at least until after the second (third?) attempt at AppleTV.

And most importantly, I'm too emotionally invested in Apple failing.

suziclue says

Been searching around and talking to other investors in chat rooms

There is your first mistake. Chat room? I'd be willing to bet that over half of the people in there are throwing out opinions based on their current position. Shorters would love for you to sell, and longs would love for you to buy. You are being easy prey by going there asking for advice. The only reason I would ever go into a chat room or message board is to look for links to actual interesting data. I would never go there looking for advice. It is like going to a late night club in the dirty part of town looking for someone to marry. Not a great idea.

RandyL says

Apple's success was driven by its CEO, Steve Jobs, being accountable to no one but himself.

LOL.. the SOB just loves to blame others... cause he knew he could do no wrong..cause he was the CEO from Hell...

"LOL.. the SOB just loves to blame others... cause he knew he could do no wrong..cause he was the CEO from Hell... "

You know, that's how it is.

For the rest of us, we need a paycheck. We can't afford to piss off a cadre of executives with entrenched power in a company.

Thus, there's no *Apple University* because no one can stand up and speak his mind w/o being shot down by others with more power than himself.

I've never understood why no one's got this point. Jobs was independently wealthy. If Apple's board took him back, they were on his terms, no one elses.

don't listen to all those that say that you are crazy to short. Most people don't have a clue about trading and shorting stocks. Most people wrongfully believe that you can only make money shorting when the company collapses. You can trade AAPL and others multiple intraday on the short and long side.

Now in regards to shorting AAPL for a bigger correction. I do not short any stocks as I prefer to buy the Puts. I would wait with AAPL for a bit longer as I don't like to play against the hype of the new device. I'd also look into a put play on QLD as that symbol moves well.

If you haven't played options you can read my article about how to hedge gold and silver positions. I released that a couple days before the gold and silver correction of last fall ;)

http://www.wtffinance.com/2011/08/how-to-hedge-physical-silver-and-gold-positions/

Intraday trading? You're not an investor.

clambo says

Intraday trading? You're not an investor.

Oh come on now. This is America! Investing is all about buying from a lesser fool today and selling to a greater fool tomorrow. That's how prosperity is created. ;-)

To me the move in Apple looks like blow off top similar to the one that occurred in netflix last year. The last big shorts are getting killed. When all the shorts lost their money then the move down will start.

treatmentreport says

To me the move in Apple looks like blow off top similar to the one that occurred in netflix last year. The last big shorts are getting killed. When all the shorts lost their money then the move down will start.

I think Netflix had a P/E of like 60-80 at the peak... It's business model has a VERY questionable future that is beholden to content providers rates negotiations. And margins will prove thin.

Apple meanwhile just recently hit 16 P/E... It's business model is very proven.. and the money it makes off "content provider" negotiations are just icing on the cake of it's massive hardware profits.

thunderlips11 says

Also, Apple's margins are big and fat, not small. I think the iPad has a 60% margin.

I said they made it so their competitors margins are forced to be thin. They've done genius things like buying up all the flash memory supply for years and IPAD glass screens for years... So competitors can't get decent rates for supplies from factories, because they are all busy with multi-year contracts with Apple.

RIMM can't afford to commit to long term factory contracts on "unproven" tablets.

Apple has the competitors balls in a vice. They are all scrambling to compete with Apple in the high-end tablet market and failing miserably.

can't really compare PEs in blow off tops between 18B and 550B company. For example the blow off top in gold (total value of 10 Trillion) was only 20% last year. Gold is probably more similar to Apple. Most people that hold it would not sell the asset as they are emotionally connected to their investment.

I own a number of Apple products and one of my best friends (who is brilliant) worked there for quite some time. Many of my friends who have been life long Apple users could not predict the success that Apple would have just two years ago and now everyone on this board is acting that they understood this company all along. That's why I am questioning if there are other factors involved that people are not looking at such as the run up in student debt of 500B in the last three years. Surely a nice chunk of it must have made it into iPads.

When you buy a Put, whoever sell you that Put will short the stock.

BoomAndBustCycle says

I said they made it so their competitors margins are forced to be thin. They've done genius things like buying up all the flash memory supply for years and IPAD glass screens for years... So competitors can't get decent rates for supplies from factories, because they are all busy with multi-year contracts with Apple.

Samsung makes the A4 and A5 chips used in iPhones. Samsung sells tens of millions of Smart Phones a year, with most comparable models selling at or below the iPhones' price. That doesn't seem like Samsung's margins are being squeezed to me.

Droid Phones are made by a variety of firms all in competition with each other, there is only one iPhone maker. That explains the generally cheaper price.

Not to mention that Droid Phones have the dominant market share and have had it for quite a while. Again, if their margins were being compressed, how do they sell so many Droids versus the iPhone?

If there's margin compression, it'll happen to Apple, rather than Samsung who can manufacture not only enough chips for Apple, but its' own products.

treatmentreport says

That's why I am questioning if there are other factors involved that people are not looking at such as the run up in student debt of 500B in the last three years.

I take your point that the runup seems suspect. Is it WebVan or is it something more substantial? Only time will tell.

As I said before your student debt idea lacks merit if I had to pin it on something it'd be this is the "IT" stock, the way Cisco was in the late 90's. Unfortunately I didn't use stop sells on CSCO and held it stubbornly thinking it'd come back, until I eventually recognized defeat and took my losses like a man. Learned that lesson.

Or you could follow another line of reasoning. Say that Gold & commodities are now "so 2 seconds ago" and the hot thing is piling into Tech stocks again. Perhaps AAPL is just at the right place & time to be THE most visible target of that pile of Monopoly money looking for a property to land on.

Meanwhile I trade the tape. It's got momentum. Bought a call yesterday, sold it today, enough cash to buy a new iPad. I keep an eye on the exits at all times, and that is all any player in the casino needs to do. Don't be a buy&hold sucker.

Apple is the total opposite of a bubble stock because it grows profits so much it can always catch up to the stock price.
Apple is simply the most successful, profitable, respected, largest company on earth.
There is no reason to believe that the sales and profits will slow down until everyone on the planet has an Apple product. This could take a while.
Call me a buy and hold sucker.

Apple has always been almost cultlike...... People devoted to Apples style and products.... They have great margins, cheap labor and a "gotta have it" huge group of fans

Vicente says

Don't be a buy&hold sucker.

Check this out:

http://www.frog-numerics.com/ifs/ifs_LevelA/SellInMay.html

Interesting stuff!

To short Apple would be a tragically short-sighted decision. Its easily already worth at least $800-$900 today, and will probably glide well beyond $1000 as the success of ipad 3 becomes apparent. Huge margins, dominant market position in the faster growing market (tablets), low P/E, and huge market share gains yet to be had in cell phone market and possibly a newly created market in TV space. Its a fast moving supertanker, anything that gets in the way will be flattened, including you.

parkave says

To short Apple would be a tragically short-sighted decision. Its easily already worth at least $800-$900 today, and will probably glide well beyond $1000 as the success of ipad 3 becomes apparent. Huge margins, dominant market position in the faster growing market (tablets), low P/E, and huge market share gains yet to be had in cell phone market and possibly a newly created market in TV space. Its a fast moving supertanker, anything that gets in the way will be flattened, including you.

I think a 65% upside in the near term is highly unlikely.

Apple is killing it in tablets, but there's little to no reason to believe that they're going to gain market share in smartphones. Their share of smartphones has been flat for two years.

There's also no reason at all to believe that Apple will get any traction in TV. The video content owners have a great thing going, and there's really nothing that Apple could offer them that is a better deal than what they're getting from pay TV and advertising. The music industry embraced apple because piracy scared the shit out of them. The TV industry isn't really concerned with piracy at this point, and probably never will be due to the nature of their business model.

Apple isn't invincible. And consumer tastes DO change. The cult of Apple could be superseded by the "next big thing."

But I sure as heck wouldn't short it. Not now. If it's PE ratio was 50x or something, maybe I'd short it. Right now it's PE ratio is about 17x. That's lower than McDonald's right now for chrissakes.

If you want to short something, don't you think Amazon might be a better choice? Their PE is 134x, which is f*cking crazy.

wthrfrk80 says

But I sure as heck wouldn't short it. Not now. If it's PE ratio was 50x or something, maybe I'd short it. Right now it's PE ratio is about 17x. That's lower than McDonald's right now for chrissakes.

Yep, shorting Apple takes balls of iron at this point.

Question is, what are they going to do with all that cash? Now that Jobs is gone, won't investors start demanding a dividend or buy back?

Apple may someday fall out of favor, but not until the 6 billion people have one of their products.
By that time I'm gonna be sipping a drink with an umbrella in it, served by an asian "nurse".

thunderlips11 says

wthrfrk80 says

But I sure as heck wouldn't short it. Not now. If it's PE ratio was 50x or something, maybe I'd short it. Right now it's PE ratio is about 17x. That's lower than McDonald's right now for chrissakes.

Yep, shorting Apple takes balls of iron at this point.

Question is, what are they going to do with all that cash? Now that Jobs is gone, won't investors start demanding a dividend or buy back?

Homo Economicus. A Legendary Creature, like Bigfoot, claimed to exist by Pseudoscientists.

Investors are still happy as long as the stock price keeps climbing.

My guess is that Cook will start a dividend.

I remain utterly unconvinced that Apple has another blockbuster product up its sleeve. Without jobs, they're going to wind up like Microsoft: Enormous profits continue to roll in from established businesses, which makes them lazy.

I don't think Tim cook is the kind of man who will develop a product that will compete directly with an existing product. That's exactly what Jobs did with both the iphone and the ipad. That's what will ensure that someone disrupts apple in the long term.

Once a company's visionary leadership is gone, and the show is being run by professional managers, however good and well-intentioned they are, the best days are behind them.

Apple will be doing extremely well over the next 5-10 years. After that, all bets are off.

Kevin says

Once a company's visionary leadership is gone, and the show is being run by professional managers, however good and well-intentioned they are, the best days are behind them.

Great point.

Kevin says

Once a company's visionary leadership is gone, and the show is being run by professional managers, however good and well-intentioned they are, the best days are behind them.

That is right. It already happened at Apple before, like with John Scully and Gil Amelio.

You don't short it when it is going up.
I will wait for a 10% drop, then short.

You also have to cover if it breaks out again. You will lose 10% per try.

It is not bad, consider that you will lose everything in a casino or real estate.

I do not think you should short apple unless you think the entire market is going to tank back to 10k DOW... Apple is going to trade like a leveraged etf... And they are announcing what they are doing with their cash horde tomorrow at noon... Expect apple to break $600 easily sometime tomorrow.

Monday 9AM ET there will be a conference call to discuss what Apple is planning to do with the oceans of cash it's sitting on. The punditocracy leads with "they'll pay dividend".

People will sell Apple if it pays dividend, because they will get a tax bill.
Plus it is a sign that Apple cannot grow anymore.

A "10:1 split" will help :)

Official, quarterly dividend for APPL
http://www.wired.com/epicenter/2012/03/apple-goes-blue-chip-with-new-quarterly-shareholder-dividend/

AND a buyback program.

And.... 3 million units sold over the opening weekend.

How are those puts doing?

Apple announces a $10B stock buyback program and you want to short the stock? You are brave.

Ian Ollmann says

Apple announces a $10B stock buyback program and you want to short the stock? You are brave.

From the beginning of the movie "True Lies:"

Tom Arnold: "...now that's ballsy. Stupid, but ballsy..."

Apple (565B) > Google (206B) + Microsoft (268.5B) + Amazon (87.5B). To put things in perspective.

BoomAndBustCycle says

Apple has the competitors balls in a vice. They are all scrambling to compete with Apple in the high-end tablet market and failing miserably.

Not true. Droid Tablets will probably reach market share dominance over the iPads by 3Q 2012. I believe they are already about 60-40 in market share, with non iOS or Droid tablets being negligible.

As fast or faster than it took the Droid to dominate the iPhone.

Hilarious! Flash crash! AAPL trading stopped due to circuit breaker this morning.

Some brand-spanky new exchange called BATS was putting out spurious trade orders, and submitted a sale of a mere 100 shares AAPL at 9% below market which tripped a "stop trading".

http://www.cnbc.com/id/46835129

I have a 3% trailing stop set on this stock, but it never triggered since the stock stopped trading immediately and it's bid/ask never really dropped much.

thunderlips11 says

Not true. Droid Tablets will probably reach market share dominance over the iPads by 3Q 2012. I believe they are already about 60-40 in market share, with non iOS or Droid tablets being negligible.
As fast or faster than it took the Droid to dominate the iPhone.

OK, but how do you become financially invested in Droid's potential success?

It seems like fragmented market vs The One. AAPL still sells a shit ton of phones and tablets, still at a premium, and without having to compete with other "nearly identical" brothers the way Droid does...

Comparing Apple to Android is so ridiculous but people do it anyway. I own 1. an android phone with the cheapest plan on earth 2. AAPL.
My Android phone does mysterious things from time to time. It's not rock solid by any stretch. I still like it however.
Apple makes a few hundred bucks on 1. every iPhone 2. every iPad 3. every Macbook air and they're selling the shit out of them worldwide. The sales keep increasing, and there are still billions of people who want one of these products, or several of them.
Look only at how much they sell, how much profit they make, and what is going on with both of those.
You have a problem with your phone. Would you rather 1. go into the Apple store? 2. go into radio shack/verizon store and ask for help with your android?
Personally I like the Apple store and my local Radio shack is full of *those people*.

swebb says

OK, but how do you become financially invested in Droid's potential success?

Droid is a verizon brand, so I suppose you'd buy verizon stock.

Assuming that you actually mean Android, obviously you buy Google, Samsung, HTC, etc.

clambo says

I own 1. an android phone with the cheapest plan on earth

Virgin Mobile?