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Apple Stock Gets Reacquainted, Ever So Slightly, With Reality – As Warned By The Only Source To Call A Short On Apple
Apple should see a material dip, on top of the one that occurred
after I indicated that I was short the stock on March 16th. Before we
delve into my opinion, let’s peruse the news from 1 a.m. this morning:
WSJ: Apple Crunched in Nasdaq Rebalance- In
a move likely to ripple across the stock market, Nasdaq OMX plans to
announce a rare rebalancing of its Nasdaq-100 index, which will reduce
the big weighting of Apple, which currently makes up more than 20% of
the index.
Bloomberg: Apple’s Weight in Nasdaq-100 to Be Reduced as Microsoft, Cisco Are Raised
So, why do you think Nasdaq decides to reduce Apple’s weighting now?
Well, the competitive pressures that Apple faces are nigh guaranteed to
make it impossible for it to fulfill the pie in the sky expectations
that are being built for it. That in combination with a 20% weighting
create a recipe for a guaranteed crash in the Nasdaq unless something
was done about it. Signs of heavy reliance on on or two products for 70%
of their profit, while sourcing the most important parts of those
products from their biggest competitors, were starting to show. iPad 2
supplies are tight due to Japan’s woes, and Apple does not have the
mobile computing product diversity to handle it like the 150 or so
Android competitors it is battling. This means much more than just a gap
in profits for the quarter. These companies are in race, and Apple is
being forced to give up some of its lead due to diversification issues –
issues that Android manufacturers (who are more diversified because
there are so many more of them from different places) don’t have, or at
least not to the extent that Apple does. Thus, Samsung, LG, Asus, HTC,
etc. will be rolling out to customers who may have had an Apple iPhone
or iPad.
This is also another (of many) massive triumphs of BoomBustblog
research over that of the most esteemed Godman Sachs who put a $430
price target on Apple just as it was making all time highs and in direct
contravention to BoomBustBlog’s stated logic. See Shorting Apple and Why Software Developers Can Make More Money On Android Wednesday, March 16th, 2011
I have finally started dabbling with Apple
shorts and puts. My OTM S&P put positions were profitably stopped
out due to trailings 
yesterday when the market recovered some of its
losses. I have decided to use Apple in the place of the S&P puts
for the time being. Medium to long term, the trade is more evident and
obvious to anyone who is objective and follows BoomBustBlog. It is
significantly more risky shorter term. Alas, there are marginal gains
already, and once they accrue to the point of indemnifying my trailing
stop, I will add more. After I finish the current leg of my global real
estate research to be disseminated to institutions, I will offer
tidbits of the modeling (I have already offered subscribers significant
info on why I think Apple is a risky long play). From a contrarian
standpoint, it may be safe to go short with tight stops, after all
although Apple Gears Up To Combat The Margin Compression That Apparently Only It, Google & Reggie Middleton Sees Coming, we still have those guys over at West Street… Goldman’s
$430 Target, Screaming Buy On Apple At Its All Time High Is In Direct
Contravention To Reggie Middleton’s Logic – Who’s Right? Well, Who
Has Been More Right In The Past? I have taken The Challenge To Goldman Sach’s Apple Proclamation One Step
Farther, Apple’s Closed System Risks
Failure! Listen, everyone, regardless of what investment positions or
tech products you may have in your stable, needs to ask themselves the
appropriate “What if’s”. I have spurred the conversation with “Will Google Win The Mobile Computing War? Let’s Walk Through Where They Stand Now & How To Value Them”
Remember, I may not always be right, but it does pay to look at the track record… Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Streets Best of the Best? More attention should be paid to the little guy, after all by now it is Now Common Knowledge That Goldman’s Investment Advice Sucks!
Didn’t you get the memo? I’m sure many traders have spurned Apple due
to the Japanese market being cut off right at the launch of the iPad 2,
but the issues go deeper than that. I will cover it in depth at a later
date, though.
Additional thoughts on the Apple short:
- Note For The Few Realistic Apple Bears… Wednesday, March 16th, 2011
- Buffet on Apple – Common Sense! Monday, March 21st, 2011
- Competition Heats Up In The Mobile Computing Space On Many Fronts – Prices Driven Down Once Again By The Big Players Tuesday, March 22nd, 2011
- How the “I Love Apple, There Is No Other Fever” Adds To The Attractiveness Of An Ever So Unpopular Apple Short Monday, March 21st, 2011
And that Research in Motion short alert
given to subscribers is working like a charm – even more so if it get’s
caught in NASDAQ storm: Research in Motion Drops 10% After Hours, Precisely As We Warned Two Months Ago – MARGIN COMPRESSION!!! Thursday, March 24th, 2011
- advertisements -
Reggie,
are you going to benchmark your anti-Apple opinion against your 'pro-Droid' Google view to compare your 'fundamentalist' argument? ...coz i'm still seeing Goo down -4% while App are down barely -1% since you revealed your short
...i (still) think your fundamental 'logical' analysis doesn't understand how the stock markets actually work and you'd have been better off (make more money) shorting Google
"rationality" is not how the world works ...rational people, value and fundamental investors are lambs to the slaughter on the stock markets
Reggie... We both agree the mobile space is a two horse race... RIMM, Nokia, HP webOS, Sony NGP, etc. aren't competitors now and won't be competitors in 5 years. Microsoft still has a ton of muscle and but their strategy right now is a disaster.
Keep looking at margin compression on devices... I'm not worried until it drops around 32%.
Don't forget to add the lofty margins from software and services into your model! Every $10 in third-party apps sold adds about 0.5% to device margins for aapl. $1.7 billion in app sales in 2010 compared to $100 million for Android market. And we both know who gets a bigger cut of app revenue.
I see aapl holding 7% of the marketshare with a P/E that's still pretty cheap and not priced for growth.
Can they penetrate as fast as Android?
Do you have a price target or range Reggie ?
Android - Massive fragmentation and it takes longer to develop and debug.
Honeycomb - No longer so open.
Motorola - Rumors of their own OS
HP - WebOS
MS / Nokia - Starting late but with great resources
Apple - Mature, nice to develop, iOS growing and a COMPLETE ecosystem.
MacBookAir - Quietly dominating and generating massive revenues.
Sorry... but Apple has legs and some new stuff on the horizon too!
oh and yes, apple store, regent street...heaving on a dull, Tuesday afternoon, don't see much disenchantment with the public right now, queues on all the tills.
You've been calling a top on Apple for over a year now.
Google doesn't care if it wins the mobile war. They'll be a player but they've achieved their strategic target because there will be now and for a while no ultra single dominating player, especially one with a closed, proprietary (if you think a UNIX variant is that) system. Google just didn't want Apple to dominate the mobile device market. Apple dominating the mobile end device market would have spelled the end of Google. They have succeeded.
Reggie, what is your year to date and 2010 performance if you do not mind me asking.
since when do we conjugate the verb "get" with an apostrophe?
"Some men you just can't reach. So you get's what we had here last week, which is the way he wants it... well, he get's it...
...I don't like it any more than you men."
while ye sing apple's woes hearken ye to RUT's approach unto the all time high: 856.48....
3 more pts, bitchz, and commander bernank will don his codpiece and declare mission accomplished... we was there, april 5, 2011.
praise be the bernank! may his victories grow ever greater!
Gee! How did you get in your financial position today, making brilliant calls like shorting AAPL?
It is not only Apple stock -a symbol just like the rest of the other stocks- but the population at large which will be reacquainted with reality.
Yeah, the AAPL freight train was doing 90 MPH but now it's on a hill and slowed a bit to 70 MPH. Probably not a good idea to step in front of it.
I'm surprised Apple hasn't announced a split.
The iphone is actually obsolete. See Motorola Atrix 4G on AT&T.
RM your predictions are coming home to roost! Android is on a mega roll! Good thinking. Lets see how the Apple integrated HW/SW model competes with the Android mobile systems super highway. MS of RIMM dissolving before our eyes. Will Ipad change anything? Steve Jobs or successor has work cut out!
Seems like now AAPL will be able to make a 33P run up with less resistance.
In times like these a survivalist might buy rations but those who know their days are numbered will choose a gizmo to make their hospice more bearable.
Alas, poor Apple.
Poor Apple?
The stock ran from $80 to $260, then Reggie warned everyone to dump it. Then it ran from $260 to $350, and now Reggie is crowing about his latest short call.
Somebody seems to be on the wrong side of history here...
Actually, I didn't warn everyone to dump it at $260. This is exactly what I mean by virtual cult like adherence to the company and stock. What I did say at about $260 was that they weren't the front runners to win the Mobile Computer Wars at that point in time, just as they are not now.
Objective viewers should be able to discern a distinct difference between not winning a race and warning everyone to dump a stock. Yet, so many have such a binary (if even that, many simply feel it can do no wrong so there is not even a 1 and 0, just a 1) perspective that anything that is not glaringly positive about Apple is seen as an attack on the essence of humanity.
Thus far, I have been absolutely correct about Apple. I can't guarantee that will hold true into the future, but it is a fact as of now.
i said sell last fall and by December was eating crow. Is this an entry point? For some--absolutely yes. And yes...I still love Google, too. "What isn't search?" is the starting point for that beast. Now if only Silicon Valley could start smoking some peace pipes--along with the rest of Insane America for that matter. Does anyone in Washington get along with anything? I hear "they're kicking the dog down the road" now.
OK, your are right, you didn't warn at $260 and I stand corrected. Looking back you said you were out of AAPL at that price.
My bad.
No prob. Trust me, you are far from the only one. I actually like and admire Apple as a company, but they are still a company. They can't defy physics, they don' t walk on water, and they are still subject to the laws of economics and business, ex. Supply and demand and margin compression.
Many take my declaration that Apple is a company as a declaration of holy jihad. This far from rational perspective is bound to cause severe downward and excessive pressure when rationality actually prevails. Market psyhcology doesn't just work in one direction.
.
Actually, I'm sure there are pre-defined weighting limits that Apple either triggered or was about to trigger. Those weighting limits are potentially misleading as it is. If Apple is truly 20% of a the aggregate grouping of stocks - then it is. Modifying that weight without an actual change in Apple's economic weighting is misleading to the true nature of the NASDAQ composite components. Apple's meteoric rise is due to 2 parts success in execution and 2 parts Bernanke bubble blowing and 1 part fanaticsm. Regardless, the stock market valuation and real economic weight is what it is. Tampering with it is designed to stabilize the NASDAQ, not to truly reflect what's going on. The DJIA is much more aggregious on this front. It is re-weighted regularly to make sure it goes up. Any company that brings it down to far is eliminated over time.
NO. The secret to apple's success is pure unadulterated bullshit.
The appstores not a success. It's a counter driven by a java app that lies out it's ass about selling 1 billion apps one day and 10 billion apps 13 months later. Fuck you. You're fucking lying out of your fucking eyeballs with those numbers. You are so fucking rediculously lying out of your ass a math brain dead turd could see it.
Apple makes shit up. They claim 45 million phone sales while AT&T and Orange publicly fucking disclose 15 million and a couple million signups.
They constantly gut and cannabilize thier own market with iphone 2 3 4. It's selling the same products tot he same delinquents over and over. They do not grow. You are publicly ridiculed and harassed in japan and china if you whip out a iphone or ipad. If they do not grow and they lay off 600 frikkin genious bar workers how can they present an app growth chart that looks like it would require a doubling of labor every 2 months.
Apples magical growth is the magic of lying out of your fucking ass. Making shit up. And using an entirely mafia controlled bullshit criminal corporation to manufacture your stuff who won't be making any confessions because they are as illegal and abusive as a group can become.
Ipad 2 will cannibalize the list of delinquents who have bought 25k worth electronic crap from best buy who get a fake ipad for their trouble because apple is in bed with jeuvenile, full grown and geriatric delinquents.
Google this term and see what happens when you do business with thugs.
"man buys fake ipad from best buy"
Talking about apples success or failure is like talking to a completely delusional steve jobs about terrific and magical completely devoid of any self criticism or realistic view point.
Apple is the biggest stinking pile of shit lies on this planet. That thinks if you keep repeating how popular and cool you are to people it will come true.
If you think the bullshit you uncovered in the banking industry about mark to market and securitization of worthless fucking commercial real estate assets is the biggest stink. Then you haven't gone nearly far enough. The biggest stink is that every single industry that appears to "dominate" and monopolize attention through sales figure are lying out their ass. Intel's sales numbers are freaking mythological animals just as apples are. Google is run entirely by counterfeit money using dark pools of fiber channel that nobody on the planet knows exists besides them of which they apply ip addresses to whenever they feel like it.
You can't get one piece of frikkin information out of google without giving it access to 20 frikkin ip addresses. Try to watch one google video without allowing no less than 7 ip address or doing one search from google without 5 ip addresses.
Now lets talk about the phone market. I can find OFFICIAL figures on the internet that claim every man woman and child on the planet buys a frikkin phone every 6 months. I can find information claiming every person in europe has 3 phones with active accounts.
If you want to analyze apple or any phone company or any phone technology. You better get acquanted with a completely suspcious mindset looking at a entirely and totally criminal enterprise that throws around numbers as facts that are as pulled out of thin air as the money that infests them. Who's punishments from the eu and euro fines are never recorded by any bank on any planet because it's a full on illusion of correction of wrong doing. Where intel fines to amd nvidia are paid with counterfeit money from people who don't even have to phone a bank to get on a computer and create a billion dollars.
All our technology is the complete and total suck and mind fuck.
Apples as meaningless in peoples lives as can possibly be. It's even hard to find one thier zealots to have a religious battle with. Yet they are 20 percent of a rating of a tech sector that is isn't as big or successful as it deceiptfully claims to be over and over. Who's technology is employed in creating numbers and facts and figures that never add up, or or stand up to cross examination. And I can just get on a board and state what a piece of shit lying full of crap industries they are and get nothing but constant hassles from every stupid frikkin phone and cable industry provider across my computer. With freaking Orange france telecom showing up as being multicast right beside everything I frikkin type.
These people are not your regular full of shit. They are you full of shit ran it through a super computer and it checked out full of shit.
And if they don't return to thier meaningless lives instead of pumping the internet full of crap about how they are going to make 12nm chips in 2 years and how many phones they sell even though you can't find a frikkin company on the planet that will verify them through subscription rates. Or find out one goddamn thing about what ESys is who claims to sell billions of intel chips.
Apples metoric rise is due to a willingness to completely lie about thier metoric rise.
You shorting Apple?
No I seriously believe that apple and intel and verizon and AT&T can keep up this fraud forever. It's not going to ever generate any crisis that makes it all come spilling out like popping puss bubble.
Seriously.
Did ya hear. Microsoft has 23 billion in cash. For realz. They totally are not borrowing 6.5 billion from the bond market just to make payroll. Totally. And Intel is KILLING in sales. They totally are not making up stupid shit like pay an extra 50 bucks to unlock a feature on a chip from a card you buy at walmart.
Oh ya and this 28 nm stuff. It's totally not so fucking hard that once you get 3 layers of carbon atoms on the lense it turns a several billion dollar machine into a used couch on the side of the road with pee stains all over it.
There's never going to be a giant WTF just happened thing. It's all going to go perfectly smoothly with completely intact illusions. The rabbits never going to come hopping out from under the table and embarass the magician.
the last thing the evil side of global capitalism wants to have happen is to give Steve Jobs and Co. a "supply chain disruption." Indeed I would argue "that holds true for the entire spectrum of America and Co." They'll have a work-around--and perhaps a permanent one--in months if not weeks. yes, yes? now "on to the firing of those auto-workers in Tennessee" because "all they do is bust their ass and make Toyota a fortune."
And raise Microsoft's? A: Because Reggie frontruns intelligence. Its a gift he has.
So, why do you think Nasdaq decides to reduce Apple’s weighting now?
Because you said they would? ;-)
russell 2000 prints at all time high: 856.61 at 12:20:51 eastern on april 5th, 2011. we was there.
praise be the bernank! may his russell be solid forever!