Deconstructing The Most Hated Trade Of The Decade, The 375% BoomBustBlog Apple Call!!

Reggie Middleton's picture

I hear so little hate on the Apple call these days. When the stock first dropped after the (3rd BoomBustBlog forecast) earnings miss and the lackluster iPhone 5 debut, all I heard was "well you've been pessimistic on Apple for years!". When I released my research to actually show that I've been one of the most realistic and accurate investor/analysts to follow Apple, I then heard "but your timing was off!". When I pointed to the specific call to move to the pessimistic band of my research in early October (when Apple broke $700, an all time high), and the stock dropped nearly 25%, all I heard was......................................................................................................................................................................................................

Let this be a lesson to one and all! Do not fall in love with a name, a stock, a company, or an idea. Save your love for your significant others and your children. Let's walk through a hypothetical BoomBustBlogger's Apple holdings, assuming he followed recommended research valuation bands, presumably pushing a 375% gain and counting, unless he decides to take profits at this point. I will do this by simply reviewing the blog posts. 

As you can see from the charts below, I have always been fairly accurate on the share price of Apple. I did personally try to short it last year as it missed earnings (and the price did drop), but it was only marginally profitable. After that my subscription research implied Apple's share price was not excessively valued in the base case scenario, implicitly riding the wave up via valuations. I even moved the optimistic valuation band higher on 3/15/12 after underestimating foreign and Asian sales. All of this does not discount the infamous margin compression theory that was the backbone of the pessimistic scenario, as we shall soon see.

As soon as I got a hold of an actual iPhone 5 I knew the real short was in. After a 42% rise in Apple's share price I publicly moved my focus towards the pessimistic valuation band in my October 12 post A Review Of The Accuracy Of Last Quarter's Apple Earnings Notes (subscribers see Apple 4Q2012 update professional & institutional and Apple 4Q2012 update - retail). This post and the several subsequent posts listed the specific reasons why I knew that Apple had officially seen its heyday from a stock value perspective. Front month slightly OTM puts on Apple (strike price chosen arbitrarily so as to protect the intellectual property that is the BoomBustBlog pessimistic valuation bands, which are for paying subscribers only) have yielded 314% so far. The ride up on Apple long stock (42%) plus the timely called ride down via short dated puts (314%) make a delicious dinner for the year and window dressing at your local underperforming hedge fund, eh?

apple puts small

Simply click here to subscribe, or gift the subscription to your local brokerage and banking buddies who just don't get it how this stuff works, to wit - The Blog That Could Have Saved That Institutional Broker - Or - Beware Of Those Poison Apples!!!.

I privately (for subscribers) moved the pessimistic valuation band several days earlier in the post Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money! Here's an excerpt:

To begin with, brand new Apple valuation and forensic research is now available to all subscribers. I suggest you jump on it now while it's hot...

 apple product chart growth copy

Well, it looks as if my Apple ruminations and research have come to Fruition - and rather accurately at that. Since Apple has such a cult following, I will set the facts straight right here in a nifty little timeline as Apple tumbles in real time. This is to correct those who are comprehension challenged in saying that I've been crying to short Apple for 400 points. To begin with, I run a subscription site, I generally don't give away actionable advice for free, I charge for it. I have warned about Apple's macro and business conditions - yes, but whether to go long or short on the stock, I only opined in public once. Read below to see how that turned out. My next post will start revealing some of my actual subscription materials in order to make public the accuracy and prescience therein. Is it time for 1000s and 1000s of rose colored #iPhone sporting #iSheep and #fanbois to issue kudos to the BoomBust???

From a market and competition perspective, the writing was on the wall awhile ago. I blogged about this point often, and distributed the opinion and analysis freely. The fanboi-like naysayers apparently had a problem with differentiating fundamental reality on the street with share prices (which invariably lag). This was the case with Research in Motion, another very popular and strong performing tech darling which we also hit a grand slam on via bear run as we warned the stock will would drop from $60s and it ended up in single digits - see Hindsight Is 20/20, And As Luck Has It Our Foresight On Research in Motion Was Right On The Money Two Years Ago. The inverse came about with our Google research (Reggie Middleton currently leading the CNBC Stock Draft Pick contest, see his opinion on air here) as it went from the $400s to mid $700s to settle in the high $600s so far.

 aapl research accuracy copy

Monday, 05 November 2012 The Blog That Could Have Saved That Institutional Broker - Or - Beware Of Those Poison Apples!!!

Rochdale Trader Made Unauthorized Purchases Of As Much As $1 Billion In Apple Stock Last Month - Well, it's obvious the brokerage didn't buy that trader a subscription to BoomBustBlog.

Friday, 26 October 2012 After My Contrarian Calling Apple's 3rd Miss Accurately, I Release My Apple Research Track Record For 2 1/2 Years

I have been most accurate in tracking Apple over the last couple of years, as I have been with Google and RIMM (and from a tertiary perspective, MSFT) - the only tech companies that I have analyzed since the great crash. I'm more well known as a banking/finance/global macro/real estate guy, but my success in tech is comparable.

Thursday, 25 October 2012 Microsoft Is Doing What The "Has Been Giants Of Yesteryear" Were Afraid To Do, Make A Radical Change BEFORE ITS TOO LATE!

Friday, 12 October 2012 A Review Of The Accuracy Of Last Quarter's Apple Earnings Notes

 A subscriber convinced me to post the 1st quarter's valuation bands (subscribers, see Apple Margin & Valuation Note 03/15/2012) for Apple to squelch the comments of those who are guessing what's behind the firewall. Our base case scenario was right on target, and  during the target and after the earnings release I realized that we underestimated international (especially Asian) sell though and shifted the weight to out optimistic band which also proved fairly accurate. As all can notice, the pessimistic band is not show, and that is where the value lies here. I am now shifting my bias towards (that's towards, not to) the pessimistic band, for I feel Apple has now started to feel the competitive and margin pressures that I warned of, and has done so right at the deadline that I gave in 2010 (this is just as much a factor of luck as it is skill, alas, if it bears fruit it bears fruit). The latest valuation bands can be accessed by paying subscribers below (click here to subscribe):

Apple 4Q2012 update professional & institutional
Apple 4Q2012 update - retail
"iPhone Margin worksheet - blog download

image005 

Tuesday, 09 October 2012 Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money!

To begin with, brand new Apple valuation and forensic research is now available to all subscribers. I suggest you jump on it now while it's hot...

 apple product chart growth copyapple product chart growth copy

Well, it looks as if my Apple ruminations and research have come to Fruition - and rather accurately at that. Since Apple has such a cult following, I will set the facts straight right here in a nifty little timeline as Apple tumbles in real time. This is to correct those who are comprehension challenged in saying that I've been crying to short Apple for 400 points. To begin with, I run a subscription site, I generally don't give away actionable advice for free, I charge for it. I have warned about Apple's macro and business conditions - yes, but whether to go long or short on the stock,I only opined in public once. Read below to see how that turned out. My next post will start revealing some of my actual subscription materials in order to make public the accuracy and prescience therein. Is it time for 1000s and 1000s of rose colored #iPhone sporting #iSheep and #fanbois to issue kudos to the BoomBust???

 

 Monday, 08 October 2012 Apple Weakness Now Apparent To Others Besides BoomBustBloggers

Now that the weakness in Apple is apparent to all, and not just BoomBustBlog subscribers.... AAPL priced relative to the SPY... looking for this 4 year trend to break for the aapl story to be over as a market out-performer.

AAPL relative weekly rising wedge

Wednesday, 03 October 2012 Lauren Lyster & I See The iBubble Go iPop Once Those 10 Million MBS Trader Jobs Fail To Materialize As Bernanke Promised

 I discussed this in detail with Lauren Lyster on Capital Account. The margin discussion started at 7:55. In this video I also warned that when the iBubble goes pop, so goes the NASDAQ, and as if on cue...

Monday, 01 October 2012 iBubble, iPop - Apple Is Now More Than 97% Of The Personal Computing Market Capitalization! If That's Not A Warning Sign, You Can't Read!!!!

See how my subscribers read about the situation in detail two quarters ago!

Apple 2Q2012 results analysis Final - redacted Page 1Apple 2Q2012 results analysis Final - redacted Page 1

Apple 2Q2012 results analysis Final - redacted Page 3Apple 2Q2012 results analysis Final - redacted Page 3

Apple 2Q2012 results analysis Final Page 4

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