Is it time to SHORT AAPL ?

[Zelhar]

It touched 600 today though closed lower.  I am not going to do that though, not for now and not unless it climbs further. But if I did placed a bet, it would be AAPL would descend below 500, even bellow 450 before the year ends.

These are the main points in support of my "bet":

1. When things can go wrong, something is going to go wrong. And for too long everything has been going too well over there (except the death of Mr Jobs that is).

2. Too depended on Samsung and lacks meaningful tech gap over its competitors. And as a result Samsung can match everything coming out of Apple too soon. The result is that inevitably Apple is going to post some weak results on some quarters due to lower sales or lower prices.

3. There is going to be a war with Iran and a general panic sale would surely follow.

4. Market cap of over 550bln is already too large compared to the size of the market size for consumer electronics. Apple's products are going to start cannibalizing on each other rather then significantly increase its market share.

5. All the other Icarus shares of the past descended back to skeptic reality prices.

[briann]

While there is no question that the price is too high, timing a short sale is very difficult.  Sure the Apple bubble will burst, BUT it could be next week, it could be in 5 years.

And your assessment is correct, they are in an industry that invites immediate commiditization, not just from Samsung, but from the entire consumer electronics industry which is super competitive. They can't continually re-invent themselves every year, and even if they did, it still wouldnt justify their current market cap which is ludicrous.

[Secularbeliever]

I own shares and might sell.  I would not short way too risky.

[Zelhar]

I don't know if I can even technically do a short. If I ever put money on it, I would do it by buying put options. But put options with a lifespan of about a year seem too expensive and the shorter lifespan ones seem too risky.

[Kahane-Was-Right BT]

Hell no!  As I said here last summer when it was in the 300's, it is NOT overpriced.  Wasn't then and isn't now.  Look at pe ratio, peg ratio, margins, all the metrics, then consider the talent and know-how, the disruptive technology power in that company and the cult like following of its customers to its products.  I see no reason to sell apple.  Stocks go up and down, and I expect it might consolidate a bit here before breaking 600, but I don't see a reason to sell at this price.   And certainly would be insane to short it, its like stepping in front of a freight train.  The market itself is off to the races.  You gotta let the winners run.  But if you MUST short something there are plenty of better targets and certainly some overpriced names out there.  But sometimes companies trade at a premium for a long time (witness the epic gorilla run in netflix which is probably still overpriced even after going down two thirds in price lol.  The market stays irrational longer than u can remain solvent.   But I don't think the flight into apple stock is irrational, personally.

[Kahane-Was-Right BT]

To clarify, the prices you suggest (150 point drop) for apple probably only happen if the entire market crashes or has a sizable correction.  And in that case EVERYTHING trades down so why apple vs anything else.   If u must get puts get them for something else IMO.

[briann]

I don't know if I can even technically do a short. If I ever put money on it, I would do it by buying put options. But put options with a lifespan of about a year seem too expensive and the shorter lifespan ones seem too risky.

Don't put too much money into this.  Remember, you are gambling/speculating.   

Yes, use a put option.  Its much easier, and you don't have to set up a margin account, etc.  But again, the timing of this is REALLY tough... and we could conceivably see apple's stock rise another 5 years before the bubble bursts... so don't lose your shirt chasing this.

As far as the PE ratios.  The current PE ratio is around 17 I think, and while that may seem low (as compared with the past), even 17 assumes continued (but smaller) growth in earnings, which is ludicrous to assume that this can be sustained.

If history has told us anything its that EVERY consumer electronics item, no matter how hip, eventually becomes comiditized unless there is a true barrier to entry.  This will ultimately bite Apple in the butt.  It may take a few years, but it will happen.

[Zelhar]

The metrics are seemingly good only because Apple kept over performing. Which is good for the company and its share holders of course, but cannot be counted on a continuous basis. Their margins can easily change very abruptly and should be expected to for all the reason Brian and I mentioned and other.

[Dr. Dan]

Wish I kept apple instead of buy netflix.  I predicted correctly that apple would be the new Google.  I predicted wrong when I thought that when jobs died, Apple would also.

For now its just me and my netflix stock.  Bought some really low but not close to breaking even.

Panl is a good speculative stock.

[Kahane-Was-Right BT]

The metrics are seemingly good only because Apple kept over performing. Which is good for the company and its share holders of course, but cannot be counted on a continuous basis. Their margins can easily change very abruptly and should be expected to for all the reason Brian and I mentioned and other.

Margins are high because components are dirt cheap and apple can do a lot of that stuff by itself not needing to "outsource" tech dev to others.   Calling for a peak in apple now is way too early to the party IMO.  They just had their best quarter ever, but they don't have to replicate that to continue to amass piles of cash as they have.  And they might replicate it anyway one of these quarters.  But even if they don't.  There is a reason rimm is garbage and the home computer industry is dying.  The reason is largely apple.   I don't know if their tv plans will work out, but IF that product is a hit (IF), tv companies will be the next corpses - they will have no way to replicate whatever apple will be doing, without hiring someone like microsoft to do it for them, and it will be playing catchup AT BEST.   But forget about tv's.  Ipad sales are just starting to take off now, and new screen new ipad product will probably boost these sales higher.
Gorilla run has just begun IMO.   In terms of technical analysis, yeah, perhaps its extended, but a pullback would be a buying opportunity imo.  Should a pullback materialize I will consider playing it with call options so it is cheaper to control 100 shares and make huge gains. 

[Zelhar]

First let me be clear that I don't advise anyone to either go short or long on AAPL or any stock. I really started this discussion to see what other people think and exchange ideas like I did in a few other market related posts in the past.

KWRBT, I think you should try to quantify your arguments a little bit more.

Apple doesn't produce anything, it designs and then outsource 100% of the production. And what's worth is key component such as the screen and the cpu it outsources to its greatest competitor. So, everything Apple does can be imitated and replicated with 1-2 quarters. Can you imagine what would happen to BMW if it outsource production of its cars to its Chinese and Korean competitors. And for how long can a premium brand like BMW could command a market share of over 50%. Because that's what Apple has achieved and that's what they have to defend now to justify their market cap.