Apple Mania

Apple continues its run today as a full-fledged mania grips the company, its products and its shares. Apple’s a good company, for sure. With Steve gone it is probably not going to be a great one anymore, but it is priced for something better than great, sort of world domination forever.

I’m a Mac user myself. I’m writing this on one of the two Mac minis I own, and I have an iPad (1) as well. So I’m not a naysayer, but when a minor upgrade of an existing product line – faster CPU, better screen, upgraded networking but functionally identical – is greeted as the second coming – then one should worry. At least if you are long the shares. Jeff Gundlach is right, this is a generational short. If I only knew at what price, I’d be playing.

Apple mania is holding up the entire market, in part because of the sheer emotional content of its mania, and in part because its huge market cap affects many of the cap-weighted indices. When it breaks, so will the market. And they will both break very hard. My guess will be that someone will realize that the lines have gone and anyone who wants an iPad 3, can have one. And mostly already has one.

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  • Tyro  On March 20, 2012 at 2:55 pm

    A $2.65 / Share (Quarterly?) Dividend… @ $605.5 / Share = $0.017/$1 invested or 1.75% dividend yield… isn’t anything to write home about even if Apple is buying stock back.

    I do think that we’ll see this hold inflated prices until the buyback period starts in September. That alone might be enough to drive the hopefuls into holding on to most of what they’ve got. With the smaller iPads and next phone revamp rumored for the end of the year… it’s going to be interesting to find the correction before it comes crashing down.

    What this means for the rest of the world…

    • reality  On March 20, 2012 at 3:01 pm

      Holding on? Sure. But a mania needs a constant flow of new buyers. It’s like a glacier. If it doesn’t grow, it shrinks, there is no steady state after a parabolic rise like this. If it stops going up, fast money speculators see their holdings as dead money, and they take profits in order to deploy their cash in the next big idea. And then selling begets selling, as people who were in late see their profits turning into losses. The speculators get cleaned out, and then the value buyers step in to support the stock at some level yet to be determined.

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