What I’m doing reminds me of the times in the past when I kept buying on the dip and said stock kept going down. Right now, the naysayers don’t see any catalyst (with most jumping on the Samsung bandwagon) and anyone who watches the idiotic talking heads on the likes of CNBC, will likely see/hear the constant stream of Apple bashing that is en-vogue.
I look at where I jumped off of GOOG (90% sold at $630 back in 2011 and the remainder at the start of 2012 when it was around $660) and it’s 52 week high ($844) back in March 2013. Somewhere in this time frame, GOOG went one way while AAPL went another. Google got off relatively unscathed from the Oracle lawsuit while Apple isn’t faring very well in the patent lawsuit area against Samsung. What this all boils down to is it looks like a repeat of when Apple lost it’s look and feel copyright lawsuit against Microsoft back in the 90’s.
Current 52 week low on AAPL is $419 and looks like it is headed back to test those lows. Short term, it is easy to construe that I made a huge mistake. I still stand by my original decisions though because this is about the long term; I’ve seen this play out in the past before and it sort of smells the same where all of the love is now in the Android/Samsung camp (akin to when all the love was in the Wintel camp). It took time but eventually, lot of the high flying players in that arena eventually were “weeded” out because there was no true innovation on their part.
Apple once again re-invigorated this whole tech race with the introduction of the iPhone (which everyone else re-positioned themselves for once the whole touch screen/virtual keyboard interface proved the industry naysayers wrong). Likewise, iOS hasn’t kept up on the user interface side which compared to the latest Android, is beginning to look and feel, long in the tooth. With Apple SVP of Industrial Design Jonathan Ives taking over the software UI design responsibilities, I expect to see some much needed strides made in this arena not just for iOS, but in the next major version of OS X (I’ve mentioned in previous postings that I’m not personally enamored with many of the UI decisions that have been made since Mac OS X 10.7).
Thus in the process, the stock has managed to give up most all of its gains made (when it hit an all time high of $705 in September 2012) since Steve Jobs passed away (back in October 2011, the stock was trading at around the $420 range). Over the past 6 months when this slide has occurred, the rest of the market has gone the opposite direction. As someone who originally got into this stock back in 1997 as a complete contrarian, I’m putting my money where my mouth is. I still see the macro story in place. I’ve seen advancements in the supply chain which will take a company like Apple, to figure out not just the market fit for such products, but also the know how on both the hardware (industrial design iteration) and software side to pull off something that people will want to own. Sure everyone who wants a piece of that action and are trying to beat Apple to the punch, are performing R&D in this area (like the purported iWatch). The question is, who will get everything right (form factor, software feature set, the marketing).
While I have stink (dare) bids below AAPL’s 52 week low, I’ve begun nibbling more in the sub-$450 range. What I’ve learned from the past is the bottom only becomes known in hindsight, and that my biggest long term gains have always come when I bought into the negativity. Thus I’m probably one of the minority few who welcome the ongoing negativity surrounding the company because I still see significant upside to the macro story especially if the company can pull off the next big thing not only in the wearable computing segment, but also in the home entertainment space. Thus I’ll gladly suck up shares if it continually falls lower because right now, the P/E ratio is just compressing even tighter, where it eventually will need to snap back to some reasonable equilibrium point.
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