AAPL & GOOG - Win, lose, or draw?

[turbo6bar]

Both are off 30% from late 07 highs.

Hypothetically, would you back up the truck, unload the truck, or sit in neutral?

Just wondering. Seems like GOOG and AAPL are at the mercy of the broader market. If the market transitions to bear, those two stocks are toast. If the market goes wall meet balls, then they will go to new heights.

Disclosure: I have no position in either stock.

[motion]

Hehehehe.... you brought me out

My portfolio, up really well last year is now in the red. You might remember that I am heavy on Google and Apple. Nevertheless, I will continue loading up on them. Do you see any competition for either company on the horizon? Do you see any slowing of tech spending or paid search? Me neither.

[Porsche-O-Phile]

I do see a slowdown in the coming months. There is little demand for new electronic toys in a recession.

However, that said, I think both represent excellent "hold" positions and are priced fairly well now. My suspicion is that to buy today might result in a decline in portfolio value in the next 6-12 months, but an increase thereafter. YMMV. Just my $0.02.

I'm considering getting back into GOOG if it falls below 475.

[alf]

Both are still overvalued. But there will be a greater fool to bid them up.

[kstar]

AAPL was all but dead in 1997 . . . and most have thought overvalued from about $3.25 (split adjusted) then to about $130 now.

IMO, it's a good buy here and ITM '09 calls look nice as well.

FWIW.

Best,

Kurt

[MRM]

Both are too high and will come down before they go up. Apple is a cyclical consumer stock that depends on the shock value of a new product to make the stock price go up. As earnings spike after a successful new product the stock spikes. When the product is no longer the latest greatest, earnings go down and the stock price goes down even though the fundamentals of the company remains firm and profitable. It's a one trick pony that's too volatile for me. If you are up on the products is has coming, I am sure you could make a killing by timing the highs and lows.

Google is riding higher than its earnings justify because it's Google. Eventually the luster will fade and the stock price will drop to sane and sustainable P/E ratios. I don't know when that's going to happen, but I don't want to be holding the stock when it does.

Plenty of blue chip companies are at near 52 week lows, historic P/Es and decent dividends. Buy some of those stable, unsexy stocks.

[TyFenn]

Originally Posted by MRM

Both are too high and will come down before they go up.

-- with all due respect MRM, it is my humble opinion that this is one of many market fallacies. In my opinion...ok, with help from Victor Niederhoffer...this ignores the function of a speculator.

I will elaborate further, a little later, since I want to outline my reasoning as well.

[TyFenn]

18-May-2006
Three Common Fallacies, by Victor Niederhoffer

1. It's going to be up but first down: Often someone talks about an imbalance that is expected to be corrected by the end of the year, and says something like, "I expect the Dow to be 10% higher by the end of the year, but to have an immediate 5% correction." If the expectation is prevalent that it will be 10% higher than investors will start buying in anticipation and the market will rise accordingly. Invariably such forecasts of a dipsy-doodle, which don't take account of the function of speculation and rational expectations to move prices forward in time rather than moving goods across boundaries, are wrong.

2. The number was very weak. The market's going to get killed: There are at least 20 important economic numbers each month, and each of them has a major random component, and many of them are contradictory of the other. The stock market is valued based on an infinite stream of earnings. The effect of one number is transitory, and merely an opportunity for weak ephemeral traders to be shaken out and churned for the benefit of long term players.

3. The mechanical system will have its day: The trend followers are up 15% from beginning of year. That proves that trend following is good. No sooner does one believe in a mechanical system than it's ready to go the other way, as Bacon said. It's dangerous to have a fixed believe in a system's inevitability because it can lead to holding on until the end. On another front, the recent 5% decline in the trend following index, is probably a cause of the stock market decline as the markets that were up were commodities and the non-American currencies, and oil, and grains, and stocks. The markets that were down were bonds. All such markets benefited and had their moves exacerbated by mechanical aspects of trend following. As the ephemeral factors get reversed, or as random moves set in motion counter ephemeral trades, all markets that had benefited from the buying power and additional money elicited from the public by such activities will tend to reverse.

--this is copied directly from Victor's site www.dailyspeculations.com - if you're not already familiar with it.

[MRM]

Well, considering my record, my advice is pretty suspect, no matter how confident I appear when giving it. My money is in no load, low fee mutual funds and index funds and the company my wife works for, which is a Dow component.

My limited analysis is to disregard speculators on the grounds that you don't know what is going to start the speculators to run and when the run is going to start. So rather than trying to time the market, the non-professional investor is better off picking good companies that have fallen out of favor, especially ones paying good dividends that can be reinvested. If I were a professional money manager I'm sure I would see oportunities with Apple and Google, but 95% of fund managers can't beat an S&P index fund over five years.

I'm interested to hear what you have to say about Apple, Google and Vic. I have to contribute to my Keogh before April 15. Maybe you can convince me to take one or the other with this year's contribution.

Edit: I see you beat me to it.

[TyFenn]

MRM,

Unfortunately, I'm still on the clock so the response 'I would like to give' I just don't have the time to complete, at the moment. My 'rough' opinion is that they are both headed downward but before I go on record as having that opinion, I still need to do more research and work the 'phrasing' of my response.