Wednesday, December 19, 2012

What's wrong with Apple?

Let me add myself to the scores of zillions of bloggers, 'professional' reporters and pretentious buggers who, all of them indeed with no exception, think they know stuff... not? Let me utter my frustration that has built up to incredible levels as I been watching AAPL's zig-zagging with no underlying trend in sight, against all 'fundamentals' and 'technicals' odds! There have been days when the selling and market cap dropped so hard that there seemed to be no support whatsoever. Nonetheless, the active volumes during a day's trading that eventually led to almost 30% decline of the company's valuation since September last, are at an average of 22 million shares, which is less than 2.5% of all shares outstanding (yep, AAPL's got less than a billion shares in all). Hefty speculators moved the company's stock to the south for almost one third of its value by dealing a mere 2.5% of the stock. Kinda crazy... 2.5 percent of owners (the brave and bold speculators that is) moved and reduced the paper value of the remaining owners's 97.5% part by roughly one third, that's give 'n take a trivial 200 billion greenbacks.

For a company like Apple with its sound fundamentals that we know in terms of a) current quarterly revenues and profits in absolute value, b) market share and margins in percentage values, and c) the perceived market value of their brand and a standard P/E ratio being appallingly low, what is currently happening to the stock is utterly nuts. Various reporters are struggling to put their finger and pens on the rationale behind based on market events around Apple's fundamentals, and often will jump prematurely to conclusions in childish manners making themselves laughable in the light of real events, when the latter eventually come out in the open. Take for example Apple's iPhone 5 launch in China. The day itself many geniuses and Reuters reporters alike explained AAPL's day drop to a lackluster reception of the iPhone in China. No long queues were observed before store opening, and therefore wishful thinkers and Apple haters (dudes, get a life) rushed to predict Apple's loss of momentum and (illegal copier) Samsung taking over, again! Jeez! Hold me or I'll faint now! Few days later, when the real news hit the streets from Apple's own formal Press Releases about a shy 2 million iPhones sold there over the first weekend after the launch, naysayers had to chew copies of their articles printed on toilet paper. Despite that, on they were all over again to find another doom story that'd explain the roller coaster.

Now the facts are: No company of such a humongous market cap and the kind of fundamentals it demonstrates should experience volatility like this. I'm talking both in absolute and percentage values now, right? These days Apple is adding more hard cash to its reserves annually than the market cap of most successful companies operating on Earth. It's products are market leaders, not only in terms of market share alone but in terms of setting quality, functionality, ecosystem and flawless design standards for consumers to swear by, and Asean geniuses in China, Korea, and Japan to shamelessly copy them, like their local culture taught them. (Actually it's our own fault, western capitalists, who have sent all our manufacturing to the Far Easteners to earn more short term profit for ourselves, leading to the total economic demise of the West like sawing off the tree branch we are resting upon. As for our political leaders who allowed this exodus to happen, well, what can I say? They'd rather go to the bushes and cut wood instead.). Especially the shameless desperados from South Korea have such a nerve and arrogance that I swear, next time I think of buying something made in there, and Samsung in particular, I wish I lose all my savings in a flash and become a vagabond! I betsa most of you reading this will think the same!

Nonetheless, despite what logic dictates, and what the stats of a thousand years history of stock trading tell us, against all odds indeed, AAPL is still dropping beyond comprehension. Seems there's no bottom to stop at. There are even a few comedians out there claiming AAPL will eventually have to fall into double digits (imagine this happening for a moment to a company that's left with more cash than its market cap... it's gonna be like when time progresses ahead kinda 'backwards', and the future becomes the past; Hawkins predicted this once to happen when the Universe will start shrinking again into a singularity...). Seems to me like kinda like the world coming to an end this Friday when elementary school math deficient Mayas presumably suggested long ago.

I believe there must be something happening that many suspect but nobody seems to publicly admit. A conspiracy theory of some sort. You see, what happens to a company's stock is utterly fundamental in terms of public credibility and long term health and company stability and success. If one imagined that a company's stock becomes extremely risky to trade because of volatility, most conservative investors will stay out of it despite potential pay-offs, and won't touch it even with a pole. In the case of Apple, and because of its current footprint on our daily activities, ignorant media and their pathetic agents will seek further sensation arising from a share drop to justify predicting the unimaginable: a catastrophic failure for the biggest company human history ever seen. And I am afraid, by pulling the leverage (2.5 vs 97.5) for a sustainable amount of time and daily overweight short-selling will eventually cause a self fulfilling prophecy to occur and potentially kill the dream. A typical behaviour observed among the most self destructing mammals on earth: the average US citizens!

There might be those freakin' hedge funds to blame. Or HFT for that matter. But why Apple? Google is trading at 22 times earnings and recovered all its recent losses galloping ahead towards new historic all time highs, again. AMZN trades at multiples that even Jeff Bezos has difficulty grasping. So, why Apple? Is it because people hate them so much? Is it Samsung, or Google, or Microsoft who hide behind this, pay reporters and bloggers alike to create the FUD and trigger hedge funds to act as they do? Why doesn't Apple management react at this at all? Apparently they think it's normal and they don't seem to care much. And right they are. It's only us who look at this from the outside that get real pissed with so many naysayers acting against the best human entrepreneurship ever existed... I'm sure St-Steven from above is looking upon us and has a hell of a laugh.

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