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"Steve Jobs is crazy- and so is aapl stock's appreciation in price-per-share these last several years. (To cut to the chase, see THE BOTTOM LINE at the end of this article.)
Movie trailer in "that famous movie trailer guy's special voice; "In a world where everybody else is playing checkers, can Apple still play chess at grandmaster level and beat the pants off everyone? Only time, and the well-being of one man holds the answer"...fade to the "1984" TV ad updated for the year 2009.
Or in other words...
"Is Steve Jobs slipping?"
"Is he actually making human mistakes?"
"Will the iPhone miss it's sales targets?"
Even if the iPhone blows past its sales targets, will that be enough to make up for the reduced margins?"
"Is aapl showing signs of cracks in their titanium armor?"
"Does aapl the stock still have legs?"
Or the favorite question I like to occasionally revisit;
"Does any of the above actually matter in the greater scheme of Apple's ongoing achievement of world dominating consistently bankable stock appreciation these last many years since Steve returned to save Apple from irrelevance?"
And the most important and difficult question of all to answer for us SLO contestants (even with a Ouiji Board)- "Does any of this really matter in a contest where patience and foresight are measured more in days and weeks than months and years?"
Well, I guess in the context of a flashy, six month stock picking contest where excessive risk and a microcosmic timetable rule like masters of an imaginary universe- it does, a lot.
In SLO, contestants are trying to out-do the next trader before the deadline, without the inconvenient hindrances of short term capital gains taxes factored in, excessive and unsustainable risk, and no other peoples' real money involved. But from the broader perspective as a person with a longer term strategy for the stock these last seven years, I ultimately ask myself the following question periodically before I pull the trigger and sell off additional chunks of the few hundred thousand dollars of remaining aapl stock holdings I have left in my actual "real world" personal non-IRA investment account;
"Will aapl's stock price be lower, about the same, higher, or a lot higher 1,2, 3 or more years from now?"
In other words, I'll put it this way;
That Steve Jobs, just when the investing world thinks they've got him figured out he shocks the hell out of the investing world yet again! That crazy, foolish, mistakes-prone, once-was-great fallen warrior. Has he finally lost his cool and made a major PR boo-boo; an embarrassing, unscripted, opps-ee gigantic mistake?
It's not like he spends months planning and rehearsing new product roll-outs? (Oh wait, he actually does).
Or that he identifies coming trends and continually refreshes their incarnation just when the competition finally figures out how to catch up? (well, o.k., he's got that one covered too).
Too bad he's not a better public speaker/ promotor for the Apple product line! (Oh wait, he's the best in the business)
And if only he could get the hang of continually shocking investors and customers in surprising and unforeseen ways...(Oh wait, that's kind of what we're talking about here with the endless iPhone speculation, rumours, upward guidance, lowered guidance gossip, facts, UFO sightings and so on.
And if only he knew how to simultaneously guide investor expectations lower while more often than not blowing the numbers away... well, you get my point.
Specifically speaking;
Dropping the price of the iPhone by hundreds of dollars, what's with THAT? Pissing off about a million early adopters who paid insane amounts of money to proudly pay additional insane amounts of money to get locked into a two year contract with Cingular/ AT&T, who often payed even MORE insane amounts of money to end their Verizon or T-mobile cell contracts early to switch over. I doubt it is simply lack-luster sales woes, or a rare careless mistake. To paraphrase another living-on-the-edge public figure..."define Crazy". . Sure, Steve Jobs is crazy- crazy like a fox. Because this is precisely aapl's strategy since before the day I walked into a PC store and bought the only Mac Luggable- I mean, Portable, available at the time- for $5,000 plus tax.
Take a look at the recent articles (if you don't have a membership to RealMoney, do a search in www.thestreet.com for thousands of other related articles)
http://www.thestreet.com/p/_rms/dps/cc/20070905/columnistconversation1.html#entryId10378039
http://www.thestreet.com/p/_rms/rmoney/gamesandgadgets/10367143.html
http://www.thestreet.com/p/newsanalysis/techgames/10378503.html
for a few of the suppositions as to the possible cut-throat business logic behind such moves. Also consider that maybe the number of iPhones sold was actually ahead, not behind projected sales estimates.
Either way, consider the fire this lower entry price-point will fuel resulting in massive additional sales for the back-to-school and holiday season. How the price cuts will assuage the wait-or-get-screwed consumer mindset preceeding what will almost certainly be a new, improved, high speed internet and wireless-enabled version of the iPhone by early 2008. And how the whole broo-hah cleverly camouflages how Mac portables and iMacs are popping up on the most unlikely of work-desks and media centers. And how the larger number sold will fuel increased entry into the expensive and closed-end spending pool that is "the Mac experience"! And how the introduction last week of Logic Studio will further bring the professional world and prosumers into the Apple product line fold by extension.
As I've been thinking for many years, none of these recent so-called controversial developments deter me from pondering- the lower aapl stock dips, the more of a screaming buy it becomes. Remember the "plunge" to $8.00? $55.00? $117.00 (about three weeks ago)? From a low of $55, it closed after this latest iPhone price reduction bizarre announcement and new iPod roll-out "back down" into the $130's, a year or so later. Now that's perspective. The beauty of Steve Jobs "the stock appreciator, ring master" is that he knows how to milk the cash cow while cajoling and guiding it to climb a wall of self-induced promotional wall of worry. Without the watering can of resistance, the seed has trouble pushing through the surface. It's a tight rope act at high altitude for sure, but no one does it better than our man Steve.
Of course the future does not necessarily equate with the past so astonishingly prosperously and I don't have a crystal ball and have misplaced my Ouiji Board, but I still wouldn't bet against Steve Jobs, let alone give up on aapl the stock. Just like I wouldn't play Russian Roulette with an almost fully loaded gun. Hell, even Steve Jobs at times doesn't quite comprehend just what an insanely great turn-around specialist he is. Take a look at this link..."Options Trade Cost Steve Jobs $4 Billion" http://www.thestreet.com/_rms/smallbusinesstech/smallbusinesstech/10362142.html
How about this for another "missed opportunity of the decade" award?...
"Michael Dell declines offer to buy Apple Computer" http://jeffkalnitz.com/journal/index.php?p=88
Here's another link, an investing article I wrote in March 2005 titled "Apple stock is up 600% in two years- what's next?" http://jeffkalnitz.com/journal/index.php?p=62
And for more of the articles I've blogged on aapl the stock, and the culture, http://www.jeffkalnitz.com/journal/
THE BOTTOM LINE?
I've been long aapl since about $8 and change. As I've schnitzeled off occasional profits to reduce the risk of losing my hard-earned investment profits by getting too subjective and thereby "greedy", I have always felt a pang of regret. Indeed, I wish I had simply kept adding to my stake. Because, damn, what a beautiful 5 year chart. And 3 year chart. And 6 month chart! There comes a point when a company multiplies its market cap til doubling and doubling again becomes more lumbering, less plausible. The story gets old (think Microsoft). I didn't think aapl was at that point when Michael Dell was rejecting even buying aapl for a fraction of the value of its parts, deeming the assets near worthless. Nor when Leopard's release date was pushed back to shift resources over to iPhone development. Not even when the iPhone, which I had bought on its first day roll-out, was slashed by $200 dollars. Because after the vast appreciation from under $10 aapl stock has seen, the gift that keeps on giving, in probability still has running room.
What I've always liked about Ken Lam's run in the Strategy Lab contests is his consistency. Many times, the same contestant who topped the charts plunges or experiences unacceptable volatility over the longer haul. And that is the best endorsement one can find as to the impressive benefits that Marketocracy, and contests like this one offer the small individual investor. It might as some infer, be a dangerous passing fad signifying a market top bubble. Or then again, it could be part of an emerging broader trend that will finally allow investors to consistently beat the market. Time will tell.
And I am willing to wager that aapl still has legs, with a price target of $175 by the end of January. Let's see- from a recent "low" of $117 to $175- about a 50% increase in stock price per share in well under 6 months... Not bad stock portfolio overall returns if you can get them.
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