Jeff Kalnitz

Rating: 0 not yet rated(0 votes)    Vote:

You are logged in as | Logout

SLO 2 Blog Entry Apple (aapl)
(May 6th, 2008 update)

I passed up my $5 soy chocolate chai mocha at Starbucks (SBUX) to save more money to spend on my next 3G iphone that I will purchase soon from the Apple Store. Meanwhile my 2 ½ year old daughter already knows how to operate my iphone just from the times she was quick enough to grab hold of it occasionally. In fact, we had to buy her a plastic yellow iPhone looking electronic toy cell phone to keep her happy. But for how long, until she will "need" her very own 4G kitchen sink version iPhone, I wonder? Aapl is now catering to a clientele from 3 to 93 years old. Message for the competition- be afraid, be very afraid!

The Apple Stores I have frequented the last several months leading up to their latest earnings report were frequently absolutely mobbed with shoppers of every age, even while the rest of the malls were near devoid of customers. And yes, those iMacs and Macbooks were flying off the shelves. That's how I knew they would probably beat forecasts and many analyst expectations. Now that the back to school and holiday seasons are upon us (yes, it starts in the spring and slowly cascades forward in this modern world), and the world is beginning to catch on to what aapl has in gestation over the coming next few years, some interesting highlight reels are in store for the Apple Store, which I will highlight in a future article. And how about that Vodafone 10 country iPhone distribution deal announced today!

Well, let's not get too carried away, as aapl is still percentage points shy of its all-time high of around $200 a share. For the purposes of this Strategy Lab Open stockpicking game, it is however only appropriate to take a follow-up gander at the past, present and the potential future trajectory of this comet of a stock, and company. Once again I wonder, can Apple become the biggest company in history by market cap, in the U.S. or even world-wide market. Maybe less far-fetched than ever?

In my last blog article on aapl, with the stock shooting between $175 and $200, I advised taking profits between $175 and $200. For new investors in aapl, I recommended waiting for a substantial pull-back, and to buy incrementally on the way down. These figures turned out to be precise exit points, as was the re-ascent of the stock after being hammered on largely overblown or unfounded fears. How did I know this? A great company for dozens of quarters will usually continue to be a great run company yet again, especially if you're talking about aapl. So, buy on dips, then buy more on further dips, and buy more if it continues to really swoon, all the while monitoring the current status of well-being and engagement of one Steve Jobs.

So recently I followed my own advice by re-loading up the boat with aapl shares for SLO 2 at a cost average of about $117 a share. As of today, it stands at about $185. Just as in SLO 1, a cool 50% or so gain in stock share price in just a few short months! Not bad, not bad. As a trader, it almost seems like bobbing for apples in a barrel thus far!

And now, here we are again, between $175 and $200, and again presented with a rapidly soaring incline off the decline. To schnitzel, or not to schnitzel? Add, subract, multiply, divide, what's an investor to do?

There are a number of similar, albeit more maturing synergistic themes at work here, but recent developments have sharpened the point on some of my views on what aapl will probably do from here. I had written that aapl as a $300 stock was, in my opinion a fairly high probability, but with marked volatility. I now think, more so than ever, $300 will not be an if, but a when, barring tragedy. The target I calculated as the end of 2009/ to mid-2010 seems to me more achievable than it appeared even to an unabashed aapl bull like me. At the $117 level, I would rather have borrowed against the stock on margin than sell shares. Now that it is again approaching $200, I would again be cautious about getting in at this lofty entry level. In the more remote probability that aapl corrects substantially, I could recommend getting in on the dips and still sleep at night with a clear conscience, and for those who took this bull to heart and got in at a much lower cost basis per share, I suggest similar caution, after a brief giddy celebration. As for me, myself and I, since I can assume complete responsibility for my own truths or follies, I will be allowing a few hundred thousand dollars of shares to ride out the stormy seas of this latest adversarial, recession-racked market in my personal investing account. Well, at least until just before the next earnings quarter, and then possibly right though the holiday fourth quarter. This will depend on a few critical considerations, which I will post in an upcoming blog entry. Time and further analysis will tell.

For now though, approximately 50% returns in this challenging market ain't bad at all, and barring or until the next major market correction brings this Apple of my eye sufficiently downward yet again, I'll smile upon both my SLO 2 and personal heady gains thus far over the last 4 and 96 months with aapl the stock, game-and-real time. I will report soon on some thoughts and links regarding the near and intermediate future possibilities of Apple the company and aapl the superhero stock.

Regards,
Jeff kalnitz