Stormy weather and Apple stock prices
Reflecting on my recent post on profiting from the Apple iMac launch, the strategy I can only say this:
My prediction was wrong. If I had been forecasting the weather instead of Apple's stock price, I'd have predicted a nice, sunny day in Brooklyn yesterday instead of the tornado that that actually landed there. To see what I mean, look at the graph below.
[Click on the graph for a larger version]
While the tracks are moving in parallel now, there certainly hasn't been any profit on the long side of the price movements yet. As noted in the prior article, prices decline about 1% going into an iMac launch and then rise an average of 1.5% the day after the launch, but we haven't seen any rebound this year. Instead, AAPL stock price declined a tiny 0.1% going into the launch, then declined another 0.8% after. while today's trading has just begun, AAPL is down another 1.8% so far, and I expect to see the usual post-launch depression to continue for another day or two before the price ticks up again.
Now as I noted in the caveat on the original post, past performance is no indication of future results, and my little analysis there just proves that point again. Predicting a week of stock market prices is about as reliable as predicting next week's weather -- getting even 50% right isn't actually too bad.
But long term, the odds shift in our favor. Why? Because Apple keeps earning more money from its business. That's why I focus on revenues and earnings in my Analyzing Apple reports. Even with all the volatility we've had, Apple stock is still up more than 55% year to date, and more than 100% over the past 12 months. That's because the company keeps earning more money on a regular basis, and one way or another, that money eventually shows up in the stock price. Said another way, I may not be able to predict the weather next week, but I'm fairly certain that December is going to be much colder here than it is now in August. Long-term, the fundamentals of seasonal weather and business are just a lot more predictable than the chaos of short-term results.
I remain confident that Apple's fundamentals will drive the stock higher over the next two years, simply because the fundamental business results remain good and growing. And who knows, Apple stock may recover even next week and give me some of my pride back by tracking the historical averages. But it may not too. After all, based upon historical averages, Brooklyn doesn't get tornados.
UPDATE: By the close of trading today, perhaps it was actually AAPL stock on Wall Street that got hit by the tornado, not Brooklyn. The actual final tally was that AAPL stock is now down 6.5% since the iMac launch day. Somehow, I don't think Apple is involved in sub-prime lending, but tornados tend to uproot everything in their general vicinity.
My prediction was wrong. If I had been forecasting the weather instead of Apple's stock price, I'd have predicted a nice, sunny day in Brooklyn yesterday instead of the tornado that that actually landed there. To see what I mean, look at the graph below.
[Click on the graph for a larger version]
While the tracks are moving in parallel now, there certainly hasn't been any profit on the long side of the price movements yet. As noted in the prior article, prices decline about 1% going into an iMac launch and then rise an average of 1.5% the day after the launch, but we haven't seen any rebound this year. Instead, AAPL stock price declined a tiny 0.1% going into the launch, then declined another 0.8% after. while today's trading has just begun, AAPL is down another 1.8% so far, and I expect to see the usual post-launch depression to continue for another day or two before the price ticks up again.
Now as I noted in the caveat on the original post, past performance is no indication of future results, and my little analysis there just proves that point again. Predicting a week of stock market prices is about as reliable as predicting next week's weather -- getting even 50% right isn't actually too bad.
But long term, the odds shift in our favor. Why? Because Apple keeps earning more money from its business. That's why I focus on revenues and earnings in my Analyzing Apple reports. Even with all the volatility we've had, Apple stock is still up more than 55% year to date, and more than 100% over the past 12 months. That's because the company keeps earning more money on a regular basis, and one way or another, that money eventually shows up in the stock price. Said another way, I may not be able to predict the weather next week, but I'm fairly certain that December is going to be much colder here than it is now in August. Long-term, the fundamentals of seasonal weather and business are just a lot more predictable than the chaos of short-term results.
I remain confident that Apple's fundamentals will drive the stock higher over the next two years, simply because the fundamental business results remain good and growing. And who knows, Apple stock may recover even next week and give me some of my pride back by tracking the historical averages. But it may not too. After all, based upon historical averages, Brooklyn doesn't get tornados.
UPDATE: By the close of trading today, perhaps it was actually AAPL stock on Wall Street that got hit by the tornado, not Brooklyn. The actual final tally was that AAPL stock is now down 6.5% since the iMac launch day. Somehow, I don't think Apple is involved in sub-prime lending, but tornados tend to uproot everything in their general vicinity.
Technorati Tags: Analysis, Apple, Business, Predictions, Stock prices, Stocks, Weather
posted by Carl Howe at
12:41 PM
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