Originally Posted by Sumergo
Seriously though. Why isn't such a continually successful company as Apple seen by the markets as a "buy, buy, buy" with steadily rising stock value?
Why IS the stock so volatile when it seems such a good investment?
Because steadily rising market value, when you consider it in context of the hyperbolic stock chart from last year, would result in an INFINITE stock value in no time flat. When a stock gets ahead of itself (IE amateur investors like Tallest Skil) think that it should go up forever just because it's a profitable company, it goes up too far too fast. That's when the dumbest of those amateur investors buy more and more, and then the stock hits a wall and corrects back closer to its real value.
Inexperienced, amateur investors (like the one I mentioned above) bitch and whine about how unfair it all is, but they're just lambs to the slaughter for people who actually know what they are doing. You'd think that grown adults would have learned after the bubble of 2000 what a bubble stock chart looks like. 20,000 posts, must have a lot of time on his hands! Better spend it learning! I took my college economics classes from Alan Blinder and Paul Krugman, among others. I wonder where he learned everything he knows?
At 700 Apple was not a good investment. At $500, I believe it is. That's why I have spend the last month putting about 15% of my investment account into leveraged investments in AAPL. I'm banking on AAPL being in the neighborhood of $600 within a month after the January earnings report. Unfortunately the idiot politicians set up another crisis to happen in late Feb, so that may interrupt my plans, but I think I will still be ok.
Tallest Skil ignored a question that he didn't know the answer to (or more likely, was ashamed of the answer once he finally looked it up). Apple is expected this quarter to report earnings that are 4% LOWER than they were last year in this quarter. Tallest skil is the perfect example of an amateur investor who doesn't have a clue what is going on but still wants to sound smart, so he will lead you to believe that Apple's $527 price (which, by the way, places it at the TOP of the list of most valuable companies in the USA) is super unfair and it is massively undervalued.
The fact is, if a company stops growing earnings, the market will punish them. Now, I think Apple will report earnings this month that are FAR higher than expectations, and that that negative profit growth will actually turn out to be false. And what will happen, to the chagrin and confusion of Tallest Skil, is that the stock will go up. Watch, it'll happen. Apple will report great earnings (I hope, and expect), a bunch of dummies on this Apple FAN board will say "oh great watch the stock drop now" and the stock.... will rise.
By the time the next earnings roll around, the dummies will forget about it, and will go back to saying (as they always do) that Apple always falls after beating earnings expectations. They never seem to get around to asking themselves, if Apple is always falling, then how did it become the most valuable company in America (25% more valuable than #2!)? Nah, they never confront that obvious contradiction All they know is that they were so stupid they bought Apple at prices above $650 because other dummies on a apple fan site told them it was a good plan, so they're still underwater.
Keep listening to amateurs trying to sound smart... you'll end up believing what they're selling - which is that the market is stacked against the little guy and that your favorite company is being unfairly treated. The actual reality is that the market is stacked against dumb people who can't see the big picture. Amazingly, some of these dumb people actually broadcast how dumb they are rather than trying to understand why their previous understanding of how the market works was wrong, and to become a smarter and richer person.
It's a mystery to me.
Buy low, sell high, dummies
Edited by cameronj - 1/4/13 at 4:00pm