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Technology Stocks : Apple Inc.
AAPL 278.28+0.1%Dec 12 9:30 AM EST
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Sdgla
To: MGV who wrote (170046)5/29/2014 11:50:27 PM
From: i-node1 Recommendation   of 213176
 
>> If you thought the "precipitous drop in Apple was reasonable"

I don't think it was reasonable on a valuation basis; but it was totally predictable and predicted. After Jobs' death they needed to show people they still had it and they failed to do so. I don't own much Apple stock, as I prefer the calls instead. But I took a tough loss on some I bought near the high in '13, so I didn't get back in until the stock had come back some.

There is a pretty fundamental difference between trading calls and owning the shares in that a fall like that will totally destroy your investment. So, valuation can give you a warm feeling but there are times when the markets will destroy you. One of those times is after an astounding string of successes followed by even a small miss. As a stockholder, the valuation gives you comfort; as an optionholder, you just have to decide whether to bail or to ride it out. I choose to avoid near term expirations to try and mitigate some of that exposure, but there is a cost associated with it.

I continue to believe Apple is substantially undervalued at current levels. I'm also aware that if they can't give markets a glimpse of the "full pipeline" from time to time, we can see another rapid selloff just like last year.
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