I guess my problem comes with definition of “hitting a wall,” especially in this market.

Well, I guess that wall can be bumped and cracked and broken over time, but doesn’t mean ya can’t beat your head against it for a while. Just semantics, I think we both understand that:)

Now, lets let HER tell the 360’s whether to buy or sell. (You out there Kate?)

Always. Buy or sell? Yes, of course. Oh, you want to know which one? That depends. If you bought well before $130 and haven’t sold yet, shame on you. Taking profits is not a sin, it’s an objective. Letting it ride is what the losers do in Las Vegas (though some would argue that there’s not much difference between Vegas and Wall Street). If you bought AAPL above $130, then you’ll have to determine how much of a loss you can stand, or, how long you can wait for the next cycle. Another cycle upwards will come. The trick is to know when (so don’t ask me, I don’t wear a watch).

RKW - 24 January 2008 10:26 PM

IMHO, lets forget PE ratios, weighted indexes, betas and alphas, and moving averages. As Kate said in her first post, things go up, things go down. Some in this thread seemed to think it would go up forever without any corrections. As Johnny Carson used to say....Wrong again kemosabe (sp). Unfortunately, in my position, I am not able to suggest to anyone on the internet whether to buy, sell or hold, and won’t. I just wanted to congratulate Kate for a good call, at the right time.

This ‘call’ wasn’t difficult. Apple’s been on a nearly uninterrupted ride for a long while, with very few speed bumps along the way. Some would call those pull backs ’opportunities.’ Fair enough.

I’m not one who believes in weighted indexes, moving averages, PE ratios (which used to be something of a guideline, but no longer) or any of the so-called stock indicators. If there’s a mathematical science in there then I don’t know what it is and don’t know anyone else who does because they cannot accurately predict the ups and downs of the market let alone an individual stock. Therefore, what difference do all the averages, ratios, indexes, indicators, and other ‘guides’ really mean?

I buy stock based on Peter Lynch’s philosophy. Remember Fidelity? Buy into good companies. A good company has good products, solid management, loyal customers, growing revenue, growing profits, growing markets. After that, sit and wait awhile. The stock will go up. When it goes up enough, take some profits. The stock eventually will go down and the price won’t have anything to do with all those ridiculous pseudo scientific indicators. When it goes down an abnormal amount then that usually points to a decent buying opportunity (gotta do something with some of those ‘profits’, right?)

My father used to say, ’It ain’t rocket surgery or brain science.’

Anyone who bought AAPL at $130 and watched it move to $200 should have been taking some profit along the way. That’s an awesome amount of profit, so taking profit helps mitigate the drop back to the $130s. Now it’s a waiting game.

So, let’s ask ourselves-- Is there anything wrong with the Apple business model? The Mac is on fire. Overseas markets may help extend the iPod’s life cycle, but that product’s growth is slowing (overseas expansion may help). iTunes Store should continue to grow but may not bring much to the bottom line. iPhone business appears on fire, too, so the only question is ’how profitable‘ and ’how sustainable‘ is it? Customer satisfaction is off the charts so I suspect popularity (measured in sales and revenue and units sold) would improve even as the price drops, just as it did with the iPod.

Then, what else does Apple have under the sheets that we don’t know about but could be a game changer? Apple TV? Add a DVR and put the box into every AT&T;home and Apple gets another leg to run on.

How’s my off-the-cuff analysis, guys? Sorry, gotta run and catch a cab.

Yeah, PE’s successor is PEG, so far as those go. While they do not (nor have they ever, for people who were paying attention) predict ups and downs, they do indicate likely long-term prospects. I did buy before $130, indeed I bought before the service formerly known as the ITMS sold a single song, and I have been selling along the way (I only have 13.3% of my original position, and that alone is worth more than three times my original cost for everything).

The point is that there are tens of thousands of places to put money in the market, and the day traders can have their fun looking for short-term buys, but I would ask this: where will AAPL be in three, six, or nine months? I have a neighbor who didn’t listen to me even when I pointed to AAPL at its pre-split 40 (after I had more than doubled), buying in eventually at a post-split 60 and missing a potential threefold gain. Worse, she’s a Mac user who missed the signs that AAPL had good long-term prospects. It still does. Can you make faster money someplace else right now? Yep. Will you be able to realize those gains against someone with a long position in AAPL? Your guess is as good as mine.

I would simply ask you how long you think this divot in the stock price will last. If it feels like months and you have lost against your buy price in a taxable account, harvest your losses, give Uncle Sam a friendly nod, and make money elsewhere. If not, sit quietly, watch, and wait. We’re back to fear and greed. Reduce those two in your buying calculations, and you’ll be a lot happier.

Well Kate, I like your reasonings, and the willingness to take profits. One doesn’t have to take ALL their profits at once (just something I wanted to point out), but hanging on forever is never a good thing. On the other hand, if someone wants to build positions over a period of time, buying on severe dips isn’t a bad idea either. I get a kick out of Erin and her cronies moaning and groaning about the market. They seem to forget some serious statistics that point to what happens within 12 months of fed rate cuts, or what happens within 12 months of serious % drops. I also get a kick out of Larry Kudlow saying all is well, when the market is at severe overbought areas, like it was when you made YOUR call.

One thing you mentioned was Fidelity. Fidelity has a nifty chart in their chartroom covering a whole room. On this chart is pasted magazine or newspaper covers at valleys and peaks in the market. At the lowest valleys, headlines with doom and gloom. At peaks, headlines with “buy now” types of copy. Sentiment at the present time, is at historical lows. Thats a contrarian indicator. In other words, some would call it a buy signal. Now, thats not on one stock like apple, but on the market.

Like Peter Lynch said, buy what you know in individual stocks. Thats what Warren Buffet does, he buys companies he understands. Oh, btw, its also not a bad thing to buy when things are low, and sell when things are high Daytrading? Naaaah not interested. Accumulation over a period of time, and moving out when everyone else is hot to trot? I can live with some of that.