Why Investing in Apple Now is Unreasonable
Invest in Apple now. Why not? After all, it's stock price has been dropping. Hey, it's a bargain. Buy it while it's "on sale" - right?
If you bought Apple stock long ago, you've made money - perhaps a lot of money. As for buying Apple stock today? You must be kidding, of course.
Yes, I realize that Apple's stock price has been dropping lately. But just because a stock's price goes down, that doesn't mean it's a good time to pick up some shares.
OK, I realize that everyone goes ga-ga over Apple's products, and has for quite a few years now. And I realize that Steve Jobs recently died and everyone's reading the book about his life and - even though he was a rather, shall we say, difficult character in many ways - he's universally held to be a business genius who created incomparable products that everyone (or at least a lot of people) love.
Oh, and I'm not saying that just because Jobs is not longer at the helm that Apple will inevitably go into decline. Let's say we agree that the culture that he created at Apple, with the leadership of his hand-picked successor, Tim Cook, could very well continue far, far into the future. Let's assume that, even without the force of Jobs's driven, relentless, focused management style and his creative genius, the company continues to create products that attract the same, or even more, millions of first-time buyers and repeat users that have driven its sales through the roof.
The fact is, Apple's price has risen too far too fast.
Now, if you haven't followed Apple over the years, maybe you don't know that it's market cap has risen dramatically. OK. Now you know. So right away, you could reasonably conclude that when a stock goes up as much as Apple has, there's a good chance it's overpriced. And that means if you buy it now, your paying too much and will probably lose money. You don't have to be a trained analyst to get this.
Now, sticking with our reason and just a sprinkling of specific information, we can make the case more clearly.
There are 24 billion-dollar U.S. corporations. And if you look at their market cap 10 years ago and their market cap today, you'll probably see why you shouldn't invest your money in Apple stock today.
(Market cap, or market capitalization, just means the number of outstanding shares - shares of stock a company has issued - multiplied by the current price of the stock. You can find the price of Apple stock using Yahoo Finance. Click HERE. You can also find the outstanding shares of Apple stock on Yahoo Finance. Click HERE and scroll down to the lower right-hand side of the page.)
Now for that sprinkling of info.
Apple's market cap 10 years ago was $8,714,422,900. As of 3/12/12 it was $497,699,093,750. That's an increase of 5,611%! Doesn't that just naturally seem incredible? Do you need to have any special technical knowledge to realize that this sort of rise is too far too fast? Weren't you able to grasp this just using your reason and common sense?
Still not convinced? Hows this: the next bigger rise on the list of 24 billion-dolllar corporations is Schlumberger's rise of 199%. Compare: Schlumberger - 199% vs. Apple 5611%. Schlumberger makes money in the oil business. You can see why they've done well and have been recognized by the market with a rise of 199%. Now I love Apple's products and own several. But 5,611%? Really?
And if a visual might help you here (maybe you hate looking at numbers), try looking at a simple chart of Apple. This chart (click HERE) is also from Yahoo Finance. Can you see just how ridiculously high the stock price rose from 2011 to the present? Even with the recent drop in price?
All the Yahoo information is readily available. The stuff about the 24 billion corporations and the 10-year comparison takes a little poking around, but it's available for free too. But really, you didn't need to know that stuff. You just needed to use your reason and common sense. Can you see that?
If you bought Apple stock long ago, you've made money - perhaps a lot of money. As for buying Apple stock today? You must be kidding, of course.
Yes, I realize that Apple's stock price has been dropping lately. But just because a stock's price goes down, that doesn't mean it's a good time to pick up some shares.
OK, I realize that everyone goes ga-ga over Apple's products, and has for quite a few years now. And I realize that Steve Jobs recently died and everyone's reading the book about his life and - even though he was a rather, shall we say, difficult character in many ways - he's universally held to be a business genius who created incomparable products that everyone (or at least a lot of people) love.
Oh, and I'm not saying that just because Jobs is not longer at the helm that Apple will inevitably go into decline. Let's say we agree that the culture that he created at Apple, with the leadership of his hand-picked successor, Tim Cook, could very well continue far, far into the future. Let's assume that, even without the force of Jobs's driven, relentless, focused management style and his creative genius, the company continues to create products that attract the same, or even more, millions of first-time buyers and repeat users that have driven its sales through the roof.
The fact is, Apple's price has risen too far too fast.
Now, if you haven't followed Apple over the years, maybe you don't know that it's market cap has risen dramatically. OK. Now you know. So right away, you could reasonably conclude that when a stock goes up as much as Apple has, there's a good chance it's overpriced. And that means if you buy it now, your paying too much and will probably lose money. You don't have to be a trained analyst to get this.
Now, sticking with our reason and just a sprinkling of specific information, we can make the case more clearly.
There are 24 billion-dollar U.S. corporations. And if you look at their market cap 10 years ago and their market cap today, you'll probably see why you shouldn't invest your money in Apple stock today.
(Market cap, or market capitalization, just means the number of outstanding shares - shares of stock a company has issued - multiplied by the current price of the stock. You can find the price of Apple stock using Yahoo Finance. Click HERE. You can also find the outstanding shares of Apple stock on Yahoo Finance. Click HERE and scroll down to the lower right-hand side of the page.)
Now for that sprinkling of info.
Apple's market cap 10 years ago was $8,714,422,900. As of 3/12/12 it was $497,699,093,750. That's an increase of 5,611%! Doesn't that just naturally seem incredible? Do you need to have any special technical knowledge to realize that this sort of rise is too far too fast? Weren't you able to grasp this just using your reason and common sense?
Still not convinced? Hows this: the next bigger rise on the list of 24 billion-dolllar corporations is Schlumberger's rise of 199%. Compare: Schlumberger - 199% vs. Apple 5611%. Schlumberger makes money in the oil business. You can see why they've done well and have been recognized by the market with a rise of 199%. Now I love Apple's products and own several. But 5,611%? Really?
And if a visual might help you here (maybe you hate looking at numbers), try looking at a simple chart of Apple. This chart (click HERE) is also from Yahoo Finance. Can you see just how ridiculously high the stock price rose from 2011 to the present? Even with the recent drop in price?
All the Yahoo information is readily available. The stuff about the 24 billion corporations and the 10-year comparison takes a little poking around, but it's available for free too. But really, you didn't need to know that stuff. You just needed to use your reason and common sense. Can you see that?
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