Stay Cool, Apple Bulls

 | Oct 09, 2012 | 12:10 PM EDT
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Less than a month ago, Apple (AAPL) hit an all-time high of $705 a share. It's down 11% since then, now in bear territory.

Is it time to panic for bulls in the name? No.

Apple has a history, like most stocks, of backing and filling after big runs.

In the last year, Apple ran TO $636 in April from $366 last November. It then dropped 17% to $530 by May, before resuming its rise to $705.

In November 2010, Apple was at $308. It then rose to $360 by March 2011. By June 2011, it had dropped 11% to $320.

In December 2009, Apple got up to $211. By the next month, Apple had pulled back 9% to $192. Ten months later, it was at $317.

In August 2008, before the crisis, Apple got up to $176. By November 2008, it had dropped 53% to $82. Yet, by September 2009 Apple had already gotten back to its August 2008 levels.

You want to keep going?

In December 2007, Apple traded up to $200. Within two months, it dropped 41% to $119. Yet, three months later it was back to $188.

In January 2006, Apple got to $85. In July, it had dropped 42% to $50. Yet, by January 2007 Apple was at $92.

And back in August 2004, Apple was at $14. It went up to $45 in February 2005 before declining 23% to $34 in May of 2005. It was above $80 by the following January.

My point isn't to make an overly simplistic argument that Apple's gone up in the past and therefore it will always go up in the future. Obviously, the fundamentals are what drive future moves in the price of a stock. If people see an increasing revenue and EBITDA stream, they will bid up the stock. The market has continued to increase its view on how big the opportunity set is for Apple over the last eight years.

If Apple's stock is going to keep moving up, it needs to continue to surprise the Street ahead of its already high predictions.

I simply want to point out though that there is a long history rapid stock price explosions up, corrections down and long periods of nothing much happening for Apple.

An 11% decline in Apple's stock over the last few weeks is a relative non-event compared to some of the 40+% drops it's seen in the past.

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