One of the most common questions I get asked every time I meet someone who has a bit of skin in the stock market is, "What is wrong with Apple (AAPL)?" Why does all it do is go down? Why is it stuck in the mud for so long?
There is nothing wrong with AAPL.
In fact, in the last 52 weeks it is actually up more than 45% compared with less than 10% for the S&P 500. Year to date, AAPL is up 18% vs. the S&P 500 which is up less than 2.5%. Admittedly, since Feb 23, 2015, the stock has been essentially flat and investors can get the impression that the stock has done nothing for a long time. In reality, the stock has been in a trading range since that day and has not been able to move out of that range for many reasons and what many investors perceive as triggers. So, let's attempt to reason out what exactly is going on with AAPL the last several months.
The first thing that should jump out to even a passive investor in Apple is the barrage of negativity that the company seems to generate almost on a daily basis. Think antenna-gate, bend-gate, so-called problems with iOS almost daily, bugs that crash the iPhone, iPad and/or every other Apple product, conjecture that Jonathan Ive's promotion was actually a demotion or a prelude to Jonny's exit from the company and all other sorts of nonsensical articles, messages, tweets and other social media. This is mainly due to the fact that Apple is the king of the hill at present and everyone wants their 15 minutes of fame by trying and knock the company off its pedestal, be it through made-up chatter or through wild, harebrained theories and total innuendo backed by almost no facts.
Another factor that has led to a range-bound stock price is the overall markets, which have been basically treading water as well, despite making new highs now and then (good for headlines, but has not much good for portfolios). There are several factors for this as well, with the most important being macro related. To start off, we have the Greece situation (mess), which has now been going on for half a decade at least, but still sends markets in a swoon whenever any slightly negative headline hits the wires. Remember the PIIGS? They are still lurking around the corner like the boogeyman. And after all was said and done, the boogeyman was nothing, just as PIIGS/GREXIT/BREXIT et al will turn out to be.
Then you have the totally mixed message that our Fed is sending out to the global markets. I have never been a fan of the Fed. It is totally reactionary. It didn't see the Internet bubble, it didn't see the same bubble bursting, nor did it see the financial crisis that the world is just emerging out of at present (unless, of course, you looks at Greece, Spain, etc.). The Fed is ignoring almost every negative data point that has been released in the last several months and writing it off as weather-related or some other flimsy excuse. In reality, companies are still laying off white-collar employees and this recent M&A spurt in technology, health care and elsewhere will ensure the continued loss of high-paying jobs. Bring on the minimum wage workforce, is what the Fed seems to be saying.
Yes, the unemployment rate has been moving lower. But it has been moving lower due to the growth in lower-paying jobs. There are still millions of recent college graduates who are working in severely underpaid positions just so that they can make ends meet. Even on a global basis, the financial conditions still don't warrant a rate hike, but the constant mixed message from the Fed continues, which leaves the markets totally confused and we all know that uncertainty is one of the markets' biggest banes.
From my viewpoint, the reason is very simple. Almost every Fed member is concerned about one thing and one thing only: they are all looking forward to the $50,000 a speech they will make or the $1,000,000+ annual salary they will earn. That is their sole concern, which is why you have so many of them knowingly make off-the-cuff remarks that rattle the markets across the globe. It adds to their resume that they are movers and shakers. Makes those post-Fed offers more lucrative.
There are many other factors that have led to a range-bound/stagnant AAPL. But even in this range, Apple gives enough opportunities to traders to make money and for longer-term investors it is a chance to add more at very subdued prices.