So now people are buying Apple (AAPL) ? Now, at these levels?
What was wrong with buying it at $116 back in early March?
The answer? Everything, or at least everything that people could throw at the stock to keep you out of it when you should have been buying.
Stunned that suddenly people are buying the breakout of the stock, I decided to go back and look at the breakdown to see if you could have spotted a bottom, the opportunity of the year to buy the stock of this amazing company when it was falling off a cliff.
It was most enlightening.
First, here are some sample headlines from some important publications on the day it hit bottom: "Apple falls toward 3 month low, bear market now in sight." Or how about this one: "Apple's stock in danger of lowest close since November."
Danger, bear market, not the stuff of opportunity.
Apple is famous for not allowing companies to talk about orders or business done with the company, something that makes it difficult to figure out how the company is doing, at least according to suppliers. But that doesn't stop the press from trying. Hence a headline out of a Japanese publication: "Apple Slashes planned I-phone Mini for First half." The article is devastating as this paragraph indicates: "The US tech giant is cutting orders for all I-phones by about 20% compared to its plans in December, according to sources familiar with the matter." The article goes on to say that Apple told suppliers that it needed components to produce 100 million for the first half of the year but now it needed only 75 million, a pretty major reduction." To me the most important line in the story was the tag: "Apple declined to comment for this story."
This article appeared in Nikkei Asia on March 10. Apple's stock was at $119. I have no idea if it was right. More important whether it was right or now the stock should have been bought on it because these kinds of supplier stories are notoriously inaccurate.
The most damning piece? That appeared in Barron's when the stock was at $121. Entitled "Apple Shares are Lagging the Market. Why the stock could continue to underperform," it was a devastating screed, with the first line "Is there something wrong with Apple?" The article's premise is historical: "Apple shares are down more than 9% for the year and trailing the S&P 500 by nearly 11 percentage points."
Instead of suggesting why this might be an opportunity the write went to the most quoted analyst on Apple, Toni Sacconaghi from Bernstein - don't ask me why - and introduced him with this line "While bulls might consider the recent weakness a buying opportunity, Sacconaghi things otherwise." He told the reporter that Apple had outperformed last year - earnings grew but the stock rallied even more - and there "are no obvious factors," the writer opines "such as new products that might drive the stock higher in the immediate future."
Huh? How about 5G with the telcos falling all over each other to get this phone to consumers to win them over in the hotly competitive American market? How about a love for the iPhone in greater China?
These is buzz, the article says about Apple moving into the auto market but that's years away. Finally: quoting Toni's research Apple's multiple is still rich versus history, Apple will be facing very strong iPad and Mac comparisons in the second half, and next iPhone cycle will likely not offer compelling new functionality." Final line of the piece: "Sacconaghi's conclusion: "there's no rush to buy Apple." This devastating article and a similar interview appeared March 5th when the stock was at $121. The stock fell five points to $116 the next business day.
It was the absolute bottom.
Not everyone got this wrong. Dan Ives, a bull on the stock, pushed it hard over at Wedbush on March 10th with the stock at $119 with the title, "Adding Apple to Wedbush Best Ideas List; Sell-off Represents Great Entry Point." He did call for a supercycle, something I don't like because that's too bullish even for me.
But what matters is this: You got an opportunity. However, it was so hard to take that it is a constant reminder that it is not worth trading Apple around different commentary and so-called news. Better to just, like always, own the stock.