Yes, priced for perfection means a company has to keep hitting record analyst predictions every quarter or the stock will fall sharply.

In a mature sector like say McDonalds or KO who are long term trenders this is not so bad. Or in an industry with relatively long contracts or a large and stable customer base - utilities or drilling operators.

But consumer electronics and EXPENSIVE consumer electronics in the face of a softening global economy?

You should get rid while you're at a good profit. Just my 2c.

I don't want to argue with you but I also don't want new investors to believe your hype and keep buying into AAPL without knowing what they are getting into.

Apple the company is a good solid company with strong past performance.
AAPL the stock is (IMO) overpriced and speculative play with a more than even likelihood of becoming a long-term value trap at current valuation. Any fundamental investor should be wary.

Why the divergence? Let's discuss.

1. Historical. AAPL is at current valuation the most valuable company in the history of the world ever at a time when the S&P is close to its historical highs. If you buy into this stock at this time what you are effectively saying is you believe the most valuable company in human history ever is about to become even more valuable at a time when the global economy is looking at another dip and the S&P is due for a correction.

Does that make sense? Not to me.

2. Analysis. Forward PE is useful when analyzing a stable market segment or a long-term trender. But consumer electronics with a lifespan of only 1-2 years for each product and where trends change like the wind is hardly a stable trend, and hence it's importance is greatly reduced in this case. Whats more AAPL has only really 2 major products, iOS and OSX albeit on several different form functions instead of a basic necessity like oil or food.

Thus, although AAPL's PE is outstanding now it can easily change.

Let's also not forget their greatly limited product range - they have maybe 3-4 (max) product launches (Mac/iphone/iPad/AppleTV) per anum. If one of those products fail it would have a severe impact on financials and thus PE.

3. Margins. AAPL is so succesful despite its tiny share of the PC and smartphone market due to its high margins - it is able to make sucke- errr consumers pay over the odds for its electronics. This success is admirable.

However the world is slowly descending into an economic recession plus additional competitors are giving added pressure to iDevices on all fronts from Windows 8, Android, WP8.

So to meet analysts predictions, AAPL needs not only to grow its market share in a competitive environment but also maintain its sky-high margins in the face of a global economic downturn. Big ask? Yes.

4. Trends. AAPL has met or beaten analysts expectations almost every time in the last 5 years (they only missed twice). This is why the stock has soared to $680. Very good, however, past performance is not always an indicator of the future, despite the past performance being priced in. This is like saying a football team has already won 9/10 of their last matches, hence you now place a bet for them to win the next 9/10 despite the bookies severely cutting the odds in their favor.

In other words - your reward is mostly priced in but yet your risk is not.

5. Buyers. People forget that to increase in value a stock must have (new) buyers at the point you want to sell in the future. Assuming your prediction that AAPL will soar to $1000. The question is, there must be people out there who are willing to pay $1000 in the near future (2-3 years) for a single unit of Apple stock? Why would they do so, presumably because they must see an upside to $1100++? Bear in mind that AAPL's dividend is extremely insignificant.

Thus you are pre-supposing that at some time in the future, the most valuable company in the world right now will presumably double in value to just to double your initial investment of $500++.

That is a lot of presumptions.

2. Analysis. Forward PE is useful when analyzing a stable market segment or a long-term trender. But consumer electronics with a lifespan of only 1-2 years for each product and where trends change like the wind is hardly a stable trend, and hence it's importance is greatly reduced in this case. Whats more AAPL has only really 2 major products, iOS and OSX albeit on several different form functions instead of a basic necessity like oil or food.

Thus, although AAPL's PE is outstanding now it can easily change.

1. Historical. AAPL is at current valuation the most valuable company in the history of the world ever at a time when the S&P is close to its historical highs. If you buy into this stock at this time what you are effectively saying is you believe the most valuable company in human history ever is about to become even more valuable at a time when the global economy is looking at another dip and the S&P is due for a correction.

Does that make sense? Not to me.

Past performance is not an indication of future achievement.

Apple's growth rate has been phenomenal. BUT you did not buy the share 5 years ago you bought it now. Expecting the company to maintain a similar growth rate is not only highly optimistic it is not even logical.

Especially when said company already has the largest market capitalization in history
LOL you read some analyst report and thought you were smart?
Forward PE = based on projected earnings.

ie, if the projected earnings are off, the actual PE is in reality higher.

Now, basing stock picks solely on analyst forward PE and not fundamentals, THAT's the classic. 
Ok kid, you can keep betting on Apple to continue its unprecedented run beating the odds and to "double earnings" in spite of the global slowdown.
Just don't pretend you are investing on fundamentals - call it what it is: speculation.

Slow down, don't click your remote yet to fast forward.

iPhone5 numbers won't be in 2012 Q4 yet.  I think it will be another disappointment because everyone was holding off buying iPhones.  Definitely will be using the dips to trade AAPL here.  Come back down to the 630'-650'.. for another ride. 

Absolutely buying NOK is speculation - and I have never claimed otherwise.

The difference between us? I am buying NOK with eyes open as a speculative turnaround trade while you (if you can be believed) are buying a speculative permabull trade as a fundamental portion of your portfolio. That makes one of us delusional. Guess who.

Before you tout the old 120B of cash blah blah, remember, that:

AAPL is trading 6 times NBV while PSR is only 1.6 (just barely positive above the margin of 1.5).

To put those numbers in perspective, to reach your touted $1000 share price (market cap: USD$1T):

To maintain the same NBV & PSR ratio, AAPL will need to double its net book value while annual revenue will need to grow by another 70% minimum.

All this while already being the most valuable company in history.

Logical? Well I suppose miracles do happen.........

The AAPL bulls will continue to pile and stack on top of each other (crowd effect) when they see AAPL price continues to move up..and the stacking won't stop until it become too heavy, then only we see prices crumbling down. What one want be careful here is not to be the last bull on top of the pyramid here.  So, be nimble and careful when you play AAPL especially playing the time decaying options. 

Now, with Uncle Ben's virtually unlimited PUTs on the market.. perhaps it is time to take a seconds look at the banks and the REITs again. I think they're much better play now.   For eg. BAC - this piece of garbage it slowly turning itself into a little nugget.   For REITs, I'm eyeing commercial ones like PLD.  IMO, the pull backs are to be bought.

iPhone is disappointing, hence Apple spread rumors that iPAD Mini is in the line. Seriously? its like iPhone+iPad and shrunk it.

Well, market timing here is important.. like I said, AAPL iphone5 sales isn't baked into this coming Q report.
So, I don't expect the numbers to be stellar. But, upcoming holiday sales at year end could be a good boost for AAPL.

Also, when I check into my sources.. this time around, I don't see much long lines of iPhone5 buyers at the stores after two weeks of announcement. There seems to ample supply available to meet the demand so far. Demand are quite nominal - unlike the previous iPhone crazy demand.. 3-4 weeks of waiting, now it seems like only 1 week of wait only.. and now.. everything is available when you walk in - that's all.  I don't see a mad rush to buy iPhones like before, maybe it is still too early into the holiday sales at this time? 

Power notes broad lack of availability at Apple’s own stores and at the carriers, writing “our nightly online checks turned up zero iPhone inventory at Apple stores across the country.

“Although we have heard reports of successful early morning walk-in purchases, Apple Store reps who we called consistently told us that there were no iPhone 5s available for walk-in purchase, regardless of location or time of day.”

He continues, “Although we were still able to find an occasional store with an iPhone 5 available for sale, those instances were rare and usually limited to less populous geographies.”

Boring, it merely matches rival phones' specs and "showcases nothing revolutionary. Seems like u have an old car, pimp it up and call it Type R?

That's why Android is outselling the iPhone at the moment and Microsoft is pushing innovation with Windows Phone 8. "This isn't the time for Apple to just play catch up — the iPhone 5 should have leapfrogged the competition, not duplicated old innovations

But if you said you can make $ of Apple, hey I'm with you there.

Well, market timing here is important.. like I said, AAPL iphone5 sales isn't baked into this coming Q report.
So, I don't expect the numbers to be stellar. But, upcoming holiday sales at year end could be a good boost for AAPL.

Also, when I check into my sources.. this time around, I don't see much long lines of iPhone5 buyers at the stores after two weeks of announcement. There seems to ample supply available to meet the demand so far. Demand are quite nominal - unlike the previous iPhone crazy demand.. 3-4 weeks of waiting, now it seems like only 1 week of wait only.. and now.. everything is available when you walk in - that's all.  I don't see a mad rush to buy iPhones like before, maybe it is still too early into the holiday sales at this time? 

AAPL price action now has dropped 10% since the iPhone5 launch.. that's disappointing but great for bears!! 
So much for the 10m sales during launch.. what a load of crocks the bulls have cooked up.

AAPL is losing its leadership in the stock market. These past week or so, we're seeing money is
flowing out from AAPL when it drops below the 50ma.

AAPL already lost its relative strength as compared to GOOG. The hedge funds owns too much AAPL and now realized it and they've dumping it and moving their money elsewhere.

Also, I think Q3 is going to be huge disappointment for AAPL bulls.

Z is correct, the iPhones5 aren't revolutionary as the last few products and they're playing 'catchup' here.
Everything that Iphone5 has, the rival Samsung S3 already got it and even better: NFC.
Seen the new ads yet?  With NFC, file exchanges with just as easy touch and go.

So, what next catalyst for AAPL? iPAD mini? Well, its' been reported AAPL has ordered 10mln of these doorstops from China.  Even S.Jobs was against the 7" screen.. not sure what's T.Cook is thinking here. 

Let see if AAPL can hold the support $600 price or not.. if not, we'll see $575-$580 soon. I'll be there if it happens. 

Who's waiting for Feb? I'm ripping AAPL right here, right now!
Thanks a bunch AAPL!

Waiting for another round to shake this tree.. 

So, what next catalyst for AAPL? iPAD mini? Well, its' been reported AAPL has ordered 10mln of these doorstops from China.  Even S.Jobs was against the 7" screen.. not sure what's T.Cook is thinking here. 

PD, looks like you've much to learn on trading AAPL and its price action.  640 the floor has became resistance when it broke.
No wonder you're losing your shirts over your options play. Just watch this baby burn up your decaying calls. 

Shorted again at 640 on this intraday bounce up.. just watch and learn.

---

Added on October 10, 2012, 3:58 amUpdate:
Closed short for AAPL: 635.50, made another scalping trades here.

I'm cool but dunno about PD. He's strange fella.. keep buying when it was high. Now, suggesting I should buy far out months calls spread. Absolutely nuts..  
Z: AAPL rolled over the $650 cliff two trading days ago.  Volume increasing too.. money being taken out from this fruit company for now. Good to stay cautious.. imo, any rally should be sold. 

no, it will not CRASH or boot slower. I have mine stable for years. It depends on user's activities, programs etc, means there are hundred of variables that can cause such. I have a Pentium 4 machine with 1GB RAM + Windows XP SP3 just running fine without any issues. Uptime currently is 162 days without single reboot.
Still mine cannot beat some record of P4+Debian Linux running over 400days!
And Mac runs on what OS?
Please, if you don't know much about PC's,  Perhaps u need to read more before millions of geeks demean you in cyberspace.
Just confine your comments within mobile phones.

So back to trading ideas on Apple : Range bound $650-700 till Oct 25
Hope on for crazy ride to Oct 25 -> If you see active movement bulldozed through $650, means the anticipation for a good result. If below means the result is just so-so.

I'm cool but dunno about PD. He's strange fella.. keep buying when it was high. Now, suggesting I should buy far out months calls spread. Absolutely nuts..  
Z: AAPL rolled over the $650 cliff two trading days ago.  Volume increasing too.. money being taken out from this fruit company for now. Good to stay cautious.. imo, any rally should be sold. 

Today, Apple has reached one of those very rare buy points. However, unlikely our previous five recommendations, we do not necessarily believe that Apple has bottomed right here at $630 a share. We just believe that Apple won’t see much lower prices from here thereby making this a unique buying opportunity. It’s better to buy at $630 and accept a small potential drawdown than to miss the entire move. We do not believe Apple will see levels below $615 a share. Thus, anything between $615 and $630 is an extraordinary buying opportunity. Between $630 and $650, you have a great entry level.

At $630 a share, Apple’s stock has the potential to rally over 60% over the coming 12-month period. And that’s assuming Apple merely continues to trade at the same depressed valuation it has been trading at over the last several quarters now. If Apple’s valuation were to somehow improve, we can see Apple reach $1000 a share much sooner than many expect – perhaps even as early as next July.

PD,

It seems we're on a different wavelength here. My time frame for trading AAPL (via options) is short term.. whether short or long, my trading can be around 1 day or a few days and at most a few weeks. I don't play leaps nor months out options.

Now, hovering around 640'sh present another opportunity for me to play the weekly puts again for the 2nd wave down. 

Haha, u just humilate yourself again. A SSD in the PC and see how fast it boot .It loads Windows 7-64bit in 11-12 seconds. Most modern laptop+PC runs with SSD currently. Its confirmed that you have a sub-par know-how on computers. So leave it out of this discussion.

On a side note, see how many PC vs MAC being sold. Enough said, before u humiliate yourself over again. Please Confine your comments to Apple/Mobile phones.

Summary : next time you try to Act clever , at least do it right.

APPLE news : Apple to pay out 2.5billion $ in Divvy.

Since u're a keyboard and google master, just do the search.
also based on your so called ...walk to Apple store, do u ever thought that the specs of the machine they put on display is superior to what u have..."

No, never in 100 years MAC +OS which is an OS run on UNIX will out sale PC with Windows powered.
MAC is ONLY popular in US, based on your links.

But worldwide is poor : http://www.gartner.com/it/page.jsp?id=1893523

Self-moaning..."Oh yea and we have a share buy bak..."
We who?

Haha, u just humilate yourself again. A SSD in the PC and see how fast it boot .It loads Windows 7-64bit in 11-12 seconds. Most modern laptop+PC runs with SSD currently. Its confirmed that you have a sub-par know-how on computers. So leave it out of this discussion.

On a side note, see how many PC vs MAC being sold. Enough said, before u humiliate yourself over again. Please Confine your comments to Apple/Mobile phones.

Summary : next time you try to Act clever , at least do it right.

APPLE news : Apple to pay out 2.5billion $ in Divvy.

Hey PD, let's not get into that PC vs Mac argument thingy.. nor AAPL (or any other XXX company) is the best company in the world.

Let's continue to chat on how to make money from this market here.

Sure, we all have our own ways in trading but let's continue to share what's work for ourselves and feel free to discuss your plan or your thinking but I don't wish to see board members here bash each just because they don't like
other trading on the other side.

Both bears and bulls can make money in this market. We all understand tis. Correct?

Anyway, tonight, I'm seeing AAPL attempting to reverse together with the broader market but
like I've mentioned yesterday, every rallies seemed to be likely sold for now.
We may see further deterioration here.. so stay cautious. 

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Added on October 11, 2012, 11:45 pmUpdate: 11:45pm

AAPL - darn it.. tagged 632.. should have waited a bit longer to exit my puts.
Going for calls here soon. waiting for bounce. RSI almost at oversold condition.
Skynet chalking up volume.. 

Options trading also a type of gambling. Why restrict yourself?

LOL! 

AAPL, oh wait..it already touched $700..
So, it's ok let AAPL walk down to $600 as next target. 

That $100 walk down could give us a lot of opportunity to make money. 

yes, enough is enough. Just stick to trading. U cannot win with your Apple is GOD or superior, every DOG have its day, remember that.

what are u trying so hard to defend Apple? You are just to obsessive and possessive. Means you are physiologically sick. Kudos to Apple to make u one.

Why i have feeling that the numbers are from Asymco?
Then it can't be your numbers.

Good try though.

Why i have feeling that the numbers are from Asymco?
Then it can't be your numbers.

Good try though.