Clearly, the US consumer and economy are in trouble. Inflation in food and oil costs are sucking real money out of consumer pockets, re-financing homes is no longer an option and the markets had their worst June since the Great Depression. All of this adds up to a 28-year low in US consumer sentiment.
In this environment, it doesn’t take a rocket scientist to conclude that discretionary spending is going to get hit hard in 2008 and I can’t think of a company with more discretionary products than Apple. Consumers may still want to buy MP3 players and smart phones but there are plenty of cheap alternatives to the iPod, iTunes and iPhone in the marketplace.
I am going to exercise PYMWYMI (Put Your Money Where Your Mouth Is) and call for Apple to revisit $110 – $120 over the next 3-6 months. To capitalize on this, I am going to buy October puts in AAPL.
I’ll let you know how it goes.
Regards,
George
And the crowd goes crazy.
Actually I was a seller on the way down. Not in the IRA, cost basis $4.58, but in the other accounts yes and I’ve lightened up quite a bit and took profits all the way from $126.00 and I frequently short against my own positions particularly on days like today. Good macro call but the fundamentals of the company were never in doubt. Without the banking crisis you would’ve been toast. So, it would’ve been much better to short all the banks. Also, check out who was the first person in the blogosphere to do the math on the triple long ETFs.
Cramer?
Come on Greg. The record is clear that you were not a seller on the way down. In fact, you predicted “$260 Dec. 31, 2008”, so you haven’t traded this dollar twice.
Having said that, I’m happy to see AAPL back up to levels where I went PYMWYMI (Put Your Money Where Your Mouth Is). I’ve got nothing against the company, or its shareholders. It hit my $120 target and actually way overshot it, so those who took my suggestion made a bundle. If longs have now recovered 8 months later, everybody wins … I just won a little more.
As always, thanks for stopping by. It’s great debate and my day for eating crow will no doubt come round 🙂
Until then, have a great day and see you soon.
Best,
George
Apple back to $170.00 and the crowd goes crazy. What’s better than trading a dollar once? Trading a dollar twice.
[…] is no secret that I have been an Apple ($AAPL) bear since June of this year – and I took a lot of heat for my June call. However, the fact of the matter is that anybody who listened to that call made […]
[…] to gloat folks but I called $120 $AAPL back in June when it was trading over $174.00. Apple fell through $120 this morning on both market weakness […]
Beltway, what say you now as we sit just a touch over $140?
George
Apple is at $175 boys far from $120. Come on you’ve got to be kidding me. BTW, did you follow my advice on oil. One of my better calls in this life. Eat steak, why when I can afford the entire farm?
All I keep hearing is IPhone, IPod, cancer scares, exploding IPods, bad chips, bad network..
All we are saying is give Steve a chance.
Beltway Greg
Steak diner to whoever gets closest to SP.
AAPL | Oct 16, 2008:
GT says $120
BG says $260
I say it goes to $145 – Apple will get hit over next couple months (down to $110 – $120), but will announce something juicy in time for Christmas shoppers and optimistic market sentiment will bump it up from $120 to $145.
Beltway, Apple off 10% to $150. What say you now?
http://blog.agoracom.com/2008/07/22/apple-drops-10-to-150-on-weaker-margins-outlookhmmm-who-called-that/
George
[…] that’s right, I did back on June 29th (”Apple Puts Are A Good Bet”) when Apple was trading at $170. I took some heat from Beltway Greg who was calling for $260 but I […]
Greg, thanks for the input. Can’t argue with you, just have to let the market decide. FWIW, I am making the call based on macro market factors. Those same factors led to AAPL hitting $120 just a couple of months ago.
I love AAPL and think it is a great and refreshing company but it can’t fight the market and investors will take their hefty profits if things turn south….which is a high possibility.
Puts vs shorting – You know the answer to that. I’d like to limit my losses if I am wrong.
Best,
George
Good job. Now you’re thinking. You’ve clearly picked every reason not to buy Apple products. To complete your equation you’ve got to consider the multiplicative inverse or what happens if everything you’ve employed to support your argument is incorrect . What happens then? My friend consumer sentiment is one of the worst indicators in regard to stock picking. Would you let most consumers manage your finances? Many of those same consumers are the very folks who made all of the bad choices in the first place. Computers are no longer that discretionary (education/business) and IPods aren’t that expensive. You act as if they’re trips to Europe. The cheap alternatives are really not that much cheaper. If you’re going to buy an IPod you have many from which to choose and you don’t have to buy as many songs. I think you’re looking for some type of six sigma event and your suffering from the dreaded hindsight bias based on the recent earnings miss from RIMM. Actually, that really wasn’t such a miss and I think folks overreacted a bit. The IPhone is going global in less than two weeks and its doing massive business before its even on sale through the pre-orders and lest we ignore the last two quarters.
A better strategy would be to buy puts on RIG and anything related to oil. When the story is written ten years from today it will tell a tale of how sovereign wealth funds (Kuwait/Qatar/Singapore/etc.) manipulated the futures markets for oil.
Why buy puts? Short Apple and turn off the computer until Dec. 31, 2008. On that day, gunslinger, you can buy back the shares and reap your reward.
Beltway Greg
$260 Dec. 31, 2008.