edit: whew, and seeming to stabilize around a 4.5% drop still leaving it above $300. I was amazed it broke $300 so easily last week and was afraid it'd fall back below with this drop.
Why do you think Apple had a big run up before they announced earnings and then dropped the past two days? Just a coincidence? Maybe, but more likely Wall Street knew the news before it was news and the folksy wisdom of "buy the rumor - sell the news" seems pretty spot on.
I do agree with your sage advice that for the individual investor, buying and holding good companies is a sound strategy (Peter Lynch and Warren Buffet would agree too). But no matter what your investing strategy, the individual investor is typically at an information disadvantage vs. investment professionals. They spend all day doing it. How can you possibly be more in "the know" than they are?
Over the long term, perhaps it evens out as you suggest, but the comment above me was wondering what explains why Apple stock would lose value on the day they posted their largest quarterly results ever. Wall Street buying the rumor and selling the news makes some sense to me. I've seen this happen over and over again (not just with Apple yesterday).
Good luck with that.
"How can you possibly be more in "the know" than they are?"
That's exactly my point. Also, if you do have privileged information, that's illegal.
:-)
also, someone mentioned (CNBC?) that Wall Street thinks Apple should have sold more than 4.19 million iPads this quarter. Errr...
This might not have been quite as good as expected - considering they were at 280 on Oct 1 and now are still 30 points higher I'm guessing there's a lot of investors trying to take some money off the table now.
Minimum retail price for an iPad is $500. 16m units X $500 = at least $8 billion gross revenue.
How many companies can take a new product line from $0 to $8+ billion in one year? It may 'disappoint' the analysts in a technical sense, but Apple's shareholders should be doing cartwheels at this news.
Say you're an Apple key employee. One who is prohibited from trading within so many days prior to the earnings report (because you have insider information). You sit there, note the stock price runup, and say "man, I'd like to sell a few of my shares at $300".
So you talk to your broker, personal financial advisor, etc, and tell them "I want to move 1,000 shares at $300 once the quiet period is over.
Bam, stock price drops temporarily, and then starts to trickle back up. I have no idea how many people are in this category, but I'm sure there are more than a few at Apple.
Finance-related articles: I read several. Margins are depressed[1]. iPad sales were lower than expected[2]. Revenue was above expectations, but profits were below [3].
[1] http://www.nytimes.com/2010/10/19/technology/19apple.html
[2] http://online.wsj.com/article/BT-CO-20101018-713881.html
[3] http://blogs.barrons.com/techtraderdaily/2010/10/18/apple-fy...
I guess I also agree it's up to debate, but I don't see how the results Apple posted are a cause for deflation, margins or no. 20 billion in revenue, nearly a quarter million devices a day, and Verizon yet to come.
Everything looks rosy for Apple, with only the Android dark horse to worry about (which has been worried about for some time).
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