I came into this year like I do most years, eschewing resolutions. I’ve never found them to work, and many times backfire when they go unrealized. I broke this rule this year, deciding on one resolution that seemed easy to fulfill. That resolution was to post to this blog at least 5 times a week.
Suffice it to say, I am about a month late . . . .
But on to other matters. 2012 was shaping up to be a very good year for me. I trade in several accounts, about half of which is our taxable account. I also have several retirement accounts I trade in as well as a couple that I manage for my adult daughters. I trade these accounts very differently, being the most aggressive in out taxable account and more conservative in the others. In my kids accounts I can only write covered calls and in the retirement accounts I limit myself to covered calls and buying just a few calls or puts. Only in the taxable account do I buy and sell spreads and other multi-leg strategies. Up until about the end of October I was doing really well in the trading account projecting a return of about 25-30% for the year compared to a 10-15% return in the others.
But then, the proverbial wheels came off the wagon. AAPL started to fall just after the iPhone release and I chased it down thinking it was going to stop falling. It stopped about 600 around October earnings and then proceeded down to 502 or so. It then rebounded to above 590, making many of us believe the rally would continue. But, no. It turned around and went back down to 500 and lingered until January earnings. After that it gapped down to 460 and settled today at 440.
The numbers are staggering. AAPL lost an enormous amount of market cap and now trades at a PE of about 10 trailing earnings, a discount to the S&P 500. Back out the cash, which is almost 1/3 of the share price and the PE is about 7.
Is it over for AAPL? Will it trade down to 400, or lower? Will it gap fill back up to 500? Hell, I have no idea. But then, I read the following article:
One of the more interesting points in this article is how much AAPL has ramped up it’s R&D budget from about $750M to a little over a billion from the 1st quarter of 2012 to the first quarter of 2013. The implication is that AAPL is working on something new. Also, why doesn’t AAPL buy back stock at this depressed level with their cash hoard? Perhaps they are saving some to build out infrastructure to support this new product.
Analysts are all falling into line saying that the growth of AAPL is over, that their products will soon be commodities with declining margins. But leave it to AAPL to come out with something else, a product or perhaps even a service that could blow everyone away. If that happens, I don’t want it to be just about a month after I’ve sold all my stock