
Apple Stock Just Crashed To A New Low - recoiledsnake
http://www.businessinsider.com/apple-stock-new-low-2013-3?op=1
======
mdkess
When newspapers are running headlines about how some stock is going to double
in value, it's time to get as far away as possible.

Besides, if you're in technology, you shouldn't be investing in tech
companies. Since most of us are technologists, if we're ever out of a job for
the long term, it'll probably because of a downturn in the technology
industry. If our savings are in tech companies, our savings will be down too.

~~~
wes-exp
_if you're in technology, you shouldn't be investing in tech companies_

Warren Buffett avoided investing in technology companies during the dot-com
tech bubble because he didn't understand them. So according to the most
legendary investor of all time, understanding what you invest in is crucial.

To exclude investing in tech companies because your income comes from tech
companies might be a good strategy to diversify and mitigate against short-
term market fluctuations. But it's an incredibly stupid strategy if you're
shooting for growth and willing to accept some level of risk. Because your
tech expertise gives you the best chance of actually investing intelligently
in tech.

~~~
ajross
I think you're missing the point. Yes, if you're willing to "accept risk" then
obviously tech can be part of any portfolio.

But the grandparent post was making a point about risk analysis that you seem
to have missed. Because we are (presumably) already employed in the tech
sector, _we are already exposed to risk in that sector, even with nothing in
our portfolios_. A tech downturn is going to impact us disproportionately
already, so adding exposure in our investment portfolios is adding extra risk
in a way that it is not for a more typical investor.

That doesn't mean "don't invest in technology", but it does mean that you need
to be more careful about how you reason about it and not just brush the
decision off as your willingness to "accept some level of risk."

~~~
wes-exp
FWIW, I get (and got) the point. Restating the gp's arguments doesn't somehow
make them more true. But let me clarify my own point.

Suppose that industry X is the best industry to be in from a long term income
and investment point of view, but that it's volatile in the short term. If the
volatility is dangerous to you and you can't accept that level of risk, then
diversification of your income and investments is wise.

However, if you have sufficient risk tolerance, e.g., enough money in the bank
and time on your hands to survive through the fluctuations, then it is still
better to be all-in on industry X for your overall growth. Because it performs
better over the long term.

I'm kind of assuming here, for the sake of argument, that you maintain the
same income+investment industry mix over time rather than changing it up
periodically and trying to beat fluctuations. But, I hope this makes my point
more clear.

~~~
ajross
It's clear, but it's still wrong: your risk tolerance analysis appears to
include "money in the bank ... to survive through the fluctuations" of the
market, but _not_ to survive a simultaneous loss of your job. Which, because
it is in the same sector as your investment portfolio, _is very likely to be
correlated with those downward fluctuations_.

Stated again, and for the third time: for technical professionals, investment
of personal assets in the tech industry carries _higher risk_ than it does for
fund managers and other general investors. If you aren't investing with that
in mind, you're fundamentally doing it wrong. This isn't a question of "risk
tolerance", it's a question of correct mathematics.

~~~
wes-exp
For the second time you treat me like an idiot and assume that I'm missing the
obvious and excluding the income aspect. I'm not. Let me come out and state it
triple explicitly so it's clear to you:

I see the income aspect. I realize that a loss of income is costly. I realize
that income performance is correlated to the industry it's in and hence
correlated with stocks in the same industry. That's the whole basis for the
discussion and I see that. Jesus!

I see that, and I still disagree.

This is where both approaches can be right and this is the whole point I have
been trying to make. For the sake of argument, suppose you have a trillion
dollars in the bank and therefore infinite risk tolerance. Suppose also that
your income is 100k. At this point, temporary loss of your income, which can
also be reduced by unemployment pay, is wholly inconsequential compared to
maximizing your gains in the stock market. If the tech sector pays back at 20%
y/y (average) and the next best sector only pays back 5%, absolutely it's
better to be in the tech sector even though your income comes from that. My
example is unrealistic, but it serves a point: mathematically, it works. So
the question is then how much risk (i.e. volatility) can you take in pursuit
of maximizing returns? If you have a lot of assets, plenty. If you have no
assets and therefore no risk tolerance, obviously diversifying your income
from your investments is a good idea. But crucially, whether or not same-
sector income/investment is a good idea all depends on how much risk (i.e.
volatility) you can take.

Would you suggest Steve Jobs shouldn't have held Apple stock? I think it
worked out pretty well for him.

------
kens
In March 2012, the San Jose Mercury had headlines like "No end in sight to
Apple growth? Even after paying for dividend and stock buyback, tech giant’s
shares are likely to keep rising" and "Regular folks rewarded for patience
with Apple stock riches".

Articles like those should be scary to anyone around during the tech bubble.
Back in March 2000, Cisco was the world's most valuable company and everyone
was buying the stock because of all the cheerleading articles. Now Cisco is
#52 most valuable company and the stock has been flat for a decade. Looking at
AAPL and CSCO stock charts shifted by about 10 years is very interesting.

This reads like I think Apple will do the same thing as Cisco, so let me be
clear that I have no idea what Apple stock will do. I just want to provide
some history about the Cisco stock trajectory for those readers who were in
elementary school at the time :-)

(By the time I'd found the articles I was looking for, this had dropped off
HN's front page, so I may be wasting my time writing this.)

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sjwright
They say crash, I'd say correction. AAPL has shot up by over 6,000% in the
past ten years. And this recent move hasn't even dropped it below the price it
commanded prior to Steve Jobs' passing.

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caycep
Why all the "terrible iPhone 5 sales" being touted in the newspapers when they
were sold out of it for months, and the latest mobile ad data suggesting it's
gobbling up marketshare like there's no tomorrow?

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Steveism
The headline is misleading. A 52 week low is more accurate. A new low implies
that the stock is in the sub $2.00 range. Of course this is nitpicking but
"Crashed To A New Low" is rather sensational.

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37prime
Henry Blodget is a well known known for being an Apple Troll. It seems this
guy have a personal vendetta against Apple. The "issues" with Apple he listed
and the explanations are full of the same unsubstantiated rumors that have
been regurtitated by the incestuous tech journalists and analysts.

------
recoiledsnake
As recently as mid-October, the stock was billed to be getting close to $1000.

[http://appleinsider.com/articles/12/10/16/analysis-apple-
sto...](http://appleinsider.com/articles/12/10/16/analysis-apple-stock-headed-
for-1000-per-share)

[http://www.forbes.com/sites/gurufocus/2012/10/05/apple-
stock...](http://www.forbes.com/sites/gurufocus/2012/10/05/apple-stock-may-be-
worth-1000-a-share-to-peter-lynch/)

~~~
cincinnatus
And in a rational world it would be. It's P/E ratio is crazy low compared to
Google and Amazon just in raw terms. But the market is an irrational place, it
only looks sane in aggregate and over longer time periods.

The rational part of me says it will be over 1k within a year, regardless of
how irrational I know that thought to be :-)

~~~
tptacek
Apple's P/E isn't comparable to Amazon's. The two companies execute radically
different strategies. Amazon relentlessly spends profits to capture market
share; Apple is famous for being the profit share leader in the markets it
sells in.

------
OGinparadise
The bloggers, financial news sites and even the mainstream media need a story
to go on, so last year it was Apple. Also analysts need to make a name for
themselves so AAPl at $1001 is a sure thing to make it in the news and maybe
stay there.

But the media tires so they start the cycle of destroying what they built up
and build up a new thing (now it's Google.) When Apple was valued at $600
Billion it was clear that the law of big numbers was going to kick in really
soon

