I’m sick of Apple. Or more specifically, I’m sick of fighting the Apple.
These swings, rallies and sell-offs have gotten to be utterly exhausting. They say the opposite of love isn’t hate, but apathy. And I’m almost apathetic about Apple AAPL +3.09% at this point. Maybe that’s a great contrarian signal. At any rate, emotions, including love, hate and even apathy are the enemy of the successful trader, so we can’t let ours get to us. Last Friday, I added another tranche of Apple calls.
Almost makes me sick to do so at this point. Which leads us to the other point you’ve heard me make so often — the hardest trade is often the right one (as long as the fundamental reasons behind the initial trade/investment are still in tact, that is). Remember the Facebook buys at $19? Painful at the time, right?
I expect iPad Mini’s are maxing out on sales and are actually in enough supply that this quarter’s numbers will have to go up. Same for the iPhone 5 sales right now. So my fundamental catalyst into year-end remains in tact. So I look past my emotions and follow the playbook. Doesn’t mean I’ll be right about this trade. But over the past 1,000 trades like this I’ve had a lot of net success and over the next 1,000 trades like this I expect and hope to do the same.
I’m deep in research on a few ideas for the Revolution Investing newsletter, including:
A new potential play on 3-D printing — making decisions on it today.
IBM short? I just don’t think IBM’s IBM +0.94% going to keep this multiple premium that it’s still got. HPQ, Apple, MSFT, INTC — most every other mega cap tech stock trades at half the enterprise value (market cap + net cash) to earnings multiple. And like HPQ, IBM’s got a bunch of debt on the balance sheet already ($22 billon!), although they do have nearly $26 billion in cash. IBM might be an ideal paired trade hedge to our mega cap tech longs. More to come on this analysis.
Microsoft MSFT +1.84% puts? I’m thinking that the new Windows 8 reception is so cold that it’s actually helping to drive people to pay up for anything Apple-related. Need a non-Windows 8 PC? Go buy a Mac. And Google’s Android doesn’t have desktop technology (yet?) does it? Maybe a Chrome/Android PC is in the future, but it ain’t here for the iPad/iPhone xMas selling season.
Which brings us to tablets. Want a tablet? You pay up for the simplicity of the iPad or the iPad Mini or you go cheap with an Android.
Windows 8 tablets? Windows Surface? My homework continues to point that the Windows 8 roll-out is a disaster for the Windows 8 PC/tablet vendors. Windows 8 phones are enjoying serious growth as part of the overall smartphone market is (estimates are for 40% or so growth next year for the smartphone market as more of the human population around the globe upgrade) and it might DOUBLE it’s market share this quarter. Which would mean it still wouldn’t be accounting for even 1 out of every 20 smartphones sold. MSFT is a lot cheaper than IBM, so maybe a lot of this is priced in for the near-term at least.
In my own portfolio, I’m not in any rush to put on new trades just now, as I’ve done my scaling into both longs and shorts according to the playbook I’ve outlined at these levels. Patience is one of the most important keys to long-term market success. So be long patience.
Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com, which is not affiliated with MarketWatch. At time of publication, Cody was net long Apple, Google, Facebook and long Microsoft calls and puts. Follow Cody on Twitter at twitter.com/codywillard.
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