When selling a stock I like to have a variety of reasons to support my decisions.
Here’s why I sold out my AAPL stock today.
We’d all like to think Apple makes its money on software and not hardware, but that’s not looking at the bigger picture. Once the hardware becomes obsolete, the software becomes obsolete along with it, particularly so in Apples case. For this reason, Apple must release new innovative hardware to grow as a company. If it is not innovative and game-changing, Apple lose brand equity. If they lose brand equity, then Apple loses the price premium advantage that lets them charge 1.5 times the price a similar “PC” product would go for. Without that premium, their margins taper out and they’re just another tech company lurching around in the dark.
Steve Jobs – Born 1955. That makes him 56. Steve Jobs IS Apple. Whenever he feels like taking a break and misses an event the stock usually drops a few percent. What if he really did leave? I suggest the Apple stock would tank out. It’s not nice to mention, but he has had a cancerous tumor in his pancreas in the past. If it returns in a more malignant form, it could instantly cause a stock run on Apple shares. Unfortunately, this cloud will always be hovering over everything Steve does and will grow darker with time. Steve IS Apple.
Malware issues are becoming more commonplace with Apple software and Operating Systems. This will only get worse as Mac now has a large enough market share and enough overconfident users to be a sizable target for malware developers. Apple software has not been tested in the “real world” like Microsoft operating systems have over the years. The Apple Malware wave has begun and its untapped territory ripe for the picking.
Apple stock chart dynamics – Yahoo Finance (new window)
Notice how from Jan 2011 onwards AAPL stock has practically zero growth? That is known the stagnation stage. Stock (and everything in life) comes in 3 stages:
It’s very rare, although it can of course happen, for a stock in stagnation to re-achieve growth potential. Usually this happens with an innovative product launch or massive pivot. If any company can innovate massively, it’s Apple. But I think they’ve topped out and it’s stability or decline from this point on.
Additionally, hedge funds have sold heavily early this year. Most likely after seeing the stagnation indicators. Hedge funds selling apple stock (new window).
As mentioned above, they have now moved their focus to Software. Software is easy and relatively low risk. Cheap to manufacture (practically free) and easy to sell through the Apple app store, with high R&D costs. But software does not create a market and the IPhone, Apples biggest product in sales alone, is getting stale. Without a refresh every year, as every customer now expects and demands, they will begin to lose market share to rivals with better products and better systems. Lastly, Apple moving into software shows clearly they’re out of ideas on the hardware front.
ICloud services are going to be announced at the next big event and to be blunt, no “normal” non-tech users actually care. Just like they don’t care about the Ipad. Both the Apple Ipad and the fancy tech services are for geeks alone. Making product for geeks alone does not lead to growth, it leads to stagnation.
Why I Sold Apple Stock:
Software doesn’t move product and Apples moving into software as their USP. Apple is still Steve Jobs’ baby, PR and Malware issues and a reduction in innovation. Apples stock chart hints heavily at stagnation, hedge funds have moved out and now I’m out.
Disclaimer: This article, just like every article on Nerdr.com is my personal opinion. For legal purposes, it is not stock advice and markets can go up and down. Research all stock options before making a potentially life changing decision.