Mr. Market doesn’t always price things correctly. In fact, he regularly suffers from too much optimism or too much pessimism usually as a result of projecting recent history out into the future rather than looking at the big picture
A couple of years ago, Apple could do no wrong and Mr. Market regarded nearly every announcement from the company as a buying opportunity. Flash forward to today and the company can do nothing right. Nearly every announcement, related to earnings or products, etc., is regarded as a disappointment and is sold – despite the fact that the company is insanely profitable, respected by critics and loved by consumers.
It’s amazing how quickly Mr. Market’s attitude toward the company has changed. Wired wrote about this today in a piece titled, “Why Nothing Apple Does Is Ever Good Enough.” All I could think while reading it was ‘if Mr. Market’s blind optimism about the stock at $700 18 months ago was a contrarian sell signal then this has to be a terrific contrarian buy signal.’
The hardest trade is usually the best. Who’s got the guts to bet now on Apple? Icahn did, and that’s why he’s the billionaire and we’re the rookies.
Will Apple finally come out with something new? Definitely. Will it be this year? Sure. Will it take off, change the world and change Apple just like iPod, iPhone and iPad did? That’s the trillion dollar (market cap) question.