Tuesday, February 8, 2011

Apple Stock Tremendously Undervalued, Get In Now or Get Priced Out!

I just heard another CNBC talking head tout Apple stock.

What he is really advocating is "get in so we can get out." The buy high and sell low theory. The long holders are in deep shit if this QE2 ever quits. Because at that precise moment, every short seller in the universe, including yours truly- who has been forced to the sideline will come enmasse to sell your inflated, POMO induced paper, back to earthly levels.

With virtually every hedge fund and mutual fund in the galaxy holding Apple stock, you can hear the chant daily. They are all in.

When two hundred shares of Apple stock (currently 355) trade at the same approximate price as a 1400sqf home in the Midwest- what is the best investment? Let's see, if you bought the home outright you would save about 700 a mo. x 12 or about 8400 dollars a year.

If you bought 200 shares of Apple, and it goes to 450, (the talking head's price) you would make about 19 grand or about two years worth of house payments. The government will take their 25% cut. But the house will not cost you anything for the duration of your life in that house. You are paying yourself 8400 bucks a year in dividends tax free for your entire life and your posterity's life minus the death tax.

There are a few other problems with buying the stock. Steve Jobs leaving the planet, pinning your hopes on a never ending stream of Ishit, existing owners achieving consciousness and the stock actually going down, and the biggest problem of all. The whole world is already in. Who are you going to sell it to? Your bartender? It's paper.

'Tis the life cycle of things. Today's story will be tomorrow's history.

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