Any time I tweet something remotely negative about Apple ($AAPL), I practically get death threats. I want to make something perfectly clear: When I tweet cautious words about Apple, it is NOTHING PERSONAL against the stock. I am simply using it as an example that you can apply to all growth stocks. Let me explain:
1) Don’t marry ANY stock because at the end of the day, they ALL disappoint. Trust me, if you don’t know this, study history or you will learn the hard way.
2) I have no problem riding trends and trading stocks all the way up. In fact, one of my favorite quotes is: “Just when you think a stock can’t go higher, it usually does.” What I do have a problem with is when people say: “I am NEVER, EVER selling the stock!” People said the same thing about the big cap tech stocks in the late 1990’s ($DELL $CSCO $INTC $WCOM $MSFT $EMC $YHOO), and rode them all the way up…only to ride them all the way down.
3) Apple is a PHENOMENAL company with earnings and sales that are off the charts. However, it’s not exactly an undiscovered story! The company will grow its $100 billion in revenue next year, but it CANNOT sustain +80% sales growth. Again, it will grow, but the growth rate will eventually slow.
4) Don’t ever say “This time it’s different.” Those are very dangerous words.
5) Sorry for the reality check, but the current big cap growth stocks ($GOOG $PCLN etc.) will eventually become dead money…just like the prior big caps.
6) For those of you who think Apple is immune to a market selloff, let me remind you that it corrected -60% (from $200 down to $80) during the Bear Market of 2008.
7) I spoke to a few people today who have owned Apple since it traded in the single digits. I asked them when are they going to sell, and they replied: “NEVER!” This worries me because the same mentality that causes you to ride a stock up, also leads you to ride it down.
Again, I have absolutely nothing personal against Apple. I am simply trying to remind people to eventually think of an exit strategy or at least lock in SOME profits along the way up. You are more than welcome to send more hate mail, but it doesn’t matter because people are going to do whatever they want anyways. I sincerely hope you make a fortune with all your trades, just keep in mind that ALL stocks eventually disappoint, which is why you should NEVER marry a stock.
$AAPL $CSCO $DELL $EMC $GOOG $INTC $MSFT $PCLN $WCOM $YHOO