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Apple Earnings Mark the End of the Apple “Mystique”

Well, Apple (NASDAQ:AAPL) earnings have hit the street, and investors are reeling from the results. Apple’s earnings climbed 24%, but results fell short of expectations thanks to slower iPhone sales and iPad shipments. Revenue came in strong, however, for whatever that’s worth.

So what should you do? Charles Sizemore says that investors need to understand that the “mystique” of Apple may be over for good. Not that the company can’t grow or that the company isn’t still reasonably cheap on a valuation basis… just that the fanboy mentality that Apple earnings will always beat expectations and continue to rely on fanatical customers is a thing of the past.

His advice? Don’t buy the weakness after Apple earnings. But if you own, don’t run screaming — just set a tight trailing stop and see what happens. If it drops 5% to 7% and you get stopped out at, say, $580 or so… let it go. Otherwise ride it out.

I may take that advice since I own Apple myself, with a cost basis around $515 on my total holdings.

As my colleague Marc Bastow said to me at lunch, “Pigs get fed and hogs get slaughtered.”

I already got greedy by begging for more at $700. It may be time to cut and run if AAPL continues to slip after this Apple earnings miss.

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he held a long position in Apple… but if this negativity stays strong after Apple earnings, that position may not last much longer.

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  • Bob

    Are you kidding? Did this guy have any idea of the supply constrains or the fact they are doing a huge refresh right now?

    • http://twitter.com/JeffReevesIP Jeff Reeves

      Fair point on the supply issue, which wasn’t covered. Here’s a good link for context — http://blogs.barrons.com/techtraderdaily/2012/10/25/aapl-iphone-5-weighs-on-profit-view-being-aggressive-with-ipad-mini/ — that links the rebound after-hours in the wake of initial declines, credited in large part to a conference call that made things seem like a supply issue more than a demand issue. However I don’t think you can wholly discount the investor psychology shift here … if I’ve learned anything in the last few years it’s that sometimes how traders are feeling matters more than the numbers. And if Apple longs are starting to feel trapped… well, no amount of supply talk or valuation calculations or whatever will change things when they decide to dump and run.

  • http://twitter.com/robogobo rob nienburg

    you must be joking. Apple always misses analyst expectations, just like they always exceed their own projections. This is just a repeat of the same pattern following every earnings call. Nothing new.