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.
- Well, I wrote just recently that Apple was either going to $605 or $1,000. Looks like the former was right. (The Slant)
- The glass half full argument: This holiday season will be a blowout. (CNNMoney)
- Also a great post from Kevin Cook from a few days ago: Is the Apple earnings miss priced in? (Zacks)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org 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.