The Apple

The Apple (AAPL) has been one of the best performing stocks in the US in recent years. Today I'm stepping out on a limb and claiming that the recent action looks like a classic example of "buy on the rumor, sell on the news."

The innovation of the ipod has propelled Apples earnings, creating the story stock it has been over the last 5 years. In 2003, the stock was trading below $10. Today, June 19, 2007, the stock closed out at $123.66. That's a greater than 1100% gain, yeah 1100%, that is what investing is all about!

Recently there has been a lot of hype regarding AAPL and the release of their new iphone ("rumor") - scheduled for June 29 ("news"). AAPL has been all of the recent talk in chat rooms and airways. One lesson I've learned in my short tenure in markets is that when everybody is talking about an investment like it will never go down, you're too late or it's time to think about selling.

AAPL is up over 40% this year. With recent quarters showing slowed demand for the ipod, investors are looking for growth in other places (the iphone). It seems fitting that the ipod has possibly saturated its market since everybody and their mom has one or even two. Other players are starting to enter the portable music space as well. AAPL and investors have turned to the hyped iphone for growth, but how much is the iphone actually going to add to the top and bottom line, it's all speculation now, we'll know the truth in coming quarters. Don't get me wrong, Apple is a tremendously healthy company, run by one of the most successful business men of the 20th century - Steve Jobs - and with over $12 billion cash in the bank, they have a lot going for them in the future.




What I'm trying to say is with the recent run up in price and "lunch room hype" I've been hearing all over the place, as an investor I'd keep my eyes peeled for an unfolding of the old Wall Street adage "buy on the rumor and sell on the news." I could always be wrong, as you can see from the chart above the stock is in a strong pattern and I don't like to bet against the grain, but if you're looking to add AAPL to your portfolio I think it's a time to be very hesitant. If you're not already enjoying the ride, I believe it would be smarter to wait until the news passes. If you own the stock don't get caught up in all the hype, think about taking a little off the table. It's okay to take profits - you're making money! And in the short term, look for signs of increasing selling volume and decreasing buying volume as a possible top in the stock.