Are we trying to convince small investors here to play the big game and joining the bets of the professionals? Joining those bets has a 12 year's history of risking some deep dives of over 55%. Even great stocks like Apple Inc. (Nasdaq: AAPL) took part in those dives, in all cases deeper than the S&P 500.
Those are the facts. The talk that momentum stocks may continue to rise is just talk. The talk that even conservative estimates of future projections of Apple's income discounted by any risk-free rate will keep going up is just talk. Only when that talk is convincing enough to have most of the investing money join forces in that stock, that stock will keep going up.
Apparently, there are doubters, or investors who want to spread some of the money they made on Apple into safer stocks, given the uncertain economic and business climate where net margins are not on the rise anymore. Last week, some of that money must have gone into my own portfolio here at P&P as it appreciated 2.5%. That is not just talk, it is a fact.
It is a normal process that when stocks had great fundamentals like Apple over the past eight years, and they appreciated considerably in market value during those years, there will come a time that investors who build up those gains are going to diversify those gains into other stocks. That process has started already for Google (Nasdaq: GOOG). For Medtronic (NYSE: MDT) it started many years ago as it did for JDS (Nasdaq; JDSU).
The intensity of the debate I see about Apple's recent 10% loss is an indication for me that this market valuation for Apple may be consolidating. When Apple's market value starts to need the promotion by its analysts and other followers, I wonder whether that is a signal of strength or a signal of weakness. Apple never needed that promotion.
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