Two years ago in the summer of 2012, many analysts and guru’s in the media were saying “buy AAPL stock, it’s going to $1,000, $1,111 even $1,200.”
Their reasoning was the “new bigger screen” on the upcoming iPhone 5 would set new sales records due to big demand. The analysts were right. When the iPhone 5 was released on Sept 19, 2012, it set an all-time new sales record for Apple. It also marked the all-time high for Apple’s stock at $704 ($100.57 post split).
Fast forward ahead, nine months later, by the spring of 2013, the stock had fallen 45% to $386. Why? Apple’s sales hadn’t fallen, profits had not fallen 45%, why did the stock fall 45%? Because everyone was already long and there were no more buyers to prop up the price.
Lesson Learned
That’s the way Wall Street takes money from novice traders and investors. They pump it up, and then dump it, trapping novice traders and investors at the top. The same goes for analyst’s upgrades and downgrades. It a shill game.
This summer feels a lot like déjà vu from 2012. Many taking heads on TV are saying the same thing they said two summers ago. “iPhone 6 sales will be epic. Huge demand for a larger screen. Hot new products coming out” blah blah blah! Maybe this time they will be right? Or maybe not?
Bottom Line
Buying a stock because someone on TV is bullish is not wise!
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Learn about York’s financial markets research at Pivotal Points.
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