FAAGETT ABAD ITT!!!!
Why bother with G Gordon Liddy and his investment advice, lookee here. Apple has more than tripled since the March Lows. Why bother with the Gold Bubble when there are so many others that we are inflating more quickly at this point. Nobody builds bubbles like we do, and they offer tremendous opportunity to make money. What happens to most people though is once they happen to get in on a bubble move early, they get way too greedy with it. One thing today that has changed from the old days, is the tremendous amount of money that quickly chases the latest great idea. Technology has allowed this to happen. That creates bubbles and also inflates them longer and further than before. It is purely momentum chasing an idea, often for too long.
Here is one of the world's great companies, no doubt. They are also releasing hot new products along with producing great earnings ( the bottom pane ). This is all well and good and should support a price rally all else being equal. We can also look at the PE ratio and see it is still only half of what it was back at the peak of 2007. ADX is also strong but not over 60 yet, although getting very close. It is there on a daily chart currently reading 70 as I type this.
So why do I call this a bubble? Very simple, the Orange line on the screen which is a 6 month 3 standard deviation reading. You can see what happened the only other time this stock has ever hit that level of upward price extension back at the end of 2007. This chart looks more like a pork belly chart than a equity stock chart. Could this keep going? Of course and it probably will as long as the overall market remains strong. However, once we do get a decline of some type, I would be very careful holding this on the long side. When trading or investing, the price has to match up with the fundamentals. When you get something that is fundamentally strong and the price is weak, it is undervalued hence you buy it for the reversion. You have to also do this with profits. This price has gotten way ahead of the rest here.
You could argue that you are a long term holder, this is great company, I am never going to sell it blah blah blah. In my opinion that is not conservative but actually a tremedously risky way to approach this. The concept of paper profits is ridiculous. This is money you have in your account that could be cashed now. The notion that you have not won or lost anything until you exit is poppycock. Whatever you have in your account balance at the end of the day is how much money you have. There are tax ramifications of course pertaining to when you buy and sell. Of course one of my favorite stories is the one about the guy who lost everything because he held a portfolio of stocks for too long because he did not want to pay tax on the gains he had. If your mortgage is due tommorrow and you need 4k to pay for it, you take it out of an account of some type that has 4k. You cannot take it out of something that has less than 4k can you?
If you are long a stock like this, you have to have an exit strategy. It could be an options strategy on the put side if you do not want to sell the stock. However, if you do nothing and this gets halved which it will when the market finally turns, you have nobody to blame but yourself. If you miss the last $20 or $30 on the upside who cares. You have doubled or maybe tripled depending on where you got in, your money on this trade. Take it and move on.