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Who knew that when Sir Isaac contemplated the Apple falling that he would be a candidate for Worst Stock Market Analyst. If he were alive today, he might be surprised to see Apple’s going up. Whereas the infamous apple upon which he based his observation bonked him on the head, the Apple (NASDAQ:AAPL) of today would leave him bonkers.
Yesterday, 24 November, Apple closed at a record high of $118.62. In fact it has been closing at record highs almost daily during the past month. It is currently approaching 11:00 a.m. in New York and Apple is continuing its upward trend, opening at $119.35 and, despite the normal minute-by-minute ups and downs, is holding strong just above its opening mark. How would Sir Isaac explain that?
Here’s what I think he would say. Being the left-brain kind of guy he must have been, he might take a look at Apple’s historic prices and, in the midst of his investigation, exclaim, “Eureka! I’ve found it!” (Wait a minute. Blaise Pascal said that. How did he get in this story?)
Newton would point his quill at 09 June 2014 and say, “Looketh ye here. The Apple hath fallen from 645.00 to ninety-tooth. The Apple ascendeth not. It merely bounceth!” Turns out Ike was another run-of-the-mill hack who refused to accept any other reality that falls outside of the scope of the economic theories that have been taught.
I am sorry to have to be the bearer of bad news, but I would have to be bold, look him in the eye and say, “Excuse me, Ike, but Apple had a seven-to-one split that day.” I can hear him now. “Thou simpleton. Thou cans’t not splitteth an Apple in to equal sevenths.” That may be true, but we could split its record setting, $700 billion market cap into seven equal segments that would make a lot of companies happy to have. At $700 billion, Apple now exceed number two ExxonMobil (NYSE:XOM) by $300 billion.
Do you see the trouble that this man has caused? All because of him, a lot of people believe that the Apple must fall. And they base that all upon the thinking of a man who suddenly waxed eloquent after receiving a nasty bump on the head. Seriously?
I think that, at least for the moment and as far as Apple goes, Ming-Chi Kuo of KGI is closer to reality that old Sir Ike. Kuo is predicting that Apple will sell more than 71 million iPhones during this quarter. Apple sold 39.3 million during the last quarter, so the predicted boost by the combination of the popularity of the iPhone 6 and the Santa Effect does not seem unreasonable at all. If Apple hits that mark, it will represent a 40% increase over the last quarter of 2013 when the iPhone 6 had yet to be introduced.
If that happens – and not even considering all the other things that Apple is doing successfully – we can expect to see the Apple share price continue to rise, regardless of what Newton thinks. Apple is currently outperforming the S&P 500 by more than 25 percentage points and, is therefore, a major contributing factor to the increase in the S&P.
In all fairness to Sir Isaac Newton, people have been tough on Apple for a long time, so he would not be alone. Besides, he lived so long ago, he would probably have a hard time with the concept that Apple was a record label for the Beatles. You can try to explain that one to him. The poor man is confused enough.
