I guess there’s a reason why I do macro….For the last 6 weeks I’ve been watching Apple’s stock move higher literally every single day. The crazy thing is that 6 weeks ago Apple’s stock had already gone parabolic and I said it was excessively risky to enter a position either short or long. And since then it’s rallied another 20%. I’ve seen charts like that a million times. And they never end well. I’ve often been short those moves (sometimes for painful stints). And the basic rule of thumb that I’ve learned from these sorts of moves is – steer clear. You can’t short an irrational market and you can’t be long it because the market risk has increased substantially due to the price compression that occurs when a stock goes parabolic and in essence prices in months or quarters worth of movement into a very brief period.
But Apple has been something else….We’re talking about the world’s largest company going parabolic inside of a parabolic move. It’s up 45% year to date! That’s a $560B company we’re talking about. This has to be one of the most incredible stories in stock market history.
Now, I haven’t owned or shorted shares of Apple in years. I think I sold my last Apple shares at the paltry price of $75 after what I thought was a slick investment during the financial crisis. But like I said at the onset – I guess there’s a reason why I do macro. I’ve been so wrong about this micro story in the last 6 weeks that it’s not even funny….
AAPL tells cyclicality to go to hell…
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.