Is Apple in Bubble Territory?

By Todd Harrison  FEB 14, 2012 9:50 AM

What it means to you.


It was a thoughtful night; risk has a way of doing that, preoccupying your mind when you should be focused on the important stuff.

Before there was Twitter or Facebook or even Minyanville, I was sharing my trades -- and my entire stream of consciousness -- in real-time.  There have been hot streaks (the dot-com bust comes to mind), cold streaks (let's just call it 2003, soup to nuts) and everything in between.  It's become second nature, to a degree, but that doesn't mean it's without stress.  Indeed, my public posture and the success of our community has always mattered more to me than my P&L.

Back to last night. After a late effort at the office, a business mixer with YPO, and the type of anxiety that only a devout Syracuse Orange fan can relate to, I found myself lying awake in bed thinking about the financial landscape.  You know my current take -- tick for tick and line by line -- so I won't recount it here.  Suffice to say that in terms of making a bet, this is as big of a short-side stab as I've made all year.

It's not about Turnaround Tuesday, although I know better than to discount that, and it's not about "putting it out there" and therefore, having to stay that way (which is a real risk).  It's about Shallow Hal -- our analogy for the pristine price action and "limited dips" -- turning into our Narrow Pal, Apple (AAPL).  While Main Street and Wall Street circle smirk around this stock, it has almost single-handedly carried the tape higher.

To channel the ûber-astute Peter Broockvar of Miller Tabak,

"Putting aside its incredible product line and pipeline of more, its still attractive valuation relative to earnings and its $100 per share of cash that may be used for a dividend soon, Apple's stock has gone parabolic. And, parabolic moves always end one way, back to the place where the parabolic move began. Now, AAPL can of course power higher to who-knows-where in this move but the largest market cap stock in the world has now entered a tenuous phase, strictly technically speaking."

I'm not talking about Apple the company (great story) or Apple the brand (I love my iPad2, iPhone4 and iTouch), I'm talking about Apple the stock.  And at the risk of really upsetting the Apple cart, I'll share the Bubble Comparison Chart below, which tracks Apple against other seen-only-with-the-benefit-of-hindsight bubbles like the NASDAQ, crude, and China.

Take it for what it's worth, which is one man's humble opinion -- or, the "other side" of the mainstream mindset -- as we together find our way.  While expiration influences may well pin this puppy at $500 into Friday, the tone and tenor of the world's most valuable company -- $468 billion, giver or take, at last count -- will shape the tape as we edge ahead.

Random Thoughts:

Twitter: @todd_harrison

Position in SPX, NDX