While I don't agree with every comment in this analyst's letter, it is always good to see both sides of a trade. I think in part the writer focuses too much on the U.S. market (and capacity) rather than global, but in terms of the impact Apple (AAPL) has on indexes and how it's market capitalization has grown and the effects, it's salient. As an aside I read a story yesterday saying 1 out 4 adults polled expected to buy an iPad – that number was shocking to me.
If you are curious the firm putting this out is an RIA out of Colorado; Zerohedge posted it this morning since they are of course contrarian on everything.
As to stock price, Apple simply cannot continue its current pace – it is up around 50% year to date. Google on the other hand is barely up for the year – I know two different companies but just offering a contrast. I scanned yesterday for stocks that are the most extended from their 50 day moving averages and that list is usually chock full of names with buyout offers, a recent earning report, or "small/mid cap momo stock of the week" ideas. Apple was actually on that list yesterday which is startling. The only thing I can compare this to is the move in Cisco Systems in 1999 during a bubble as both were the largest companies in the universe at the time. At some point Apple will need to either (a) digest / consolidate / go sideways or (b) pullback substantially. When it does (either of those scenarios) it will be interesting to see what the rest of the market does as it's over 4% of the S&P 500 and 10% of the NASDAQ. Even with today's weakness the stock has not pulled back to even its 10 day moving average.
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