Wall Street is busy feeding Apple to the muppets again. At this point, feeding Apple stock is long over, so now it is time to put out some Apple bonds. And make no mistake, Apple stock investors have been highly encouraged to know that muppets are eagerly snapping up Apple bonds.
Apple AAPL stock had a low of $392.50 on April 24, 2013. Tuesday, the stock closed at $442.78, a move of 12.7% in six days. The rally has been ferocious, as shown on the chart.
Nary a thought seemed to be given by those buying Apple 30-year bonds to the possibility that Apple’s cash cow, the iPhone, may not even exist 30 years from now. Apple generates about 70% of its profits from iPhone. Apparently a yield of 3.883% for 30 years is too tempting for the muppets.
To understand what all of this means, some background is necessary.
March 22, 2012 was a glorious day for Apple fanboys and girls. Apple stock had just crossed $600 for the first time. The fan boys and girls were basking in the glory of their genius to have over stuffed Apple stock in their portfolios. Wall Street brokerage firms were tripping over each other to outdo the next analyst with obscene targets on Apple. One analyst even came up with a target of $1650. It did not matter that to achieve a $1650 target would have required 100% of Apple’s potential customers to spend $2500 each and every year on Apple products and services. It was obviously absurd, but who cared?
My routine is to try to help investors achieve high risk-adjusted returns, i.e., returns in excess of those commensurate with the risks taken. I have never been afraid to pick the unpopular view as this is can be what it takes to make money…Read more at MarketWatch
