One Problem With Traditional “Investing”

AAPL 17April2013

AAPL is getting hit today (along with the rest of the market).  It’s down almost 6% and was below $400 at one point today (will likely be below again).  Interestingly, as it falls, it becomes cheaper on a fundamental basis… at this level the price/earnings ratio is less than 9x… an absolute steal in the not too distant past, but subject to doubt in this environment.

This article discusses the current state of AAPL the various issues and the company’s prospects.  It does a good job of laying out lots of great points both pro (a valuation lower than DELL at current levels and  lots of cash) and con (slowing growth, margin compression, competition) regarding the company’s future.

Rotten Apple

The problem?  Not a word of the analysis will help anyone trade the stock.  And the authors admit as much.  They say that that they don’t know where the bottom is and neither does anyone else.  They are right… neither fundamentalists nor chartists know how low AAPL will go.  The difference is chartists acknowledge and accept that at the outset.  They then proceed to trade based on the factual and knowable price action as opposed to trying to predict price behavior.  Since fundamentalists have to ultimately come to the market and deal with the price action anyway, chartists are simply cutting to the chase.

And who doesn’t prefer cutting to the chase?