Wednesday, August 5, 2015

The Not-So-Mystifying Behavior of Apple's Stock

Well, Apple's stock is doing one of its unfathomable downslides again. It's already 15% beneath its peak. And reporters are writing articles diligently running down all the uncertainties that might be causing this dip.

Their thesis - that a company's stock price is tied to the company's perceived value and prospects - is false. People aren't betting against Apple's future. Almost no one doubts its stock price will eventually return to the 130s. People are meta-betting. They're making bets about the betting.

Those watching from the sidelines, mystified by the activity, should ask themselves why they aren't taking advantage of the bargain prices and buying AAPL. At this point, you'd make an easy 15% profit once the stock recovers. Is it doubt about Apple's prospects that prevents you from buying a few shares? No, you're not buying because 1. you're unsure how much lower it might go, and you want to wait to buy at the bottom (though it is, of course, impossible to know for sure where the bottom is), and 2. you don't want to tie up your money waiting for that recovery.

And the stock market is just like you! So why are you mystified?

It always amazes me to see people mystified by behavior they themselves exemplify. You are the greatest source of information on why people do what they do! I keep flashing back to how my parents were perpetually indignant about how, as they kept moving further eastward on Long Island, the assholes from Brooklyn kept following them and ruining the rural landscape. They never realized that we, ourselves, were the Brooklyn assholes who kept moving eastward and ruining things!

My savings were ravaged by my investment in SIGA, but I'll definitely be buying some Apple shares with the remains. I do so accepting that it will probably drop lower...but there's no way to know where the bottom is, and I'll be very happy to make 15% on my investment, even if it takes a full year to recover (it never has before).

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