I wrote a blog post last week about how I have consistently warned investors not to buy Apple ($AAPL), and I spelled out another reason why you should sell Apple immediately.
Well I received over 55 comments almost all of them negative, telling me I was wrong about Apple. I even had one gentleman from the UK who physically threatened me. (I hope he knows that in the US its illegal to threaten someone, and by the way I am 6’5″ 220, so Sir, I will give you my address if you want to talk to me in person lol)
But I am not hear to gripe or be upset over negative comments, I am simply here to try and make people better investors and educate them on how Hedge Funds and institutional traders work. When a stock has poor relative strength like Apple, mutual funds, hedge funds and traders will not buy it.. bottom line. Mutual Funds and Hedge Funds can only raise money or make more money if they beat the S&P 500 and post positive returns. So these professionals, mutual funds and hedge funds are only interested in the short term, they are only interested in making the best possible return for a quarter or three month period. So they will not touch stocks that have poor momentum, because these stocks have proven to lag the market over the short term (which is usually about 3 months).
Apple is a broken stock right now, not only is it down over 12.5% for this quarter, but its down 34% over the last six months also its gets even worse when you look at its performance versus the plain vanilla S&P 500 Index.
The S&P 500 is up 10.2% for the quarter, which means Apple is under performing the S&P 500 by more than 22%, The S&P 500 is up 8.3% over the last 6 months while Apple is down more than 34% over the last six months, so Apple is under performing the S&P 500 by more than 41%…
Because of this poor relative and absolute performance, Apple will go nowhere until we have a market correction of more than 10% or more. The reason for this is market leadership changes when their is a market correction, so when Apple goes to $350 during the next correction, thats when you will see funds loading up on this stock and that’s when you should buy.. until then stay away from Apple please.
Also I have no short position or any position in Apple, I run a service called the Billionaires Portfolio, where I am only long stocks. I am long stocks that have positive momentum plus value and are also owned by the world’s best billionaires investors and hedge funds. This combination has proven historically to produce huge market beating returns for the reasons I just told you (institutional investors such as hedge funds and mutual funds are short term performance chasers), so they like stocks that are moving higher with better relative strength and momentum than the S&P 500 index.
Editor of the Billionaires Portfolio