Most of you have probably already seen the bullgasm happening over at Barron's. Here's their cover for the week:
Nothing sums up the euphoria these days better than Apple, Inc. The stock is up nearly 40,000% since 1982 and, more recently, is up about 500% over the past three years. The company seems unable to do wrong (unlike, say, its former arch-rival RIMM), and the media is awash in predictions of the stock reaching $1,000 per share. There doesn't seem to be much basis for this except that it is a Big Round Number, which also would make Apple's market cap an Oh-So-Round trillion bucks.
Now let me make clear I am no Apple-basher. Anyone who knows anything about my background knows I have been an Apple fan since the early 1980s. My first Macintosh was purchased in early 1984; I got my first iPhone (the first of many) on its introduction day (which I chronicled with this video), and my first iPad on its debut day. I'm not one of the crazies that waits in line for four days; I simply show up later in the day, pay for it, and resume with my life.
My fondness for Steve Jobs is well known too. A simple query on YouTube for "Tim Knight Steve Jobs" yields a plethora of hits, and I even worked at Apple for a number of years. So with all of that as a preamble, I have no ax to grind with the good people in Cupertino.
But the long-term chart looks really, really, reaaaaaaaaaaaly extended. Look at this gigantic ascending wedge spanning back to when the stock was in the single digits.
…..look a little closer……..
…..and closer still……..
We are right up against that massive trendline. Does this mean Apple doesn't have a prayer of crossing it? Of course not. The draw of getting AAPL above $500 is huge, so I wouldn't be surprised to see it cross that level and maybe tack on a few dollars for good measure.
But all this talk about Apple going to $1,000 is just plain silly. It's not going to happen, anymore than the predictions of Qualcomm going to $1,000/share in 1999 materialized (just reading a snippet from the linked article reminds me of how utterly insane things were back then; to wit: "Qualcomm shares gained 156 to close at 659, a new 52-week high. Shares have traded as low as 25.31 in the past year.")
Oh, and as for Barron's efficacy at nailing market turns with its cover stories, it is unparalleled. I leave you with their cover from the market's bottom (to the day, no less) in early March 2009.