• support@madhedgefundtrader.com
  • Member Login
Mad Hedge Fund Trader
  • Home
  • About
  • Store
  • Luncheons
  • Testimonials
  • Contact Us
  • Click to open the search input field Click to open the search input field Search
  • Menu Menu

How to Play Apple in 2016

Diary, Newsletter

Not a day goes by when someone doesn?t ask me about what to do about Apple (AAPL).

After all, it is the world largest company. It is the planet?s most widely owned stock. Almost everyone uses their products in some form or another.

So the widespread interest is totally understandable.

Apple is a company with which I have a very long relationship. During the early 1980?s, I was ordered by Morgan Stanley to take Steve Jobs around to the big New York institutional investors to pitch a secondary share offer for the sole reason that I as one of three people who worked for the firm who was then from California.

They thought one West Coast hippy would easily get along with another. Boy, were they wrong. It was the worst day of my life.

Today, some 200 Apple employees subscribe to the Diary of a Mad Hedge Fund Trader, looking to diversify their substantial holdings. Many own Apple stock with an adjusted cost basis of under $5. Suffice it to say, they all drive really nice Prius?s.

So I get a lot of information about the firm far above and beyond the normal effluent of the media and stock analysts. That?s why Apple has become a favorite target of my Trade Alerts over the years.

And here is the take: You don?t want to touch the stock during the first quarter of 2016.

And here?s why. Apple is all about the iPhone, which accounts for 75% of its total earnings. The TV, the watch, the car, iPods, the iMac, and Apple pay are all a waste of time, and consume far more coverage than they are collectively worth.

The good news is that iPhone sales are subject to a fairly reliable cycle. Apple launches a major new iPhone every other fall. The share price peaks shortly after that. The odd years see the introduction of the ?S? models. But these are minor upgrades, not generational changes.

So during those in between years, the stock performance is disappointing. 2015 certainly has followed this script, with Apple up a modest 1.2% YTD as of this writing.

The coming quarter could be especially scary.

Just like you see a big pull back in the tide before a tsunami hits, iPhone sales are flattening out. This is because consumers start delaying purchases in expectation of the introduction of the iPhone 7 in September 2016 with far more power, gadgets, and gizmos.

Channel checks, however dubious these may be, are already confirming the slowdown of orders for iPhone related semiconductors from suppliers you would expect from such a downturn.

The weakness assures that the current selloff will continue. With any luck, you might be able to pick up shares in the $90?s, last seen during the August 25 flash crash.

However, after March things will start to get interesting, especially post the Q1 earnings report in April. That?s when investors will start to discount the rollout of the iPhone 7 five months later.

The last time this happened, in 2014, Apple stock rocketed by 88.5%. This time, I expect at least a 50% increase to $150, if you can get in around $100.

After all, I am such a conservative guy with my predictions..

Even at that price, it will still be one of the cheapest stocks in the market on a valuation basis. The value players will have not choice to join in, if they?re not already there.

But Apple is a much bigger company this time around, and well-established cycles tend to bring in diminishing returns. It?s like watching the declining peaks of a bouncing rubber ball.

The bull case for Apple isn?t dead, it is just resting.

The China business will continue to grow nicely. Their new lease program promises to deliver a faster upgrade cycle that will allow higher premium prices for their products. That will bring larger profits.

Just thought you?d like to know.

AAPL 12-16-15

Apple Trucking

Share this entry
  • Share on Facebook
  • Share on X
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share by Mail
https://www.madhedgefundtrader.com/wp-content/uploads/2014/06/Apple-Trucking.jpg 239 321 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2015-12-17 01:08:442015-12-17 01:08:44How to Play Apple in 2016

tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Mad Hedge Fund Trader (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade. 

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

Copyright © 2025. Mad Hedge Fund Trader. All Rights Reserved. support@madhedgefundtrader.com
  • Privacy Policy
  • Disclaimer
  • FAQ
Link to: December 16, 2015 - MDT Pro Tips A.M. Link to: December 16, 2015 - MDT Pro Tips A.M. December 16, 2015 - MDT Pro Tips A.M. Link to: December 17, 2015 Link to: December 17, 2015 December 17, 2015
Scroll to top