If you bought shares in Apple Computer a few months ago when it broke 30, now might be an excellent time to look at lightening up.
In case you don’t watch the blow-by-blow financial news, here is the short version of what has happened. Monday, the stock was upgraded by Piper Jafray, with a new price target of $100 per share. This level was just short of double the previous price target, and 90 percent more than where it traded last Friday. So Monday, the stock jumped! In fact it looks as though the stock has jumped a few more points today to close pennies under $64 per share.
The rationale for this upgrade is that digital music is hot, hot, hot, and no digital music player is more hip than the iPod. Of course, some people point out that this makes them a one trick pony. Where are the computer sales? The Operating System sales? The software sales?
Frankly this thing smells like Blodget’s famous $400 price target for Amazon.com. Yes it got there, and in a hurry, but it didn’t stay there for long. Who are these people bidding Apple up this high? Was there a big short squeeze or something?
Consider a “stop” order on this, so if the price drops suddenly your broker will sell it to keep you from losing money (hence, stopping your loss). Or, if you bought in the low 30s, sell half; the remaining half can go to zero and you still don’t lose money. You get to enjoy the roller coaster almost risk free. Insert the usual disclaimer here that I own Apple shares.
In closing, I hope everybody has a Happy Thanksgiving. As a topical item I offer this item on “heritage turkeys.”
And thank you all for reading.