Monday, October 10, 2005


The most interesting dilemma facing me right now is how to handle the upcoming market making news on AAPL. I sold off my holdings today, expecting a roll back in price tomorrow as the street gets nervous about the upcoming earnings announcement and Wednesday "secret meeting", where Apple will supposedly unveil its video iPod. AAPL seems to blow past estimates on a quarter for quarter basis. Where the stock is right now, it seems as if bad news is already priced in to the stock, setting it up for either a relief rally once the bad news is released, or a wonderful shot up if the news is fantastic. The expected announcement of the video iPod presents another risk, since if anything else is unveiled, the market will be angry!

My working plan at the moment was to sell off all holdings today, and let the stock roll back a half point or so tomorrow, and do my best to purchase a small stake at the bottom.

My plan sounds very much like a predictor-type move, which is not usually where I want to be, but I have two things working in my favor. 1) I have held AAPL through the last 4 earnings announcements and have been rewarded financially each time. In trading I like to continue to do what works. 2) Thanks to the rise in shareholder class-action suits, large well run companies seem to be issuing conservative guidance that is often beaten. Witness AA's announcement after hours today. They saw the street forecasting .44, revised downwards to .29 to .32, then turned in a .33 number (including the unexpected effect of Katrina). Clearly they were managing their earnings forecasts, and I expect AAPL to do the same.


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