Apple is approximately 20% of the Nasdaq index and therefore is the market, so as the indices of the US markets move, so does Apple. This could be a vicious circle or virtuous circle depending on your point of view, but no matter how much circularity there is in a boom or a bubble it can't hope to keep things going indefinitely.
But the first law of investing is: "don't fight the tape" and Apple's progress is fantastically strong. While the value of the company is huge, the P/E, a measure of value as a ratio of profits, is almost reasonable at 22. That is to say Apple's share price is mighty but so are its profits. At $335 Apple is still 20% away from overtaking Exxon as the top dog of US industry so you can imagine there is still further upside.
Apple 400?
With the market in a strong bull phase and the Apple magic still
strong, a bear like me needs to stay in the woods until further
notice, grumbling that it will all come to a sticky end soon enough.
Will we see $400 a share? With the current market running hot and
Apple in new high territory and the darling of the market, only a fool
would bet against it. However that is not a reason to bet on it either.
Where do you think the Apple stock is headed? Tell us on Twitter!
Clem Chambers is CEO of stocks and investment website ADVFN. For free real-time stock prices go to: www.advfn.com
