Bloomberg: How plunging Apple can be saved

From Kriti Gupta’s “Apple Is Plunging and a Weaker Dollar May Be the Savior It Needs” posted midmorning Monday on the Bloomberg:

Apple Inc. just suffered its worst week since last February and is down again Monday. What can reverse this trend? If history is any guide, look for a weaker dollar.

The tech giant hit a $3 trillion market capitalization on Jan. 3. Since then, the stock has lost 13%, while the S&P 500 has lost 11% with mega-cap tech shares taking a beating. The correlation isn’t new. Each time Apple’s market value has hit a trillion-dollar milestone, the broad market gauge has entered a technical correction. And a dollar slump has been the key to turning it around.

When Apple first reached a market cap of $1 trillion in August 2018, it sparked a 20% technical correction in the S&P 500. It happened again two years later, as it breached the $2 trillion milestone and then helped fuel the tech wreck of 2020. Obviously, other factors have played a role, like Federal Reserve decisions and macro economic developments. But there is no mistaking Apple’s role as a stock-market bellwether…

The point being, keep an eye on the dollar. As it weakens and gives foreign investors more incentive, the S&P 500 is likely to reverse the selling that has thus far marked 2022. And history says big tech, including Apple, will play a significant role in that.

My take: Apple doesn’t need saving. The stock will take care of itself.

11 Comments

  1. Robert Paul Leitao said:
    @PED Thank you! Apple doesn’t need “saving.” In an era of rising interest rates, equities become less attractive due to the increasing opportunity costs of equities versus returns on stable value instruments. I have few concerns about Apple – strong balance sheet, pricing control in the company’s primary product and services markets combined with an attractive long-term growth trajectory. I do have concerns for investors who borrowed to chase high-flying, low-no profit glamour stocks or heavily used margin in an effort to chase big gains.

    8
    January 24, 2022
  2. Robert Paul Leitao said:
    Investors need to separate concerns over fluctuations in share prices from concerns about the strength of the underlying enterprise. Share prices will move up and down and down and up. There have been no changes to Apple’s underlying fundamentals. No matter the current market conditions, quality always matters.

    8
    January 24, 2022
  3. Aaron Belich said:
    Well said Philip and Robert.

    Apple Inc. is doing just fine.

    $AAPL and Apple Inc. are not joined at the hip, never were. Apple Inc. has spent the better part of it’s existence dragging $AAPL to some semblance of reality since the rest of the institutional investors have used and abused it.

    4
    January 24, 2022
  4. Dave Ryder said:
    I bought a few shares today. I’m thinking long-term.

    6
    January 24, 2022
  5. David Baraff said:
    OMG!! The sky is falling, the world is ending, the…

    Oh. Never mind.

    6
    January 24, 2022
  6. Daniel Epstein said:
    Well there could be a correlation between the stock market and Apple stock hitting Trillion mark valuations. Of course correlation does not mean causation and Apple reaching a market Cap number should not be a signal to sell the market that is followed as usually Apple stock price has advanced in the future so wouldn’t that be a buy signal?
    Today’s dramatic fall and turn around seems to be the crowds heading for the exits while the patient investors spy a buying opportunity. Hard to time that move unless you are a real short term trader! Sell in the morning buy in the afternoon. I wouldn’t be surprised if this kind of action unfortunately lasts little longer. I often feel like Tuesday falls and Wednesday rebounds do feel more reliable. Just a feeling not backed by research.

    2
    January 24, 2022
    • Fred Stein said:
      Upvoted, David. Good thoughts.

      Do these journalists really not understand that correlation is not causation? Or do they callously exploit naive readers who hope to gain some key insight for trading advantage?

      Either way, it’s a sad reflection on the the field of journalism. As Gregg has pointed out, even the venerable news outlets have abandoned quality.

      0
      January 25, 2022
      • Daniel Epstein said:
        Even venerable news outlets have their biases. Remember don’t let the facts get in the way of a good story. My take on Bloomberg is they consistently write articles about Apple to attract views. The substance of the articles is not always solid.

        1
        January 25, 2022
  7. I heard backup beepers on road construction trucks on my island all day. Noticed the price at $155 but Monday typing assignments beckoned. Figured the app was broken when I saw shares closed down 79 cents at $161.62 on whopping volume (~151,000,000). Roller coasters and high rollers. Apple shares have been popular with overseas investors for a long time. Their kids want iPhones and an Apple Watch. Friends in France, Germany and Portugal buy & sell stocks on their phones. Massive sovereign wealth funds need consistent long term results from firms that qualify according to culture & goals. Apple stock fits the bill. Fluctuating dollar sweetens the deal.

    4
    January 24, 2022

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