Jim Cramer wants to buy Apple on the dip (video)

“The chasm — the dichotomy — between those who think [the market’s] going to be good and bad is the deepest I’ve seen since 2007.”

From “Jim Cramer explains why he wants to buy shares of Apple and Nvidia” snagged Friday from CNBC Pro:

My take: For a guy whose mantra is “own Apple, don’t trade it,” Cramer sure sounds like he’s trying to time the market.

21 Comments

Fred Stein said:

One word: Risk.

Apple reduces risk. Even if things go bad, they will suffer less. When the worries dissipate, they will do very well. In between, buybacks.

Customer loyalty, technology leadership, and integrity don’t go away. We own that by proxy.

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May 13, 2022
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- Joseph Bland said:
  
  @ Fred:
  
  Yep. Here’s a fun fact: Even now, Apple is up 91% from what it was 2 years ago. Other stocks, not so much. Amazon has been slaughtered, down 11% from what it was 2 years ago….
  
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  May 13, 2022
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  - Daniel Epstein said:
    
    Yes kind of a fun fact. What was Amazon’s PE back then? And Apple’s PE? And today? Amazon’s forward PE today is 67.54. Apple’s forward PE today is 24.11. Some people (Like Rod Hall Today) are saying Apple is still overpriced because the S+P 500 average PE is lower than Apple’s so Apple should fall to the average PE. What do they say about Amazon? Amazon rebounded today a higher percentage than Apple did. At least for the past two years Apple has been a better stock to own.
    
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    May 13, 2022
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    - Robert Paul Leitao said:
      
      Daniel: I’m not concerned with earnings multiples. I consider multiples applicable only when comparing enterprises in the same industrial or services sector. In my view, Apple is an equity class all its own. I don’t understand what Rod Hall is talking about. But that’s OK. I usually don’t understand what he’s talking about. Has anyone heard or read anything about Apple from Katy Huberty lately?
      
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      May 13, 2022
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      - Jacob Feenstra said:
        
        Robert: A lot of analysts have a standard that they compare a stock to—a measuring stick. With Toni Sacconaghi it’s the past average multiples of AAPL. So he often brings that up: “Apple is expensive based on its past multiples.” I have never heard him ponder the possibility that maybe, just maybe, the past multiples were ever even justified (AAPL was for a long time undervalued).
        
        Rob Hall has as measuring stick the S&P 500. He regularly goes back to that. When earlier this year (I think) a reporter asked him, after a huge run-up of AAPL, whether Hall rating of NEUTRAL, still makes sense, he in full confidence said that in general AAPL has performed in line with the S&P 500 and consequently his NEUTRAL rating has proven to be accurate. (That’s one way to make a dark cloud look sunny.) Because he has the S&P 500 as his standard—incorrectly, I believe—he is wrong, but because he applies that standard consistently he can take comfort in the fact that at least he is consistently wrong! It may get him into the Hall of Fame. (Sorry, couldn’t resist.)
        
        With you I believe that Apple is in a category of its own. So one constantly has to weigh its own merits, its fundamentals, against the global context.
        
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        May 13, 2022
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        Robert Paul Leitao said:
        
        Jacob: Thank you for the thoughtful comment. I believe Rod Hall is primarily a hardware analyst and in the interviews with him I’ve viewed, he sees Apple almost exclusively that way – as a hardware enterprise. I think he’s an odd choice by Goldman to cover Apple. As Services continue to increase in percentage contribution to the aggregate revenue mix, and at much higher GM than devices, it would be appropriate for the earnings multiple to expand versus the historical norm. But we know that already. I do appreciate your insights into his outlook. I don’t think Apple has any direct or even closely similar comps for valuation purposes. As long as net income continues to rise, the fully diluted share count continues to shrink and a multi-pronged strategy to expand current markets and enter new ones remains in place, there are no valid comparisons, in my view.
        
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        May 14, 2022
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  - Robert Paul Leitao said:
    
    Joe: Thank you for the reminder context and contrasts are important. I don’t want to be a spoiler. Take a look at where Apple was trading three years ago today. Going back two years is good. Going back three years is an exhilarating experience.
    
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    May 13, 2022
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Kirk DeBernardi said:

Fred S. —

Spot on.

I’m holding…and amused while doing so.

Panic rarely pays off.

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May 13, 2022
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- Bob Goldstein said:
  
  I have seen this and so much worse over the years. I just hold tight and let Apple buy for me through dripping IRA dividends. Over the years I have seen a lot of people in different groups panic and sell
  
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  May 13, 2022
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Robert Paul Leitao said:

If you are a long-term investor, don’t agonize about the bottom, focus on how much room there is to the top. Enterprises with wide economic moats will be the leaders in a recovery and they are the enterprises that have the most pricing control over their products. Quality matters. Enterprises that are able to internally generate their own working capital are in the best position to navigate the challenges of rising interest rates. Be choosy. But choose! After one chooses, it’s best to act. There’s no replacement for due diligence and research. Do the work, make your decisions and act on your work. Have confidence in your decisions and know over time equities move higher. Again, quality matters.

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May 13, 2022
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Michael Goldfeder said:

@Robert: Very well stated. I’m looking at this current decline as a double whammy positive with both Apple buybacks and Warren acquiring even more shares.

For those Apple investors who are not currently subscribers to Apple 3.0, it’s an invaluable source of information to fully understand and appreciate the opportunity currently being presented by the schizophrenic market action. Much like the security blanket used by the “Peanuts” character; “Linus.” Only so much better!

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May 13, 2022
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- Joseph Bland said:
  
  @ Michael:
  
  Good point on Mr. Buffett! Folks who dumped AAPL are feeding the Buffetts of the world, who will stay long and get strong!
  
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  May 13, 2022
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  - Steven Philips said:
    
    A Buffett Buffet? 🙂
    
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    - Robert Paul Leitao said:
      
      Steven: Thank you for the laugh!
      
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Greg Lippert said:

Able to sell put options on AAPL at $130-$140 for good premiums. I’ll take it! If its gets put to me – thats ok!

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May 13, 2022
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- Fred Stein said:
  
  yo bro.
  
  During these dips I go way long, way deep out of the money. Can you believe it? People will pay $7.32 for June 2024 $100 puts. How does that compute? Even with a 50% chance of Apple crashing (ludicrous), it would have to drop $85 just to break even.
  
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  May 13, 2022
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  - Greg Lippert said:
    
    @fred
    Thats crazy good! I may do that too and just sock it away.
    
    I usually sell my puts and calls closer to the money (not too close) and shorter in time.
    
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    May 14, 2022
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Joseph Bland said:

This was at the end of the video:

“The definition of capitulation is when people sell what they love.”

A couple of days with volume at about 140 million shares on a stock with a float of 16+ BILLION is NOT capitulation; it is INVINCIBILITY!!!

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May 13, 2022
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- David Drinkwater said:
  
  I heard that, too, Joe, loud and clear.
  
  I am not going to sell what I love.
  
  I am not going to do something that I know to be incorrect.
  
  Also, with a cost basis of $129 on my latest shares (purchased at an increased cost basis to replace charitable donations), $122 on my next most recent shares, (purchased for nonnumerical reasons) and from there dropping to sub-$12 cost per share, Apple would have to completely invert for the to lose actual money.
  
  But paper money is also nice.
  
  I do not look forward to Saturday morning’s Standard Work Metrics.
  
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  May 14, 2022
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  - David Drinkwater said:
    
    That was meant to say “numerical reasons”, not “nonnumerical reasons”.
    
    For me, it’s kinda like Musk’s obsession with 420. Just … different.
    
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    May 14, 2022
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- Robert Paul Leitao said:
  
  Joe: I appreciate the dramatic flair. Your other posts today prompted me to look at Apple’s performance over the past 2-year and 3-year periods. I don’t see Apple’s price performance as invincibility. I see it as the market’s version of Apple price capitulation – to a point not much below where the shares were trading during a brief market pullback in March. By comparison to other equities, I view it as tame. It makes the headlines the media wants and pundits get to scream, “Capitulation!” I do, however, understand your point.
  
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Philip Elmer‑DeWitt

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Jim Cramer wants to buy Apple on the dip (video)

“The chasm — the dichotomy — between those who think [the market’s] going to be good and bad is the deepest I’ve seen since 2007.”

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