Wall Street greeted Barack Obama’s inauguration as the 44th president of the US by shedding more than 5% of its total value Tuesday. Some might interpret the market action as a vote of no confidence in the new administration, others likely view the dip as an indication of challenges ahead for the US economy and still others would say the market for stocks acts as any market with excess inventory on hand – by putting things on sale.
The sale price for shares of Apple (AAPL) closed Tuesday at $78.20, the cheapest price the stock has seen in over two years, more than 60% off its all-time high of $200, set in December 2007. One of the most widely followed Apple analysts, Gene Munster of Piper Jaffray affirmed a price target of $235 for Apple stock as recently as December and today’s price action, coming just one trading session prior to the company’s quarterly earnings announcement, would seem to be Wall Street’s equivalent of a one-day red tag sale.
So what do you think? Is Wall Street giving potential Apple shareholders a gift, or is it trying to unload damaged goods while it still can? Can a guy like Munster, who follows in minute detail every financial move the company makes, who reports, often with uncanny precision, what Apple’s revenue and profit numbers will look like before they are announced to the public, can he seriously set a price target 200% above the stock’s current value?
What I know is that a year ago, after the market had knocked AAPL down from $200 to about $140, I wished I had some money to put into the stock, because I loved the company and its products, and I thought its prospects for the future were great. I know that six months ago, when the iPhone 3G came out and the AppStore launched with the stock trading at $175, I wished I had some money to put into the stock for the very same reasons.
Today, I know I’m kind of glad I don’t have any money to put into the stock because I still love the company and its products, and I still believe its prospects for the future are great, but it seems sometimes that’s not enough to make money in the stock market.
