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Apple Thrills Like Roulette, Can Make You Just As Broke

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What is the next big thing for Apple?  This is a favorite topic in all sorts of venues ranging from water cooler talk at the office to investment publications.  The most speculation centers around iTV, but in a very different way, the next big Apple thing is already here—Apple stock.

Apple stock has become the favorite casino game of gamblers.  After all it is easy to get an adrenaline rush and make thousands or millions of dollars in minutes depending upon how big a hand you want to play by trading Apple stock short-term .

If you want to be a high roller, special tables are readily available in weekly options.  The volume in weekly options has swelled.

Apple is one of the rare stocks that consistently shows large moves without earnings or a takeover being a component of that news.  Monday was no exception.  In the pre-market when I was analyzing our positions the stock was under $500.  A half hour later the stock had moved to $512.  An hour after the market opened, the stock was back approaching $500.  During the afternoon the stock rallied strongly and after-hours was trading over $520.

The point is that just like a lot of money can be made or lost in a casino in a very short time, a lot of money can be made or lost in Apple stock in a very short time almost every day.

Just like in a casino the house always wins, in Apple stock high frequency traders always win.  Newbie retail day traders lured by the prospects of quick gains fall victim to high frequency vultures armed with machines running sophisticated algorithms; all but the most astute and experienced traders are no match for the machines.

Some analysts stay in a state of confusion.  Nobody knows with any certainty at what P/E Apple should trade.  Analysts appear to react to the price action to make their recommendations.  Of course, no analysts are ever going to come out and admit that he or she is simply reacting to the price action.  Decisions regarding the stock appear to be made first based on the price action and then justification of the recommendation is made using the fundamental data that has shown to be of no value in predicting the moves of Apple stock in the very short-term.

For most investors the best course of action is not to be lured into day trading Apple stock.

According to my method, long-term risks in Apple are rising.  For this reason our subscribers have realized profits on 80% of the position.  I advocate surrounding core long-term positions with short-term trades to enhance returns.  In our experience this approach can almost double the returns and reduce the risk.

About Me: I am an engineer and nuclear physicist by background. I founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Write me: Nigam@TheAroraReport.com.  Follow me here.  Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, $525, $629, $568 and $610.