Consider the following excerpt from the above-mentioned Bloomberg article titled “Apple Doomed to End Up Like Sony, Says Forrester CEO”:
In a blog post pitched today by his spokesman as “something provocative,” Forrester Research CEO George Colony said that without co-founder Steve Jobs at the helm, Apple will “coast and then decelerate...”
Colony’s reasoning is that without Jobs’ charisma, design vision, and ability to take big risks, Apple will end up like Sony, a rudderless organization that will have a long, painful decline ...
Forrester’s chief said Apple’s board should have found another charismatic leader to replace Jobs instead of Tim Cook, whom he described as “proven and competent”: “His legal/bureaucratic approach will prove to be a mismatch for an organization that feeds off the gift of grace.”
Colony went on to argue that Apple will shift “from being a great company to being a good company.”
While I am not 100 percent on board with the Sony comparison, I agree wholeheartedly with everything else Colony said. In fact, I uttered eerily similar words across the web before Colony went public on his blog. Here’s a sampling:
March 29, 2012
Apple is left with a mere mortal as CEO. A man who is hardly the creative and marketing genius Jobs was. Tim Cook does well shaking hands with foreign politicians, but, he’s in a tough, almost impossible job as Apple attempts to move forward. He’s living on borrowed time.
April 20, 2012
Just like the path to success, the road to failure or, at the very least, mediocrity, will not present as a swift and straight path.
April 23, 2012
... an Apple without Steve Jobs will likely lose its luster and enter a relatively slow decline to merely being good, not great.
Now, to be clear, other than expressing some ultimately unnecessary caution ahead of Apple’s earnings report, I have been quite bullish in the near-term.
While I continue to gush over Apple’s present dominance like everybody else does, I refuse to put on the blinders like many Apple permabulls. It’s nice to see somebody else thinking — and saying — the same thing, even if he does not give me a nod with a footnote.
Apple longs tend to discount this whole conversation as moot and meaningless because of Apple’s present superior state. You have folks making comments like this on articles that explicitly reference the long-term:
It took a lot of loyalty to stay long AAPL this quarter but I did it.
Wow. That’s the type of thing hockey fans probably say as they paint their faces before a big game. As a good friend of mine, who is an Apple bull, mind you, told me Wednesday night, also on Twitter: “Emotions and money are never a good mix.”
That’s exactly what you need to check yourself on. Of course, today, you can call me all sorts of names for urging emotional restraint and a consideration of the long-term future. Clearly, it means little, materially, in the here and now.
Apple lowballs guidance. Apple crushes estimates. Apple goes up. Apple pulls back a little. Apple lowballs guidance. Apple crushes estimates. Apple goes up even higher.
We have, at a minimum, another four to six quarters of that to come. And I am not saying that it’s not exciting and extraordinary. I am sided with the most bullish of bull cases.
There’s a danger, however, in not looking ahead and considering worst-case scenarios. It’s a psychological process. With every one of the aforementioned “rinse and repeat” cycles, some longs will find themselves getting even more “loyal” and emotional. As that internal fervor grows, all logic goes out the window. Making money, whether the long knows it or not, becomes secondary. It’s all about being right, but, even more so, seeing the story through.
Group psychology also comes into play. While the individual long ultimately deserves praise or blame for his or her own decisions, we cannot ignore the impact of the group on the individual. What was once a set of loosely connected shareholders becomes a cult. See stocks like Sirius XM Radio and Research In Motion if you do not believe me. RIM permabulls sailed that ship, with defiance, all way to the bottom of Lake Ontario.
This is not to say there’s any comparison to be made between a great company like Apple and a mediocre company like Sirius XM or a truly awful company like RIMM. A legitimate association does exist, however, between the behaviors of each firm’s shareholders. Review the message boards and comment threads on articles over the past year that focus on Sirius and RIM.
While Apple supporters, by and large, remain civil and level-headed, slowly but surely, with a post here and a post there, they’re devolving into that inane cult-like territory I thought that was trademarked by Sirius and RIM bulls. When the case you make for staying long your stock sounds more like a deranged terrorist video, you really need to check yourself.
And I must stress ... if doom occurs, it is not impending. By no means. However, I have seen the process I describe take place. I have fallen victim to it in the past. With each victory, you become all the more certain that there's no way — God willing — you can be defeated. A little bit of loyalty, and Tim Cook and China will take care of the rest.
Ironically, seeing profits slowly start to get smaller only strengthens your resolve. You hold. You listen to the pumps to buy on the dips. And it keeps working. You’re rich. But for every disciplined investor who manages his or her position properly, there’s at least one devotee who stays all-in and keeps digging himself or herself a deeper hole. Before you know it, your otherwise rational mind fooled you into staying in a position from $700 down to $250 because you just knew it had to make it to $1,000. It was destiny.
What makes the whole situation even more tragic is that it’s relatively easy to manage a position like Apple, particularly once you have built up some size. Apple is a long-term investor’s dream not simply because it seems to always end up moving higher, but because it’s an income-generating powerhouse.
As I have noted in recent days, you can literally live off covered-call income even if you “only” have a couple hundred shares of Apple. Even if you do not own the stock, there’s income to be made. If you have the cash to support the trade and would not mind getting long Apple on a pullback, selling putsis almost a no-brainer.
Consider the premium you could collect on several May strikes, as of midday Thursday:
AAPL May $590 put, $11.15
AAPL May $585 put, $9.55
AAPL May $580 put, $8.05
Heck, even down at $565, you’re taking in $4.75. That’s not bad at all for one month’s worth of your time, particularly if you have a hefty bankroll.
Whatever you do, do not allow your emotions to take over. That might seem like an obvious and errant thing to say given what we're living through with Apple, but, every single day, investors squander relative fortunes thanks to behaviors that effectively overtake them.
Additional News: Apple’s Blowout Earnings Fuel Push for Dividend Hike
Additional Views: Why We ‘Don't Buy’ Apple’s Low-Ball Guidance: Analyst
CNBC Data Pages:
TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks.