September 3, 2013 (www.investorideas.com newswire) Apple are rich and successful – so if I invest in Apple stock, I’ll be rich and successful too, right?
Perhaps - but it's never a certainty.
From humble beginnings, building primitive home computers in a Palo Alto garage belonging to a young man named Steve Jobs, Apple has risen to become if not the biggest, then certainly the coolest company on the planet. Millions of sleek white Apple computers sit on desks in homes and offices across the world, and millions of shiny iPhones are pressed to ears or tapped away at every hour of the day. In 2012 they could boast a revenue of $156 billion - nearly three times the GDP of Luxembourg! Their stock rose dramatically following the introduction of the revolutionary iPhone in 2007, followed by an almost meteoric rise to a whopping $700 in 2012.
Sounds great, right? Who wouldn't want stock in a company so clearly successful, innovative and - perhaps most importantly - loved? After all, despite the critics, there's no shortage of Apple fans who follow the company's every move and eagerly await the latest releases, whether it's the seventh iteration of the iOS software on every iPhone or the long-rumoured iWatch, a device that will do for the humble wristwatch what the iPod did for MP3 players.
Not so fast, though. Since the heady autumn of 2012, Apple's stock has plummeted to the mid 400s - still respectable, of course, but a far cry from the glory days. What happened?
Part of the reason is that Apple stock is just too popular. When every wannabe investor is pouring cash into Apple stock, things will be fine for a while - until reality kicks in and the market brings the stock down to a more realistic level. No company could sustain the incredible growth of Apple without hitting a wall. While the yearly increments of the iPhone design continue to attract buyers across the world, there's only so many smartphones you can sell.
A business model based on unveiling the next big thing every 12 months has to survive on great products - and right now, Apple are merely improving, not innovating. What's worse, the intense speculation could even lead to feelings of disappointment when the new device fails to live up to the hype - and this can only have negative repercussions for the stock price.
Perhaps in time, some great new design will become a must-have - like the iWatch, if it ever sees the light of day - but then again, Apple could continue to sink as competitors like Samsung continue to make inroads into the global smartphone market with their Android handsets.
So should you buy Apple stock?
Well, the truth is that it's impossible to say at any one moment whether you should or should not buy shares in Apple. All investment carries risk, and the stock market can easily trip up an unwary investor. Perhaps the best option to manage risks is to invest in CFDs - "Contracts for Difference” - which are uniquely versatile investment options that let you trade in the prices you pay to buy or sell a stock, rather than the stock itself. Investing in a CFD from a company like www.cmcmarkets.co.uk can even let you profit from falling stock, which is ideal for a measure of security when dealing with a volatile investment such as Apple shares.
Published at the Investorideas.com Newswire - Big ideas for Global Investors
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