Is Apple an Investment “No Brainer?”

I certainly don’t think so. With investments, there is rarely, if ever, a true “no brainer.”

I wrote yesterday about Bill Miller and the infamous crash of the mutual fund he was managing.

Bill Miller is now claiming that Apple’s current stock level “makes no sense.” He means this in the good way – that the stock is such a great deal that it doesn’t make sense. If he’s right, investment returns from this level should be good.

This is the time to be afraid

Right now you have some big guys lining up for Apple. You have Carl Icahn, Bill Miller, David Einhorn, all of which have gotten involved in this company, which seems to be such a great deal.

This spells trouble, especially Bill Miller’s statement that the stock price “makes no sense.” Miller should have learned by now how dangerous of a statement that is. Whenever an investment seems too good to be true, it usually is. There is something going on with Apple below the surface that is troubling. I don’t know exactly what, but stocks don’t just trade at cheap prices for no good reason. I admit that Apple’s stock seems like a great bargain on paper, but you have to be more savvy than that.  All too often you find out later that the stock price actually did make sense – the stock was low because something was wrong.

I’m not saying Apple is going to go down from here. Like all stocks, there is probably a 50/50 chance it will go up or down from here. But don’t get sucked into this foolishness that a company the size of Apple could be trading at a prices that is so good it “makes no sense.”

And one guy in particular is missing

One more point – did you notice an important name missing from my list of billionaire investors that are jumping into Apple? Yes, Warren Buffet’s name is curiously absent – and he is by far the best mind of the bunch. Definitely something to think about.

Again, it is probably a 50/50 chance the stock will go up or down from here, but my nose smells something rotten.

Photo by Alex Murphy