With the recent rise in AAPL I wondered when profit taking would set in.

Expect to see the same thing happen when AAPL hits 200. Be ready to buy

The whole market is down, not just Apple.

AAPL might bounce up a bit still, but I'd expect a fair bit of profit-taking while the sub-prime mortgage situation is unravelling. With the rest of the market trending downward, I think Apple's value is going to drop, if less so than the rest of the market. The economic situation may actually play to Apple's benefit as the weakening American dollar makes Apple products more competitive in Canada and Europe.

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KitsuneStudios wrote:
AAPL might bounce up a bit still, but I'd expect a fair bit of profit-taking while the sub-prime mortgage situation is unravelling. With the rest of the market trending downward, I think Apple's value is going to drop, if less so than the rest of the market. The economic situation may actually play to Apple's benefit as the weakening American dollar makes Apple products more competitive in Canada and Europe.

Apple dropped more than the market: - 5.8% vs about -2% for the NASDAQ, -0.3% for the DJI and <-.1% for the S&P.

Apple went up over forty dollars a share in the course of a month. Profit taking is inevitable. The big boys drive the price up, take profit, buy back in at a lower price, and then start the whole cycle over again.

It's not just the "Big Boys" who do it. I placed instructions to sell a lot of my AAPL stock when it hit $189.5 and to use all of that money to buy if it dropped to $170. Sixth time I've done that this year, made enough profit to cover rent and living expenses for the next three years easy. It may not be in the millions, but it's still a significant chunk of my income.

If you had simply held that initial buy, you probably would have made even more ('on paper.' at least)...

Nope. With the buy/sell/buy I've ended up with more shares total, all at a higher price than when I've bought them. I've kept track of things for almost a year, to settle a bet with a friend (and to show him you don't need a few million to make investments). By setting instructions to buy, sell, then buy back I made 20.1% more than if I had just left it all there. Of course, this is just Apple, the other two stocks I do this on only got 13.6% and 11.4% more doing this.

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Anonymous wrote:
If you had simply held that initial buy, you probably would have made even more ('on paper.' at least)...

Not so. Consider this:

1. Buy 10 shares at $100 for $1000.

2. Sell the 10 shares for $150, getting $1500.

3. When the stock falls to $125, buy 12 shares.

4. If the stock goes to $175, your stock is now worth $2100, vs $1750 if you had just held on to the original 10 shares.

The fallacy comes from 1) not realizing that he bought MORE shares than he had and 2) thinking that these were the SAME shares. They could just as well been shares in another company. Consider this:

1. Buy 10 shares of A at $100 for $1000.

2. Sell those 10 shares of A FOR $150, getting $1500.

3. Use the $1500 to buy 12 shares of B at $125.

4. Assume A and B both go up to $175. If you had held on to A, it would be worth $1750. However, by selling A and buying B, your stock is worth $2100.

This is just what "day traders" do, only they do it in a matter of hours, even minutes.