Vulcans, Theology, iMacs and Nanosuar
January 25th, 1999

No news on the Apple front. We're in the doldrums. Sales are always slow to uneventful this time of year. News is sparse and often shifts to macro-economic prognostications, which are usually wrong.

Perhaps MacWorld in Japan will bring us some fuzzy feel-goods. Otherwise, the wait is on till the numbers for the new G3 and the candy-coated iMacs start to roll in later this quarter.

Meanwhile back at the ranch, the Apple Trader's advice is to hold and/or accumulate into any downdrafts. Buy like crazy if we're lucky enough to see a sub $35 price.

An Apology

Last week's Apple Trader's column garnished an unusual amount of e-mail, much of which I have yet had the time to reply...

OK, I'll admit it. Last week, buzzed on caffeine and still smarting from the missed opportunity to take some short term profits on Apple when the stock was at $46, I got a little bitter while writing the Apple Trader column. But I did make some good points, which I stand by. I urge all Apple executives to go back (hyperlink to your left) and read last week's column.

No, I don't think Steve Jobs is brain dead, just the opposite is the problem, he's a hyperactive kid if ever I saw one.

The Holy Mac

A general rule for investors: Do not get emotionally involved with the companies in which you invest. Vulcan impartiality is a mandatory quality for successful investing. One has to have the courage to pull the plug on any investment as soon as long-term negative trends are identified. One has to make a special effort to isolate and highlight all possible pitfalls facing a corporation one finds oneself predisposed to invest in. The hype is easy to hear the downside is often a barely audible whisper.

Apple is as much a theology as it is a corporation for many people. The whole Star Wars imagery of the Apple rebels with the force clearly on their side has been with us at least since the famous 1984 television ad. At first the evil empire was IBM and then it was Microsoft. Since Steve's return Microsoft has been partially rehabilitated but they're still the evil empire in my book.

The Myth has retained its strength over the years because it is so appealing. It wasn't invented in the New York offices of Chiat/Day. It grew organically and evolved from the real stuff of everyday life in San Jose.

There is a central core of truth in the Apple Myth. The machines since the beginning have been insanely great. Today, with the iMac, the PowerBook G3 series and the new G3s, the machines are still inordinately better than any other company's hardware. Don't even get me going on the OS.

This sort of infatuation with a corporation is sure death for an investor's profit. No, you aren't Han Solo; you do not have to go down with your ship. Unless, of course, you are looking for a tax write off.

I bring this up because Apple is hardly a run of the mill type investment. We are all in love with this company, and thus in violation of that basic rule of investing, which says, all together now: Don't invest in companies that you are emotionally involved with.

Rules, of course, are made to be broken. Break financial rules at your own risk; the edges are pointy and you may bleed green

Thus, if I sometimes sound a bit, let's say harsh, on our favorite investment, it's really just an attempt to keep a balanced perspective of Apple's true financial position. That's why I actively trade on the up and down cycles in Apple's position, it forces a deeper analysis of the facts than just a long-term rosy outlook.

That's why MacWorld and the Jobsian reality distortion field generated at MacWorld are death to all investment wisdom. This latest MacWorld was truly a flower child, love-in of rainbow colors if there ever was one. So much so that even a cold sober grinch like myself saw only psychedelic visions of an upwardly sloping Elysian Field of stock growth forever and thus missed the opportunity to reap a handsome short term gain at 47 bucks a share!

Now with Apple languishing in the pre-forty zone again, I fear it will be next quarter before we see the likes of the Jan 13th high again. That's discounting the possibility of a general market slump which, indeed, is sneaking up on us at this very moment.

Thank Apple's lucky star that the only news crossing the press desk lately is good news for Apple. At these low stock prices one more knee-jerk downgrade could take Apple back to 32. Of course, that would be a fortunate buying opportunity if ever there was one. (Personally, I've set my buy level at 35 dollars.)

The good news out this week was that the iMac stole first place as the best selling PC hands down for the important October through December Christmas season. The iMac garnished 6.2 percent of all PC units' sales in the 4th quarter! That adds up to 7.2 percent of the total PC dollar volume. That's gotta hurt over in the Wintel aisle.

The Analysts: Stupid or Evil?

Of course, this good news made me want to kick some analyst butt.

Remember last November when AAPL stock could go nowhere because several analysts were predicting that the iMac fad was dying out faster than the market for pet rocks. Now, were these guys lying through their teeth or are they just stupid?

This quarter's version of "Let's see if we can scare AAPL down with Outrageous BS" comes from an even more officious facade: Solomon Smith Barney with their false allegations of channel stuffing. Just the term "channel stuffing" makes fund managers on the street run for cover. Hold the facts, ma'am, we're outta here. Again, the question is whether Rich Gardner of Solomon Smith Barney is cunningly manipulative or is he just stupid? I'll bet he's just a moron, but conspiracy theories are always more fun. Would the X-files be a hit if the US government was depicted as just a bunch of Keystone cops?

The news from Japan is that the rev B Bondi Blues are almost all gone. Anecdotal evidence I've gathered from store checks around this country indicates that iMacs are still moving very well. No backups in any channels. Where do the iMac naysayers get their data?

In fact, my wife bought a bondi blue wonder (now only $999, gasp!), with the mysterious mezzanine slot, on the bet that an original iMac five years from now will be a collector's item. Save the box in the attic. Apple is not making any more bondi blue iMacs with the mezzanine slot, ya know.

Meanwhile, while the iMac appreciates, it's displayed Jetson's style in the living room. By the way, no one ever told me how cool Nanosaur was.

Your comments are welcomed.