Should I buy AAPL (again)

As most of you know, I'm a proud owner of Apple stock and have been for a long time. There have been a lot of times this past year where it seems that I should have sold and did not. Oh well. That is the problem with my having invested in the company and not having traded the stock.

Of course, had I just traded the stock, I would have sold during 9/11, I would have sold when Jobs had surgery and I probably would have sold at any of the times that it has lost half or almost half it's value in the last 7 years. Had I been a trader, I would have lost out on the current 1000% gain that I'm sitting on.

Would I have been smart to jump last December when the stock hit 202 intraday? Yes. But I didn't buy the company wanting to sell it. I bought it because I wanted to own it. I guess that some people probably won't understand that. There have been a dozen times in the last 7 years that I would have been right to see that would have cost me money if I took them.

So now, AAPL looks like it could test 52 week lows again during another market drop downward. I've been buying calls every time this drops, and I'll probably do so again if it drops over the next couple weeks. The calls I'm buying are at least a year out, so I'm not saying that AAPL will rocket upwards in the next couple months. But by next year at this time, unless the entire market gets halved again, you will be wishing that you picked some up here.

I do think that there will be an event at next earnings that could be profitable to the upside. I think that there are a couple things that indicate we could have a massive short squeeze if all things align just right. Apple has traditionally not had a very high percentage of shorts. But this is going up in general with the overall market problems. Take a look. Also, there is some bullish sentiment that Apple could blow out numbers again, even in the downturn. I think that these two things indicate a potential for great upside in a squeeze if enough shorts get on this bandwagon before earnings. Like lemmings, I think they will.

So what gives me confidence? Three things:

1. The first reason is contrary:
During a recession, people tend to do small things that make them feel better. Apple has this category well covered, iTunes gift cards are everywhere, iPods are cheaper and better than they have ever been, and even if you got one last year or the year before, you are feeling the need for the new one. Is your old iPod a gaming machine? Does your old iPod have apps? Face it, you feel the technolust, and everyone else does too.

2. The second reason is trend: There is a global move (finally) to mobile and hand held computing. Apple leads in laptop sales and "pwns" everyone in hand held computing.

I have been a cutting edge consumer of this trend for the last 12 years. Starting with palm pilots hooked up to Nokia cell phones with a tether and almost every iteration of Windows Mobile or other hand held since then. None of the many devices that I have owned compares to the iPhone.

The only device that seems to come close is the Android based "gPhone" but even it falls short. Feeling cheap in comparison. I managed to stop in and play with the Android phone at T-Mobile and was able to play with the MySpace App that my team designed for the first time on a live phone*.

The Android phone feels "plastic", like a toy. The screen "wiggles" when slid out and when I picked it up, I had thought that I was holding on of the fake display phones until the screen lit up.

The iPhone, and for the timid, the Touch, are the best handheld computers on the planet. The hardware is not cheap and plastic like the Google phone, the software does not feel locked down and corporate like the Blackberry. The developer market and simplicity of the app store make this a killer that everyone will adopt. The price that consumers see up front is too cheap to pass up and likely to get cheaper with new models.

3. The third reason is personal: I visited the mall yesterday at 1:00 in the afternoon to stop by the Apple store and drop off an old computer in need of repair. The mall was a grim sight. Even for a weekday, the mall was barren. It felt like a ghost town that had no ghosts. The food court had people, but it was just after lunch at 2:00 and there weren't many people there either.

But the Apple store was different.

It had so many people in it that I had to wait to get help. Every station had someone shopping or buying. There were people engaged, iPods being sold and happiness all around. It's hard to judge traffic at the Apple store, as it has always been packed, so it might have less than it did 6 months ago, but on Tuesday of this week at 2:00 in the afternoon, it seemed to be doing very well.

I didn't go into any other stores, but of the ones that I passed, about half the mall, there was little to no activity. So Apple really stood out as busy.

I think it's possible that this could be a good season.

Do I think the market or AAPL can go down?

Of course. There is the possibility that all hell has broken loose and the consumer, always slow to catch on that they should be in a recession, has finally realized it and is slowing their spending. So if you buy. Realize that things can get worse before they get better. Also realize that if hell has broken loose, we could go down another 50% and stay there of the next ten years.

I'm hoping that hell has not broken loose.

I think AAPL can hit as low as 80 under great, massive fear in the market or under any general collapse that does not decimate the market. But I think a year from now, this will be back to the 130 to 150 mark on some returned optimism in the market.

* The app is great and is better when viewed on the live phone than in the simulator. My team rocks. (We designed MySpace on the iPhone as well.)

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