Apple

Here's a perfect example of why I don't yet see a secular gold bubble:

Last April, I shorted SLV in the face of the great precious metal mania. Everyone wanted silver, Cramer was telling me to buy silver, my precious metals refining neighbors were telling me to buy silver, silver was absolutely going to blast through $50/oz., the banner ads on my browser were telling me to buy silver, Zerohedge was telling me to buy silver, and everyone who owned silver was borderline insufferable with joy. Silver was the world’s greatest hedge to every global problem. So I sold the hell out of silver. One week later SLV lost 25%. link

When my neighbors, relatives, and co-workers are telling me I've got to buy gold, I'll know we're in a secular gold bubble.

Apple (AAPL): Is this another secular bubble?

Now, 11 months later, the world has found another AAPL of its eye. Pun 100% intended. Their iPhone’s cure cancer. Their iPad’s help the blind see (retinal display…seriously?). Their iPod’s have cultured the ignorant. Everyone wants AAPL.

AAPL is easily a $1,000 stock, Cramer is telling me to buy AAPL, every analyst has a buy recommendation on the stock, and according to all valuation metrics (except common sense) it is still cheap. Buy AAPL!

(Source)

So, today, I sold the hell out of AAPL. History repeats and I expect it to repeat two days from now.

Will AAPL tank? Who the heck knows. Maybe this time it'll be different. All I know is, 9 out of 10 sources seem to be yelling "buy AAPL". My inclination is to assume that people who are just now buying AAPL are contributing to the Greed or Delusion stage of a secular mania.

AAPL: Reversion to the mean

If and when the bubble bursts, and AAPL over-corrects, will it drop to $150 before returning to the historical mean? When Apple's stock reverts to the historical mean, will it trade at $300? $250? What is the historical mean price for AAPL?

Disclosure: At the time of writing, the author has no position in AAPL and has no plans to take one in the foreseeable future.

Why is AAPL so wonderfully profitable? This may help explain it:

[ISI Group’s Brian] Marshall makes reference to a note he put out on November 15th of last year, in which he argued Apple’s revenue is secured in the same way as the cable companies, with a high recurring aspect as users buy a “$650 high-end ‘set-top box’ with an ~18-month replacement cycle,” as he characterized it.

Hence, he estimates that the “implied value per iOS user” right now is $1,900.

The first hit's (not quite) free.

Is there a $99 iPad in your future?

Analysts report that Apple slashed iPad parts orders by 25%. This may be a sign of weakening demand.

Karl Denninger, over at market-ticker.org, predicts Apple's impending fall from grace -- due to declines in sales as a result of the current and worsening economic mess, among other things:

Apple gets a lot of their sales in Europe. But Europe is a train wreck economically. To believe in the forward story and that the production cut is not "real" you have to believe Europe will avoid a Depression. Given what's going on over there, such a belief is an act of pure insanity.

Oh sure, they might not get the worst of it right now, but this is a forward projection, not a call for a crash in the morning. You also have to believe that the United States will not suffer the knock-on effects and that sales here won't get hurt. And finally, you have to dismiss the fact that HP effectively destroyed pricing power for tablets with their "blowout" of the Touchpad.

Denninger thinks that HP's Touchpad $99 blowout may have altered consumer price expectations:

The latter may well be a stake through the heart. HP's "blowout" put the $99 price point in the mind of consumers and that is not going to go away. This sort of "ratchet" mechanism has a well-documented history in America, and once it takes hold it is almost impossible to get rid of. There are already signs that this pricing pressure is eroding the edges of everyone else's tablets, with the first to succumb being RIMM's "Playbook." This will reach Apple and margin collapse is a well-documented phenomena that has a habit of trashing stock valuations.

The HP Touchpad is not an apples-to-apples comparison to the iPad. Apple products do sell at a premium, though I think it's safe to say that there are plenty of people who are not willing or able to pay Apple's current prices. If the economy worsens, that segment will grow–so there may be significant pressure to cut prices. And even though the HP blowout didn't last long, it may be returning in late October:

Fortunately, HP will be coming out with 100,000 to 200,000 TouchPads at reduced pricing, sometime around late October, giving you another chance to get your hands on one.

Some have observed that iPad sales may be reaching saturation, as well. If that's the case, Apple may be selling many iPads to repeat, upgrade customers. (Apple's fan base is known to enjoy the privilege of paying for the latest version of the product they already have.)

Will Apple be forced to reduce their premium pricing on the iPad product in order to maintain sales and preserve their market share? Will we see $99 iPads within the next year? If not $99, how about $199? $299?