If Apple goes, the whole country goes

“The world’s most valuable company has turned into a bit of a casino stock,” Angela Moon reports for Reuters. “Since Apple Inc on February 29 became only the sixth company in U.S. history to top $500 billion in market capitalization, trading has become more volatile, indicating that more investors are tracking headlines and looking for quick gains.”

“Apple has gained 32 percent since the beginning of the year, outstripping its gains for all of 2011,” Moon reports. “It accounts for more than 4 percent of the weight of the S&P 500 index, a kind of outsized standing that has caused its moves to dictate market direction on a daily basis.”

“For long-term investors, the stock of the iPad and iPod maker has been a winner, the ultimate in buying and holding. From a short-term basis, buyers have gotten much more fickle,” Moon reports. “‘Apple has become a favorite daytime trading stock for short-term traders. It’s one of the rare stocks that have momentum followers and that move on headlines that are not related to earnings,’ said David Rolfe, chief investment officer at Wedgewood Partners in St. Louis, Missouri. The firm manages $1.5 billion in assets and owns Apple shares.”

Moon reports, “There are concerns that Apple, because of its size, will start to hurt the overall market should the euphoric trading that pushed it to a record high of $548.21 on March 1 subside. ‘We used to say ‘if GE goes, then the whole country goes.’ Now we say ‘if Apple goes, the whole country goes,” Rolfe said… Despite the high price, Apple look like a value stock. It trades at 15 times earnings, close to the 14 earnings multiple of the broad S&P 500 index, even though its earnings per share grew nearly 83 percent last year, nearly four times that of the broad index.”

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