HP and Apple: Poster Boys for Market Insanity

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Sometimes it seems like Mr. Market simply woke up on the wrong side of bed. Today is one of those days. After sinking this morning, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up by 0.84% as of 1:55 p.m. EST.

Perennial loser Hewlett-Packard (NYSE: HPQ  ) sports one of the Dow's largest gains today, jumping 4.4% on nothing but fluff and dreams. Speaking at a conference in Germany, CEO Meg Whitman said the Autonomy software business isn't all dead weight and might actually contribute to HP's sales at some point. That's all it took to make HP a big winner.

On the other hand, eternal winner Apple (NASDAQ: AAPL  ) plunged 4.7%, shaving some $23 billion off Cupertino's enormous market cap. To put that drop into perspective, HP is worth $27.6 billion right now, or just 20% more than the shareholder value Apple burned today.

And why, pray tell, did Cupertino slump so swiftly? The short answer is that there is no obvious reason.

Some market watchers blame reports that Google (NASDAQ: GOOGL  ) and friends are stealing Apple's thunder in the tablet computer space. OK, fine, but they're doing it by growing their own slice of the pie -- not necessarily by stealing anything from Apple's plate. Nobody needs to die here.

Others point to the fiscal cliff, speculating that Apple investors might be selling before the new year, when capital-gains taxes may or may not jump. After all, the stock has still gained 40% over the last year, or 200% in five years. But then, why aren't recent market darlings dropping like flies all over the map today? The same tax calculations would apply equally to longtime Apple partner Skyworks Solutions (NASDAQ: SWKS  ) , for example -- the two stocks have climbed in virtual lockstep for years:

AAPL Chart

AAPL data by YCharts.

And yet Skyworks gained 0.5% today, watching Apple burn from a distance.

Let's just face it: The stock market doesn't always make sense. No news can be good news -- or bad. Game-changing information can move stock prices in the wrong direction. We just have to accept the crazy volatility, buy on the stomach-wrenching dips, and sell at insane, unsupported highs.

Luck favors the opportunistic, after all.

There's no doubt that Apple is at the center of technology's largest revolution and that longtime shareholders have been handsomely rewarded with gains of more than 1,000%. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons both to buy and to sell Apple, as well as what opportunities remain for the company (and your portfolio) going forward. To get instant access to his latest thoughts on Apple, simply click here now.

Read/Post Comments (1) | Recommend This Article (4)

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  • Report this Comment On December 05, 2012, at 2:37 PM, prginww wrote:

    AAPL shares are being oversold. False rumors used by traders to scare investors into selling. Listen up...AT&T said sales of smart phones were soaring ,but in their first 2 month's of tracking sales, AAPL sales seemed a little low. GEE, Wonder why? Didn't AAPL say that they were have some production/supply shortages 5 weeks ago? YES!

    So naturally, they would be a little light because AAPL demands perfection from their state of the art products. AAPL now has resolved these issues and all stores report iPhones in stock.So if things are that bad...why are many of the analysts that follow AAPL increasing iPhone 5 estimates?

    Is it because these phones are awesome and still in huge demand ? I think so !! Another report from IDC today saying AAPL IPAD sales losing some ground to GOOG android. DAH, Well of course.

    AAPL had near 100% of sales 2 years ago, but as usual, everyone copies AAPL, and does what they do.So AAPL got nearly all of the 10 million iPad sales 3 years ago, but now they get 53% of the 500 million sales of iPads, so is this really bad news? Because to me , it sounds as if AAPL is increasing their cash at alarming rates and this is all good news. Whenever a false rumor knocks down AAPL shares, it causes some investors to sell and panic because they think Congress will tax them at 43%. OBAMA CAN NOT BE THAT STUPID, IS HE? WELL MAYBE, but all is well with AAPL. This is another buying opportunity (gift) to buy shares of 9x P.E AAPL

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NASD 5,257.40 15.57 0.30%

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Related Tickers

10/21/2016 4:00 PM
AAPL $116.60 Down -0.46 -0.39%
Apple CAPS Rating: ****
HPQ $13.80 Down -0.30 -2.13%
HP CAPS Rating: ***
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****
SWKS $77.47 Down -0.62 -0.79%
Skyworks Solutions CAPS Rating: ****