OK, Jeff Gundlach. You were right. Absolutely right.

The bond guru has maintained bearish sentiment on Apple (NASDAQ:AAPL) for the better part of a year. Last May at the Ira Sohn Conference in New York, Gundlach went as far as to recommend shorting Apple while going long natural gas, a trade that he said had "monster legs." Let's look at the price of United States Natural Gas Fund (NYSEMKT:UNG) compared to the Mac maker to see how "monster" this trade turned out.

AAPL Chart

AAPL data by YCharts.

Over the next four months, Apple would continue rallying and top out at $705, nearly 30% higher than when Gundlach recommended shorting it, while natural gas was up less than 10%. Following Apple's peak, shares have cratered and are now down 22% from his initial call, although natural gas has given up most of its gains as well and is now only up 2.6%. Not so sure I would call that "monster," even though his prediction that Apple would eventually fall has come to fruition.

In November, Gundlach appeared on CNBC at a time when Apple was trading near $550. The fund manager then expressed his belief that Apple has lost its main product innovator and that it would soon try to pass off "tooty-fruity" iPad colors as innovative. His crystal ball told him that Apple would soon hit $425, which was $125 below prices at the time and represented a market cap loss of nearly $120 billion. I panned Gundlach at the time, saying his price target was absurd since it would put Apple's P/E firmly into single-digit territory of 9.6 (or 6.7 excluding cash), and that Apple's cash would comprise 30% of its value.

Right after the new year kicked off, Gundlach went back on CNBC to reiterate the same $425 prediction. He said that his call wasn't about being a bond guru or a equity specialist, but merely because he's a "market guy" and that $425 was about the price that Apple went vertical and that the "bubble" would soon have to pop and shares would return from whence they came. I wondered if he would ever be right.

By mid-morning today, Apple shares tapped a fresh 52-week low of $422.90. Gundlach was right. Investors are looking at a pullback that has now officially reached 40% since late September -- less than six months ago. It took a while for Gundlach's call to pan out, but pan out it did.

Not so absurd anymore
As far as those "absurd" valuation figures I calculated from his first $425 prediction, they're even cheaper now since Apple has posted an earnings release since, which also happened to spark a plunge.

Since Apple's earnings per share last quarter were effectively flat from a year prior (down $0.06), the previously estimated P/E is still right on target at 9.6. However, Apple did add an additional $15.9 billion in cash to its coffers during the fourth quarter. That means that Apple's P/E ex-cash now comes in at 6.3, and the company's $137.1 billion in cash comprises 34% of its $400 billion market cap.

Of course, those figures don't really matter anymore, since even Apple bulls that think the company is undervalued can sometimes find reasons to sell. Reasons that have nothing to do with fundamental valuation but everything to do with Apple's fickle investor base and the fact that shares are dominated by emotional momentum. Like it or not, Apple shares have disconnected from intrinsic value and now trade solely based on emotion, with fear being the No. 1 feeling right about now.

Gundlach's $425 price target has proven to be absolutely right. Should investors have been listening all along, even though it was seemingly predicated on anecdotal observations instead of fundamental analysis?

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.