I have to admit -- I have mixed feelings debating the investing merits of Apple Computer (NASDAQ:AAPL).

On the one hand, I bit the worm on Apple about a year ago, when I sided instead with Microsoft (NASDAQ:MSFT) in the Fool's first annual Stock Madness tournament. The laptop looked open-and-shut to me. My opponent in that round, fellow Fool Bill Mann, had conceded that:

  • "Microsoft absolutely slaughtered Apple."
  • "Apple lost the operating system war."
  • "Apple is unlikely to ever destroy Microsoft."

Didn't matter a whit. The Apple fanatics poured in and voted their love of God and Company, and Apple polished off Microsoft right quick. The moral of that story: It's no use arguing against raving loons (er, I mean "the Apple faithful").

So that's reason No. 1 why I'm less than enthusiastic about making the anti-Apple argument today. On to Reason No. 2:

Is verbosity the soul of wit?
It's been less than a month since my fellow Fool Nathan Parmelee penned a thorough and lucid analysis of Apple's valuation. After running a discounted cash flow analysis on the company, Nathan concluded that in order for Apple's shares to be fairly valued at their then-current $85 per-share price, the company would need to achieve earnings growth rates of "20% a year for the next five years, 10% for years six through 10, and 5% for years 11 through eternity."

Failing to hit those targets, Nathan warned, could result in Apple's shares falling by "more than 30% from current levels."

Are we there yet?
As Apple shareholders certainly recall, five days after Nathan penned those fateful words, Apple downgraded its own shares, forecasting per-share profits of just $0.38 for Q2 2006. This estimate fell $0.10 below Wall Street expectations -- and equated to just 12% year-over-year growth. Over the three weeks since Nathan warned Fool readers that Apple was looking a little brown, and the two weeks since Apple released its mushy profits forecast, the stock has already fallen halfway toward the 30% haircut that Nathan predicted -- down 15% to date.

In other words, not only has Nathan laid out a cogent argument against Apple -- he's already been proven right. Sure, Apple could turn around and move back toward 20% earnings growth in Q3. But we've now seen what the least bit of bad news can do to a priced-for-perfection Apple. Imagine what will happen when, one fine day, Apple has to take a charge for obsolete iPods, "restructuring," or some similar one-time item, and actually reports a loss.

It won't be pretty.

One Fool's dilemma
That brings me back to why I'm so unenthused about arguing against Apple. It's already been done, and already been proven correct. Anything I add would just be piling on. So instead of reiterating why Apple's not worth buying, let me instead tell you how you can quickly figure this out for yourself. You don't need to know how to do a discounted cash flow analysis -- just look up a couple easy numbers on Yahoo! Finance:

Apple trades at a trailing P/E of 40. Yet analysts think it can only grow earnings at 20% long-term. Divide the 40 by the 20 to arrive at the company's price-to-earnings-to-growth ratio (called a "PEG"). Unless your result is in the neighborhood of 1.0 (and lower is better), don't buy.

You say you love tech? You love Apple's products? Fine. Then buy Intel (NASDAQ:INTC), and use your profits to buy yourself an iMac. The company sells for a P/E of 15 and has a 15% projected growth rate. Or pick up some Motorola (NYSE:MOT) -- cheaper than Apple at 12 times earnings and a growth rate of 11% -- and use the profits to buy a ROKR music-phone.

Investing isn't rocket science, folks. Don't make it more complicated than it needs to be.

Otherwise, you may wake up one day to find your portfolio filled with Apple-sauce.

Wait! You're not done. This is just a quarter of the Duel! Don't miss the bullish opening, as well as the bull and bear rebuttals. Even when you're done, you're still not done. You can vote and let us know who you think won this Duel.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. If he did (or was), The Motley Fool would require him to tell you so -- just like we're required to tell you that Microsoft is a Motley Fool Inside Value pick. We're sticklers about things like that.