Image source: Apple.

For the longest time, Apple (NASDAQ:AAPL) bulls (including myself) have pointed to the company's incredibly cheap valuation levels as a potential opportunity for investors.

The argument goes a little something like this: Apple's earnings power, cash flow, and revenue growth have long surpassed the majority of the stocks in the S&P 500, yet it has also long traded at a significant discount to the market. For example, right now Apple trades at around 11 times earnings, while the broader market trades at a little over 20 times earnings. It looks even cheaper if you back out Apple's substantial cash position, currently valued at $39 per share, or roughly 40% of its market cap.

If you were to assign Apple some type of market multiple based on its trailing-12-month earnings or forward earnings (your pick), then you'd arrive at a meaningfully higher price target that would represent healthy upside. This is the approach that Carl Icahn has also used over the years to calculate his valuation estimates.

Here's the thing: it doesn't matter.

A lesson from the shorts
There's an old saying when it comes to short-selling. Hear me out.

Theoretically, there is no limit to how much a short seller can lose on a short position, since there is no theoretical limit to how high a stock price can go. There have been plenty of times when a bearish investor will take a short position based on a justified short thesis, only to still lose out. Why?

Well, the saying goes, "The market can stay irrational longer than you can stay solvent." Famed economist John Maynard Keynes was the first to make note of that after he got burned on a highly leveraged currency trade. Even if a short thesis does play out, it can still take some time for the market to realize it -- and you have to be able to hold on to the position long enough to see it through to the end. Think of David Einhorn's six-year short on Allied Capital. But most of us aren't hedge fund managers.

How does this apply to Apple?
When it comes to owning shares of Apple, the market has shown a persistent willingness to assign the company a lower valuation than the rest of the market. A cheap valuation is only an investing opportunity to the extent that the valuation discrepancy or inefficiency eventually corrects itself -- but Apple has traded at a discount for years.

There are a few possible explanations for why Apple remains so cheap. Part of it is that Apple is an emotional stock that reacts heavily to fickle storylines about what may or may not be happening with the iPhone business at any particular point in time. Another is the law of large numbers, since Apple is clearly struggling to put up meaningful growth rates as its trailing-12-month revenue base has now swelled to $235 billion. Frankly, I'm not quite sure what it would take for Apple to truly earn investor respect again.

At this point, investors shouldn't hope for the market to suddenly come to the realization that Apple is too cheap. It would absolutely be a pleasant surprise, but the market is clearly quite content to stay irrational as far as Apple's valuation is concerned.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.