One of the media's biggest financial stories this week involves the curious fall of Apple (AAPL). Specifically, the largest company in the world by market capitalization has entered correction territory – a 10%-plus fall from a high-water mark.
Not surprisingly, few analysts have soured on shares of the culture changer. Even fewer are discussing the technical resistance near $133 per share let alone the drop below a 200-day moving average. The last time Apple pulled back 10%-plus from its peak and fell below its 200-day trendline, the stock went on to lose 33% from that moment forward.
Obviously, history rarely repeats itself in identical fashion. What's more, in a market where the median U.S. stock sports its highest P/E and P/S ratios ever, Apple is a relative “bargain.” Heck, Apple even offers an attractive dividend that you wouldn't be able to count on from most companies in the white hot biotech space.
On the other hand, I am not particularly interested in writing about the merits of Apple as a buying opportunity. On the contrary. I am far more intrigued by discussing the hypocrisy of the buy-n-hold community.
In particular, “don't try to time the market” pretenders are the first in line to discuss the benefits of buying Apple as it trades at a 10% price discount from its highs. If you're a buyer of stock at a particular time at a specific price, you are timing the market. If you rebalance when you perceive your allocation is out of whack, you are a market timer as well. You are selling some assets at one price and buying other assets at another price.
There's also the hold-n-hope claim that one sticks to his/her asset allocation mix through thin and thick. If that is so, then where does the 60%-40% stock-bond asset allocator suddenly have more cash to buy more Apple shares? Retirees with rollovers sure wouldn't have it from work income. Even for the buy-n-hold asset allocator who claims he would use the income from dividends and interest or “work” to buy more Apple is being disingenuous. If you have no intention of timing the market, all of the monies would be reinvested immediately; you would not be waiting for an opportunity. The whole idea of a buying opportunity is, by definition, a market timing endeavor.
