Apple Inc. (AAPL): Jim Cramer Sarcastically Explains Psych Shift Against The Company

The temptation as is to sell, to protect yourself against further losses. As a stock falls in value, people cut and run, leading to more pessimism about the stock price. Stocks bottom generally when expectations are reduced to the point where they can be beaten. Once beaten, psychology shifts, and the trend changes, unfortunately, if you’ve sold during this time, you’re out of luck.

Contrast

You might have noticed the run Google Inc (NASDAQ:GOOG) has had as of late, from $500 to around $800, a whopping 60%+ increase in the last two years.

Google’s certainly firing on all cylinders, but if you look through the press, do you see many sell recommendations or downgrades on Google stock? Most writing — mine included, admittedly — fawns over the prospects from its upcoming Google Glass release.

Only a year and a half ago, I read writers trying to make Google a laughingstock for investing in driverless cars, describing it as “wasted shareholder money.” Today, the technology appears to be tangible (says this bullish writer).

How much negativity do you hear about Google now, as its price-to-earnings ratio expands and its stock rises? I’m not saying Google is overpriced. But as an investor, I want to stay keenly aware when Wall Street believes a company can do no wrong.

To quote Warren Buffet, “You always pay a high price for a rosy consensus.”