Apple Inc. (AAPL) vs. Gold: Buy or Sell?

Page 1 of 2

Apple Inc. (NASDAQ:AAPL) has been taking a beating in its stock price the last seven months, and only in the last week has the stock found a rally with at least a leg to stand on. Gold has also seen a dip in its price over the last couple of months after it had hit $1800 was supposedly going up from there. Now that both are at or near the bottom of a trough, one analyst went on CNBC Tuesday to discuss the better strategy for each – buying or selling either Apple or gold in the near-term.

Mark Dow of the Behavioral Macro blog, made his case as to his approach – why he says buying Apple Inc. (NASDAQ:AAPL) right now is the better play, as is selling any gold interests.

Apple Inc. (AAPL) to be Added to Several WisdomTree ETFsWhen asked about which was the better buy, Dow said, “No question it’s Apple, as far as I’m concerned. The fundamentals mattered very little with both of them. They were both in a bubble. Apple Inc. (NASDAQ:AAPL)’s popped earlier and fell more dramatically. But now, with the earnings announcement and the decision to issue a large dividend and a large (stock) buyback that’s … put a floor underneath it. It changed the asymmetry of the payoff for traders.

Image: Apple Inc. (NASDAQ:AAPL) MacBook

“The problem with Apple Inc. (NASDAQ:AAPL) is that it is such a large share of all the indices,” Dow continued, “that portfolio managers can’t afford to get this wrong. So guys who had gotten out 20, 30 points higher are now saying, ‘I’ve gotta get back in, because if I get this wrong like I got it wrong before, I’m going to lose my job.’ And this is why, since it bottomed out the morning after earnings, it has gone up in pretty much a straight line. It has gone through all the resistance levels, it has gone past the 50-day moving average, because it won’t let people in. Guys have to get in because they can’t afford to get it wrong.”

In regards to gold, Dow said there is still room on the down side, saying that the commodity is in an “intermediate” phase from is highs and will continue to go lower. Why? “What’s happening is all the dire predictions that led people into gold in 2009 and 2010 are not materializing – we didn’t get hyperinflation, we didn’t get a second Lehman (Brothers). So many of those people who were long on gold because of inflation, are now having to trim their positions. I have been short gold and I will remain short on it for the time being.”

What are your thoughts on gold and Apple?

See the full video on the next page:

Page 1 of 2