Investor, are you? Stay away from Apple stocks

News I saw on Yahoo Finance recently – “Brian Blair, a senior research analyst at Wedge Partners, talks with Bloomberg’s Pimm Fox and Scarlet Fu on how the shares can take off over the next six weeks.”

The only reason why you would cheer for this is because you probably own an at least one of the i-’Gadgets’.

Either that, or you intend to own one soon. At the very least, you are aware of the i-Products range designed and made by Apple.

If I’m an Apple staff, I’d thank you for being a supportive consumer. Because that means my stock options or restricted stock units are ripe for reaping after it hit a new high at US$705 last 21 Sept.

But no, I’m not. If I were, I’d probably lose my job writing this, coming from a company culture  where product launches and details are shrouded in secrecy. Or I’ll be too busy making sure my (even longer!) prototype iPhone 6 does not get stolen in a bar and leaked online by a technology columnist.

But what does the consistent surge in stock prices means for investor? Should you be euphoric  and jump in to buy the stocks now? After all, owning an indispensable product and a stake in the company which made them is a wonderful thing.

Wrong. You should be afraid.  Be very afraid. Remember Warren Buffett’s  investment philosophy? Be fearful when others are greedy.

In fact, Mr Buffett had this extra to say during Berkshire Hathaway shareholders’ meeting in May 2012: “I would not be at all surprised to see them be worth a lot more money 10 years from now but I would not buy either one of them.”

He was referring to Apple and Google.

And boy, Buffett definitely has valid reasons – being anti-technology per se or resistant to change is certainly not one of them.  I’m far from being a Warren Buffett, but I don’t need to be him to understand why.

This is coming from someone who owned exactly 11 shares of Apple at US$85 during the 2008 financial crisis.  Let’s talk about Apple’s main business, iPhones

When the first iPhone was released, it was absolutely revolutionary. Touch screen on phones were virtually unheard of. This exact term is best to used to rhyme with the visionary behind it – Steve Jobs.

Fast forward five years, it no longer dominates the smartphone sector. It is now playing the defensive game instead of being offensively revolutionary. It goes on and on with the never-ending patent infringement wars between Apple  and two of the world’s smartphone giants – Samsung and HTC.

Whatever you can do on iOS,  I can do the same on my Android phone. Apps are made for both platforms. So, what advantages does iPhone have over its current competitors?

How much more pixels can you squeeze into the retina display? How many more megapixels you can put into the camera? And does it makes you excited just by having 32 GB and 64 GB of storage? If you look at it just and fair, these are relatively minor improvements.

Think of it – if I’m Apple, and I possess products in the pipeline which are so revolutionary (I think I might have over-used this word by now), I would not fret over people feeding off my creativity.

After all, being first at the right time and place gives me authority and leadership over my competitors. I would be taunting my competitors – ‘Catch Me if You Can!’ – the exact same title for a biographical crime film by Leonardo DiCaprio in 2002.

It is ironic coming from a company whose founder once quoted a saying from Picasso ‘Good artists copy, great artists steal.’  Because it was rumoured that Jobs and his team copied the GUI and mouse from Xerox back in the 80s, for Apple Macintosh.

But now, the predator becomes the prey. It’s karma. What goes around, comes around.

Technology moves fast, and gadgets like smart phone is fast becoming a commodity for the past five years. If a company can be the technology leader for the next two decades, then all is good.

But it’s easier said than done. Example, Microsoft is the unsurpassed technology company in the 80s and 90s, now it is being overshadowed by the likes of Google and Facebook.

Another exhibit – Eastman Kodak, which filed for bankruptcy protection because it failed to adapt to the  digital age fast enough in its core business. And did I mention Nokia? Oh, I almost missed that because it has nearly faded into oblivion.

How about the grand daddy of smartphone, Research in Motion Blackberry? I bet it no longer as sound as glamorous as it was in its heyday as the corporate-executive-must-have. In fact, it could well be the last in your shopping list if you want to get a new phone.

I felt strongly about RIM because I was invested in the stocks at US$70 back in 2009 – and (was) a great company with solid fundamentals back then. That was until Apple pulled a Julius Caesar’s Veni Vini Vici (I come, I saw, I conquer) and cannibalised RIM’s market share.

Now, RIM stock price hovers around US$7. Yes, I lost lots of money, but it was a great, albeit excruciating painful  lesson which made me realise the weight of Warren Buffett words on technology companies.

Compared to companies like Coca-Cola (one of Buffett’s favourite), Coca Cola has undisputed monopoly. It had long years of track record for that. Can anyone dethrone Coca Cola in the next 10 to 20 years? I doubt so.

Truth to be told, I have nothing against Apple or disrespect against the late Steve Jobs. Its immense contribution to the revolution of the mobile industry is undeniable. It changed our world, and certainly made a ding in the universe.

Jobs’ an inspirational figure and I’ve watched his 2005 Stanford commencement speech over and over again (Google it – must watch).  However, I don’t care if an investment bank analyst or Saruman with his Palantir predicted Apple stock will hit US$1,000 in the near future.

I will be a contrarian for the time being.

How about you?

LCF, founder of HowToFinanceMoney.com believes in value investing, although he admits there’s still much to learn from the experts.

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