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Apple, with its combination of huge size and huge outperformance now drives equities performance to such an extent that it has become difficult to get a clear picture on market health just by looking at index price moves. For this reason, the Wall Street Journal reports that strategists at top firms including USB, Goldman Sachs, Morgan Stanley, Barclays and Wells Fargo have started excluding Apple when they look at indexes and earnings calculations. Here are two eye-opening “ex-Apple” statistics:
For the 2011 fourth quarter, the S&P 500 posted a year-on-year increase of 6.6%. Ex-Apple, that increase dropped to just 2.8%!
On May 2, 2011, Apple’s weighting in the Nasdaq 100 was trimmed from 20.5% to 12.8%—a whopping 38.5%. From that date until September 5, 2012, the Nasdaq 100 went up 16%. Ex-Apple, that gain was only 5.4% percent! In other words, Apple made up more than 71% of the Nasdaq 100’s gains for that 16-month period.
....Apple Stock: Where to From Here?
With the huge outperformance that Apple has enjoyed since Nasdaq cut its index weighting last year to 12.8%, what would you guess is Apple’s percentage weighting of the total Nasdaq 100? Etfdb.com lists Apple as being back up to 19% as of September 6, 2012! Almost as amazing is Apple’s weighting in the whole S&P 500 at 4.9%.
Unless Apple has a serious price pullback on its own, the Nasdaq will be forced to reduce the stock’s weighting once again. To continue to match the index, many funds and institutions will have to sell some Apple holdings at that point, which would put significant downward pressure on Apple’s price.
In addition, Apple unveiled the iPhone 5 today. This could set a classic “buy the rumor, sell the news” dip after the market digests all the hoopla around the announcement.
Combine these multiple influences, and Apple looks ripe for a correction. But given the company’s recent record for innovation and execution, any such dip would likely be no more than a breather on the way to Apple 1000. That phrase alone should strike fear into the hearts of Apple followers everywhere. Just ask anyone who owned Qualcomm options in 2000.
“Be who you are and say what you feel because those who mind don't matter and those who matter don't mind.” - Dr. Seuss
I have a Droid but like the iPhone my wife has. Would have considered the iPhone 5 when I become upgrade eligible in November but Verizon, last I heard, was not allowing the unlimited data option to be grandfathered with it. If so, will just upgrade to the best 4G Droid phone I can find.
