Should I take a bite of Apple? a case study

Of course the question of the day is: should I buy or sell Apple?

This, in fact, is an excellent opportunity for me to share with you how to use skills I teach in my book The Intuitive Investor: A Radical Guide for Manifesting Wealth to answer the question for yourself.

Most blog sites would just share with you their opinion of Apple. But my goal is your investment self-sufficiency, not dependency.

Let’s get to it!

1. In my book I point out that there is no such thing as a future fact. Facts, by definition, are things that have occurred in the past; yet investing unfolds in the future. We have just such a moment right now with Apple. What is going to happen in the future?

2. The first intuitive investing principle is Infinity. This principle states that the universe is infinite and interconnected. There is no boundary to the possibilities.

So we begin with the Apple problem with infinite possibilities. Steve Jobs may die, he may live, or he may retire. Apple may be unaffected, they may fall apart. And so on, and so on, and so on, and so on.

I give readers two primary tools for identifying their own, “infinite” boundaries so that they can expand their own capabilities to harmonize/understand as much as is possible about a business (see below) – they are identifying your fears and areas where you feel ignorant.

Let’s take these in turn.

Is there anything about the news from Apple that scares you? If so, what is it? Are these actual facts that warrant your fear? For example, after September 11, 2001 in downtown New York City there was ample factual evidence of a terrorist attack, so the facts justified fear. But are your ‘fears’ about Apple more likely anxieties? You need to list these and evaluate them as to their legitimacy.

For me with Apple, while Steve Jobs has certainly been a creative and leadership force at Apple, the culture of Apple has a life of its own. There are other leaders at Apple who can fulfill the roles that Steve Jobs fills.

So for me, that he is leaving is not something that causes me to fear. My principle concern is actually not on the creative front, but on the symbolic front. Steve Jobs is a symbol for his employees – but more on that soon.

Next, is there anything about the situation that makes you feel ignorant? If so, there is a ready-made solution. Increase your knowledge. The one thing that there doesn’t seem to be much information about is exactly what health issue has led to Jobs stepping out for a medical leave. Yet, if you feel like I do that the culture of Apple has a life of its own, then this unknown is unimportant.

3. The next intuitive investor principle is that of Paradox. This principle states that the nature of the universe is paradoxical. It also means that the way we experience the flux of the universe is as awash in separation, or distinctness.

For example, I am not my toothpaste. My career is not the same as my dinner this evening. So the paradox principle lets us begin to narrow down vast possibilities into narrower probabilities. It also states that opposites are not opposed, but complementary.

So let’s make some distinctions with Apple. Among the consumer technology companies in the world, where does Apple rank? How many employees does Apple have? How can it be that one employee could destroy the culture of Apple? If Steve Jobs steps out of the business permanently how can that destroy so much value?

Again, for me, while Steve Jobs is an important part of the Apple culture, the business is very large, very complex, very interdependent, and a vast resource of creative expertise.

4. Harmonizing is the next intuitive investor principle. It states that if you want to understand something then you have to harmonize with it. What is the emotional state of Apple right now? What is the emotional state of shareholders of Apple right now? What is the emotional state of an Apple customer right now?

In The Intuitive Investor I teach techniques for how you can harmonize with these very things via meditative connection to the collective consciousness.

Thus, the emotional state of Apple is: We have been through this before. Steve Jobs has taken two previous medical leaves of absence and we have done just fine. There also seems to be a bit of an underdog, world-beater attitude permeating Apple right now. That is, there is a desire to prove to the rest of the world outside of Apple that the company will be just fine without Steve Jobs.

The emotional state of Apple shareholders right now is: Is the party over? Primarily it is one of a low-grade anxiousness. On a scale of 1 to 10 I would place the anxiety level at about a 3. Note: I am tuning into the mood of these shareholders at 3:55pm MST on 18 January, 2011 and Apple has just announced its quarterly results. In short, they kicked butt.  So the financial performance of the company is mitigating some of the anxiety experienced earlier in the day.

The emotional state of Apple customers is: fairly despondent. Apple customers are cultish in their loyalty to Apple products. The products of the company are more than just utilitarian devices; they are statements of individuality and identity. Right now the Apple customer has had the image/archetype of Apple a bit shattered.  In other words, they are taking Steve Jobs’ health problems personally.

Principle III: Harmonizing has Seven Essential Investor Attitudes associated with it. One of those attitudes, the seventh, is “Beware of False Prophets.”  One of the false prophets is “Archetypes are not a substitute for analysis.” Apple itself is an archetype – by my definition it is the proverbial Immortal One. The company that “walks on water” (w.o.w.)!  In other words, a company that is perfect, above reproach, and that will make you money no matter how much it costs you to buy an interest in it.  Steve Jobs stepping down for awhile has tarnished the “Immortal One” image.

The other archetype present is Steve Jobs as the Boy Genius – this is the human equivalent of the “Immortal One” company archetype. The problem with both of these archetypes as investors is that ultimately the normal-ness and human-ness of these two archetypes is revealed. And that usually results in a rapid sell off of shares.  In other words, yesterday’s sell-off was fairly predictable.

5. The final intuitive investor principle is: Action! Now that you have the above information about Apple you need to take action, that is, you need to make a decision, buy or sell?

For me, the above information suggests a disconnect; between what the public (investors and customers of Apple) thinks and feels relative to what really is present and going on at Apple.

The company is a large, complex, robust, creative business with multiple good leaders and great ideas. Furthermore, the medical leave of absence is something that they have experienced before and my intuitive sense is that the company wants to prove itself to the world.

What none of the above analysis answers, because it’s a question more suited for the left-brain, is: what is the appropriate price to pay for Apple? To me, even after the sell-off of shares yesterday, Apple looks fairly to slightly overvalued. So it wouldn’t be a buy.

However, if you feel that Apple is trading at a discount and that investors have mis-assessed the future prospects of Apple (i.e. the stock is undervalued), then the above intuitive analysis would mean that you should be buying.

I hope that the above analysis shows how The Intuitive Investor can help you to wrangle an overwhelming, complex situation in order to make better, more whole-brained investment decisions.

Jason