Apple will not be able to overcome the economic calamity we are still in. By fall the recesssion will be acknowledged to be a depression and unemployment will likely be above 11%, on way to 15% in 2011. Economic austerity in Europe, state and city bankruptcies in US, and a big China slowdown are very likely to push the economy into the pit, unfortunately. I want the good times to come back, but we must be realists. I believe Apple is likely to fall to $175 by October, possibly lower.
- sp500 avg was trading in the mid 30s before 1929 crash
- sp500 avg was trading in the mid 40s before 2001 crash
- sp500 avg was trading in the mid 20s before 2008 crash
today sp500 avg is trading in the mid teens, aapl is barely trading above that in low 20s. fwd sp500 is in low teens while aapl is in mid teens. even if aapl stays here at 270, its p/e will drop to high teens and fwd p/e will drop to low teen purely from the 3Q earnings.
point is... market is nowhere near the bubble valuation of 1929 or 2001 and 2008 was not much higher than the 17 avg since the 1970s. i don't mind comparing today to 1929 but the valuations are nowhere near what they were then. now if aapl was trading at 50+ p/e and mrkt was 30+ you may have a point, but they are not even close.
aapl is trading at roughly the same p/e as it was when it was 120. the p is barely keeping up with the e.
Much of what you say is correct, especially about unemployment. But it appears that we have weathered the worse, things have calmed down, and the market will continue to meander through this minefield just fine.
Just like after the 1929 crash ended in November '29, there was a false recovery for six months that saw a nice recovery in the market. However, by summer 1930 the bloodbath started again and the market finally bottomed in 1932 worth only 15% of the '29 high.