This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Apple Investing: The Unique Psychology of This One Company

NEW YORK ( TheStreet) -- The frenzy and scrutiny surrounding Apple (AAPL) highlights the challenging psychology of owning the iPhone maker's stock, according to investor Vitaliy Katsenelson, chief investment officer of Investment Management Associates.

Apple shares have fallen 13% this year and are down double that amount over six months, as investors have started to question the company's growth potential. Once seemingly unstoppable, Apple saw its fourth-quarter earnings miss consensus estimates and the company took another hit last month when its first-quarter revenue failed to meet Wall Street's expectations.





In a column on the Institutional Investor Web site, however, Katsenelson says that understanding Apple requires an analysis of fundamentals and psychology.

"What makes Apple stock difficult to own is psychology," he wrote, comparing the company's success since 2000 to a "black swan" phenomenon. "We tend to think of Nassim Nicholas Taleb's black swans as significant random negative events, but Apple is a positive one."

Katsenelson notes that Apple co-founder Steve Jobs pulled off a "miracle" when he returned to the company in the late 1990s, making Macs exciting and unleashing the revolutionary iPod, iPhone and iPad. "You could argue that the success of each 'I' product in itself was a black swan, exceeding all rational expectations and revolutionizing, transforming and in some cases creating new categories of merchandise that had never existed before," he said.

The CIO, who recently bought Apple shares for clients at $450, nonetheless acknowledges the uniqueness of investing in the tech giant.





"One reason the psychology of owning Apple stock is so difficult: its high price. (Note: I am talking not about its valuation but purely about its price)," he wrote. "Apple has had only one stock split since the late '90s, when it was trading in double digits, and it now changes hands at about $450 (down from $700 just a few months ago)."

Clearly, investor sentiment toward Apple has shifted. TheStreet's Chris Ciaccia, for example, recently warned that, at the moment, there's little Apple can do or say outside of a new product that will assuage investors' fears over slowing growth.

Apple shares gained 0.2% to reach $458.88 during Wednesday trading.

-- Written by James Rogers in New York

>To submit a news tip, send an email to: tips@thestreet.com.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.97 +100.83 0.59%
S&P 500 1,998.98 +14.85 0.75%
NASDAQ 4,552.7590 +33.8570 0.75%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs