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Here’s My Damn Interpretation

“Holy crap! Where’s Simmons to interpret this shit. Bet it’s scaring the poop out of Apple investors,” wrote Jim Szymanski the other day in an internal email in reference to some article pointing out Microsoft has a higher price to earnings ratio than Apple.

Be cool Jim.

The market, the aggregate demand, the “smart money” if you will, thinks that Apple has basically peaked in their earnings, they’re done growing, and that there are now just two directions remaining, sideways and down. No, I bet it’s not scaring the crap out of Apple investors at all – if you’ve got stake in a sexy company that pays a dividend, the value of your stake couldn’t go much lower with such a low P/E (in the tech sector no less), not without an earnings sinkhole. This isn’t the first minute of the Facebook IPO. There’s no “irrational exuberance” behind Apple’s share price anymore. It’s a half a trillion dollar company, they earned there way to that legendary height and they are not there now because the aggregate demand to own their company is stupidly optimistic.

My interpretation of the market’s interpretation is that, given that it did its homework and I haven’t, as much as I want to root for Apple, I will clap for them if they can continue to make about as much money as they’ve been making (or they stop this eerie southern trend in their quarterly profit reports). I do find it peculiar, that low a P/E for Apple, but I’m not a contrarian here. I’m not on the horn with my broker. Wall Street thinks Apple, not unlike Microsoft, is a bellwether blue chipper at cruising altitude and who am I to disagree. I’m a shareholder of both companies, I’m not scared, and I have no inclination right now to buy or sell shares of either.

Google on the other hand still tickles my fancy with their robot cars and their gigabits o’ fiber, these wild and crazy ideas they run with — and on top of making money with their day job, it’s that sort of activity a company needs to have to be in the “growth stock” P/E league in the tech sector. So if you gave me $650 now just to see what I’d do with it I’d either buy another share of Google, or maybe I’d just buy the Nexus 4 and take my wife out to dinner. If there’s anything left over I guess I’ll save it for the car dock but there won’t be because I’ll be ordering myself the second least expensive Sancerre on the list this time.

Doug Simmons