Conspiracy Theorist: 5/26

Apple is flying high but it has to crash

By Mark Luedtke

As a general rule, when a stock goes parabolic, it’s time to sell. Currently the richest company in the world, Apple Inc., some analysts believe, has gone parabolic again. Apple had a parabolic move in 2000, right before the tech bubble popped and Apple stock along with it. It had another parabolic move in 2007, right before the housing bubble popped and the financial crisis hit, when it dropped again. Now, Apple is parabolic for the third time this century.

“Today, Apple is on a tear again,” MarketWatch reports. “It has not seen a drawdown of more than 15% on a closing basis for over 37 months. It has closed outside its 3-ATR for two months in a row and is now in its third consecutive month above the rising channel.”

MarketWatch recommends shorting Apple, but not everybody agrees. Yahoo Finance presents Apple’s parabolic appearance as an artifact of the scale of the chart.

“For most stocks, using an arithmetic or log scale chart wouldn’t make much difference if the price historically is similar to today’s price,” it explains. “In Apple’s case, though, price today is a lot larger than it was historically. A $20 move today is nothing compared to a $20 move in 2005. Using a log chart fixes this distortion and should usually be the default chart choice to prevent such discrepancies when they do occasionally occur.”

But nobody disagrees that the hype around Apple has gone parabolic with breathless predictions that its watch and the Chinese market would make it the world’s first trillion dollar company. Apple products were even hyped to cure diseases.

Don’t bet on it.

It’s no coincidence Apple’s two previous hyperbolic events coincided with financial bubbles. Because Apple’s products are standard quality at premium prices, Apple is perfectly positioned to take advantage of Federal Reserve (Fed) money-printing. Its business model is based on style. When easy money rules the economy, consumers feel rich and increase spending on luxury items, raising Apple’s stock. When the bubble pops, consumers look back to value and away from Apple. Apple will take a big fall when the current bubble, the biggest in history, finally pops.

But Apple’s ride at the top will also come to an end due to fundamental problems. Like General Motors, IBM, Microsoft and all giant corporations before it, Apple will tumble because of internal socialism.

Even though they’re voluntary, giant corporations suffer from some of the same problems of socialism as governments. As they grow, they tend to absorb more and more companies in their supply and distribution chains because their executives want more control. They try to insulate the company from market forces. This is counterproductive. Like governments, they no longer have prices to guide them to make rational economic decisions. Like governments, they can’t perform economic calculation on internal processes. This produces inefficiency and paralysis and reduces the quality of products and productivity in producing them, causing delays. This is why giant corporations can’t exist without government protecting them from competition.

The more businesses they gobble up, the worse this problem becomes. Apple has acquired 67 companies since 1988, but 26 of those have been acquired since 2013. That’s out of control. Executives of giant corporations also have a tendency to abandon their core competencies and lose focus, believing they can’t fail at anything. Then they fail. Apple’s CEO Tim Cook penned an op-ed against religious freedom, revealing he’s more interested in politics than products. Apple is delaying the release of a wireless charging system customers would love. Instead, Apple is developing a self-driving car.

We’re seeing all these problems with the Apple Watch. Apple had to delay the launch from April to June. Yahoo says this suggests demand is weak: “The Apple Watch will launch with a whisper rather than a bang on Friday, an unusual start for the company that may reflect early uncertainty about demand for Apple Inc. boss Tim Cook’s first new product.”

The watches that have been sold have problems. The heart monitor doesn’t work on people with tattoos on their wrists. One of its components is buggy. It suffers low battery life and slow apps. These are classic signs of a company grown so large it can no longer perform economic calculation to make rational economic decisions. Maybe the Fed will inflate Apple’s stock valuation over $1 trillion before it crashes, but I doubt it because Apple is no longer the productive company it was.

Mark Luedtke is an electrical engineer with a degree from the University of Cincinnati and currently works for a Dayton attorney. He can be reached at

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Reach DCP freelance writer Mark Luedtke at

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