Nothing Lasts Forever: Apple Is Showing Its Age

Shares of Apple (AAPL) rose modestly in early trading Monday on news that the release of the new iPad Mini and updated iPad saw strong demand, despite hurricane Sandy. "Customers around the world love the new iPad mini and fourth generation iPad," CEO Tim Cook gushed in a statement. "We set a launch weekend record and practically sold out of iPad minis."

The mini rally was welcome relief to Apple shareholders who have seen the stock fall over $100 since the September 21st release of the iPhone 5, nearly entering official bear market territory.

Perspective is in order regarding Apple shares. The stock is still up over 40% in 2012, 210% in two years and more than 7,000% over the last decade. On the way to those staggering returns Apple collapsed of almost 50% in 2008 and dropped over $100 once already in 2012. For most Apple shareholders this pullback is just another dip to be bought. Business as usual, in other words.

For the last 15 years, any day the market is open has been a great day to buy Apple, but in 220 years of formal U.S. stock trading no company or stock has seen gains the likes of AAPL without a subsequent calamity. IBM (IBM) rose 1,000% in five years ending in July of 1999 then took 11 years to get back to old highs. Wal-Mart (WMT) rose 1,000% in the 1990s and went no where for the next decade. Those are best-case scenarios; most rocket stocks collapse and are never heard from again.

Apple remains the best company in the world but it's starting to show its age. The new products are tweaked up versions of the old ones rather than the innovative leaps to which users have become accustomed. The company spent nearly a year searching for a head of its wildly successful retail stores only to fire him in 10 months. Long-time execs are leaving, software "glitches" are surfacing and iPhone customer loyalty is ticking lower. Apple is even losing market share in tablets and smartphones, two categories all but invented in Cupertino.

Apple shareholders will ignore all of the above and buy the dip anyway. They may be right to do so; for now. In the larger picture the burden of proof isn't on the bears to explain why Apple will eventually falter badly but rather on the bulls to tells us why it won't.

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