Don't panic, investors. Apple's seen worse

“History shows that Apple’s stock has experienced dramatic declines on a fairly regular basis, even while surging to 380+ times its price from 1998.” — Logan Kane


From What The Past And Present Tell Us About The Future, posted Friday on Seeking Alpha:

Apple has seen a decent amount of volatility over time. To illustrate this point, I built a graph of the last 10 years of Apple which shows the cumulative drawdowns in the stock… During this period, you would have had to endure drawdowns of 60 percent during the 2008 crisis, 40 percent in 2013, close to 30 percent in 2016, and over 25 percent now. Had you bought and held AAPL, you’d be up over six times your original investment plus dividends, even after the 20+ percent drop since the most recent high.


My take: I don’t know Logan Kane from Citizen Kane, but I like his charts. The next one shows 10 years of Apple gains, despite the periodical downdrafts:

panic volatility

Past performance, of course, guarantees nothing. But look what Wall Street’s posted estimates are saying about the future:

panic volatility eps

Kane’s commentary:

As you can see, earnings estimates have fallen for Apple in past weeks, but not by nearly as much as they rose in August. However, the stock (along with the rest of the Nasdaq) has been priced as if the sky is falling. Apple now trades for roughly 13.4 times current year earnings. It’s not a rock-bottom valuation, but it’s a significant discount to the S&P 500 at large.

Looking even further into future EPS estimates (the green line below), you can see Wall Street’s expectations rising sharply two fiscal years ahead:

panic volatility eps

If you’re a long-term investor, this not the time to panic. Not if you can afford to hold out for 2020.