Warning Finance(trading) Post

I like numbers and amongst my many hobbies, I dabble in stock trading and put money where my mouth is so when I recommend long or short, that means I am. Of note I don't have an official license to practice advisement so if you listen to me its at your own risk, cackling not included.

So there are two movements I've recently moved into, one being antimony, via UAMY, and the second trying to figure out Apple (AAPL). Now antimony works if you have a portfolio willing to take a risk, but I wanted to talk about apple. Specifically what is the board thinking by paying a dividend and pursuing a massive stock buyback campaign, and that's what I wanted to throw out there.

The Chart below is apple's stock for the the past 3 years. As you can see clearly, it's been up. There have been varying trends, but still it's been up. Recently though the slope has drastically increased. I mean between December and this past week, Apple is up $200, or 50% in just under four months.

That trend is entirely unsustainable. Mainly because of reality, in stock world with algorithmic trending, yes it could continue, but if you take into account the idea that a consumer goods company is worth more than an industrial manufacturer or a diversified R&D company...you run into some issues. The problem is Apple has continued to succeed, and has a pile of cash thanks to Steve Jobs and his drive to innovate vice the drive to return money to the stockholders.

This week that changed, yes Apple has gobs of money on hand, and by gobs, I mean gobs. This past week they decided to issue the first dividend since 1997, when Jobs pulled the dividend in order to fix the company by reinvesting internally, which saved the company and brought them to their current state. This worked, b/c apple reinvested internally and led the back with breakthrough products.

Now, they went back to financial games, dividends and share buybacks, and released the iPad 3 with an HD screen, and the same battery technology that's in a 15 year old iPod. To handle the HD screen, the battery size was increased, technology wasn't improved, but the size was increased. Anyone with an engineering degree or even most script kiddies in High School can tell you higher power usage means more heat, so this wasn't an unexpected problem. The news says Heatgate is overblown but its symptomatic, especially when you consider they just issued a stock buyback, and for probably the first time released a subsequent generation of a product that wasn't a big jump.

That's the crux of my short argument. I don't see what Apple is gaining by releasing a dividend. The amount of money they're spending on a stock buyback, could easily solve that little heat issue and what would that do? Make Apple stay ahead of the competition. Or how about reinvesting the cash into the SIRI database so that the next generation of Apple products is 100% voice responsive, but no they paid some shareholders a meager dividend 2.65(qtr)/610 when it could've been reinvested and made the stock price cross $1,000, instead Apple is getting into the financial games which killed the company before Steve came back and saved it. Just my 2 cents and i plan on shorting them in the near future, fairly heavily b/c I don't believe the current board is capable of running a cutting edge consumer products company...too many crappy MBA's there.