The buzz among Apple (AAPL) traders today is a thought experiment that Matt Haughey worked up at
A Whole Lotta Nothing
. He writes
Haughey worked the numbers and the result is the chart above, which he calls the Keynote Index Fund (click chart to view full size). His conclusion: if you had invested in his hypothetical fund for the past two years, you would have realized a healthy 7.3% profit over 24 hours and 11.9% over 48 hours. The longer term results are not quite so impressive. Over the past decade, the fund gained 1.2% over 24 hours and 2.2% over 48.
Of course, long-term Apple investors have done considerably better. Haughey points out that if you had bought $10,000 worth of Apple stock in 1997 and held it the whole time, it would be worth $525,187 today.
Haughey’s methodology has been raked over the coals rather thoroughly at
, where it has been pointed out in several ways that hindsight is enormously seductive but not much help in picking stocks.
Curiously, Piper Jaffray’s Gene Munster performed a thought experiment similar to Haughey’s last month and arrived at the opposite conclusion. Reviewing Apple share prices in the month before and the month after Macworld over the past three years, he noted that the stock tends to rise in advance of the keynote and to fall afterward — or at least it did two years out of three (see chart at right). His analysis suggests the old Wall Street adage: buy on the buzz, sell on the news.
UPDATE: Speaking for the bulls at The Mac Observer‘s
Apple Finance Board
, reader Tommo_UK looks beyond the Macworld effect to offer this sensible advice: