Why did Apple drift sideways in 2011 and take off in 2012? by Philip Elmer-DeWitt @FortuneMagazine April 6, 2012, 3:02 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The dividend is one reason it’s up. But what was keeping it down was fear. The investors who mull over the mysteries of Apple’s AAPL valuation at Investor Village’s AAPL Sanity board have been trying to come to grips with the shape of the chart at right, which shows the company’s stock price drifting sideways for most of 2011 and then taking off like a Scud missile in 2012. Although recent gains can be attributed to growth funds moving into the stock after the company announced a dividend and buyback plan last month, that doesn’t explain the action that began several months earlier, shortly after Steve Jobs died. What was really keeping the stock down, suggests Anna Murray, a regular on AAPL Sanity who posts under the handle lifeisgood (and writes thrillers and romance novels on the side), was fear. In an entry that starts with a quote from Buffettology (“The price at which a security is being sold is not always indicative of what the company is worth.”), she puts it this way: Fear has kept AAPL stock price suppressed, and mightily so… The public was convinced that Jobs was the entire company, and the stock market saw this and responded by keeping the price of the stock far below its fair valuation. The effects of this are still with us, and only now have saner heads begun to realize that this company is an innovation machine that can’t be stopped. Of course those of us who have followed the company for many years already knew the talent base was deep. Those of us who listened to the conference calls quarter after quarter and acquainted ourselves with stories and backgrounds of the extraordinary contributors such as [design chief Jony] Ives and [CEO Tim] Cook knew better. Apple in 2010-11 is a perfect case study of a fear-motivated public and business press overestimating a liability, which caused stagnation of the stock price. Now the world is seeing the true business value and they are willing to pay a price far in excess of what the market had been valuing it. Finally. Perception falls to hard reality. I believe we are just now starting to move the stock price up to the intrinsic value of this company, and I plan to enjoy the ride.