Now Everyone Hates Apple?

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A little over a month ago we reduced our position in Apple (AAPL) by virtue of swapping half of our core technology ETFs into a tech ETF that does not own Apple. This had the effect of reducing our exposure from about 4% to about 2%.

There was no fundamental bear case to make at the time but there was a pretty good list of sentiment indicators that we've all seen before in terms of analysts competing for higher price targets as the stock kept going up, the stock getting constant attention on stock market television, a lot of excitement about the coming product launch and the stock having become the largest company in the world (click through on the above link for more details on these things).

Since we made the swap the stock went down a hair, then up a few percent and now most recently down a few more percent (the stock was $675 when I started placing trades in late August).

Now things seem to have changed some. It is still talked about a lot on stock market television but now it seems like a lot of pundits hate the name all of a sudden which speaks to the psychology of the market.

The point of this post is not about Apple specifically as it is too early to be right or wrong with the trade. The point here is the list of sentiment based indicators isolated in more detail in the previous post. I didn't write that post and place that trade because I hadn't seen those things come together many times before. Often I talk about the details of various market events being different but that the behaviors tend to repeat over and over.

Reducing a position when the sentiment becomes cultish or euphoric will not be the worst trade you ever make.