Monthly Archives: June 2010

BAM’s 45 Dollar Target Stirs Angry Apple Mob

Apple_bad apple 2When we prepared the information for our recent press release, (See Full Press Release on Fox Business) we didn’t expect to be instantaneously pummeled with verbal assaults from Apple enthusiast.  But the fact that we created so much anger and so many outrageous claims—from orchestrating a collapse in the stock, to knowing something others don’t know about Steve Jobs’ demise—says a lot about the cult-like following this company and its stock currently enjoys.

Remember, a bubble stock by definition must be vigorously defended by its participants.  In other words, the outpouring of negative comments regarding our 45 dollar price target on AAPL actually confirms what our model is telling us.  And although I don’t want to attack the attackers (because I understand their reaction to our forecast for an 80% plunge in AAPL) I do want to point out the fact that these people reacted violently and instantaneously, without any knowledge of our track record.

Believe me…I have nothing against Apple or any of their users.  This press release was simply another attempt at providing retail investors with a piece of the information normally viewed only by my hedge fund clients.

Let’s face it, if you think it would be impossible for Apple to decline to 45 dollars between now and 2011, I assume you’ll hold on to your position.  But refusing to even entertain the idea of a large decline in ANY stock has historically proven a bad approach to investing.  The bottom line is that things change.  Maybe there’s a kid in a garage inventing a product that will disturb Apple’s dominance.  Maybe Google has a few more tricks up their sleeve.  Maybe the global economy is poised for another derivatives-led implosion (our model says this is coming) maybe, maybe, maybe.  Who knows what fundamentals will prove out after the fact? I certainly don’t.  But I know the BAM Model’s track record and I’ve learned not to doubt it not matter how crazy the predictions might appear.

As you’ll see below, many of the comments from the MacDailyNews site were typically juvenile, “BAM obviously stands for Boneheads, A**holes, and Morons” while others wanted us investigated “call the FTC” but other comments really do speak to the brainwashing that takes place when a bull-driven bubble stock mesmerizes its participants into believing in their own brilliance.

Comments attached to our press release:

-What an idiot! $42 is less than Apple’s cash in the bank

BAM = Balmer And Microsoft….

-Speachless (sp) once AGAIN!!!! Stupidity of BIBLICAL PROPORTIONS!

-Where is BAM Investor located? I don’t want to drink what’s in their water.

-They’ll have over $15 EPS at year end what are these guys smoking?

-Can you say stock manipulation?

-The term snake oil salesman comes to mind and what a prize if they can fool enough people into taking the medicine they peddle.

-Apple is not a bubble stock. It had $9.6B in earnings last year, and will likely have $13 to $14B in earnings this year. Bubble stocks don’t have earnings to support their share price, Apple does.

-I last heard that Apple’s cash in the bank is at $52 per share. Doesn’t he have someone the understands basic quarterly reports to help this idiot out?

-This one truly needs to be investigated. In attempting to create a self-fulfilling prophesy, I’ll bet they have a sizable wager in the market themselves. Even a small move, created by this hogwash, may make them money. Scum.

-As someone else mentioned, I’d like to see more then two or three cases where these dudes were right. Even I can get lucky – one in a million times perhaps. Real data please or STFU!

-There is NO WAY to predict the future of random systems

Past Results of our “Random System”

As I said earlier, I have nothing against AAPL.  We’re simply passing along information generated by the BAM Model to attract attention to our product in an attempt to help those willing to listen.  After all, every single downturn sprouts a whole new group of people complaining that they “should have sold.”

Here’s the unedited, original BAM Report we mailed to hedge fund clients back in November of 2007 just after the DOW hit an all-time high at 14,198.  The news was almost unanimously bullish as were investors, and the individual stocks we highlighted (with “outrageous” downside price targets) were all seemingly healthy as they hovered 70% to 100% above the downside targets our model predicted.  As you’ll see below, these stocks read like a who’s who of big names, they were in diverse sectors, and the vast majority of Wall Street analysts were extremely bullish at the time our report was published.  Needless to say, we were laughed at back in 2007 just as the AAPL cult is laughing at us now…     


November 12, 2007

-The stock market tracked the BAM model well last week as stocks suffered their biggest three day decline in five years with the NDX plunging in a “straight-line decline” to the 2056 magnet level just as anticipated. But now, just as investors probably think it can’t get much worse, it has.

-Lets start by reiterating the bigger-picture BAM stock market forecast which points to a brutal 58% bear market decline into 2010 with the SPX round-tripping the entire 2002-2007 bull run before finding support into the SPX 680 level.

That’s right, regardless of election year cycles, the Olympics in China, emerging market strength, a possible interest rate easing cycle etc. etc. etc. our model is unequivocally ultra-bearish over the coming few years in fact it most closely resembles the set up we had during the 1929-1932 period.

During the 1929-1932 period—to dissect it a bit for you—started with a crash followed by a large bounce followed by a variation of mini-crashes and long grinding declines.   No two periods are exactly the same, but as I take a step back and look at our stock model, it has a very similar set of sell signals, future periods of weakness etc. as did the 1929-1932 period.  In fact, the only real difference between the 1929 through 1932 period is that the current set up actually looks MORE bearish in our work.  Maybe that’s impossible, and maybe it’s not but let’s just say I can honesty tell you all that this is the first time I’ve ever hoped our model is 100% wrong.

Individual Price Targets Also Confirming Model’s Bearishness

When we first started talking about the enormous real estate bubble in 2005, the BAM model was giving us what appeared to be absurdly low price targets for stocks like HOV, DHI, BZH, KBH, and TOL during what we thought at the time would be a huge real estate collapse into 2009.  Well, those absurdly low price levels now seem believable—because we’ve already reached most of them—and  we’re now ready to talk about some equally absurd price levels we think other stocks will see on either a crash leg or over time during the next several years.  This is just a small very random sampling but it should serve to illustrate what we see coming.

GM-6.00, possibly even 2.50, into 2009

RIMM-48.75-crash leg, 24.00 into 2009

FSLR-120 crash leg, 52 during 2008

GS-70 into 2009

GOOG-293 into 2008

BIDU-187 into 2008

LM-23 possible on crash leg or into 2008

…Now let’s take a look at the results of the above predictions:

GM-6.00, possibly even 2.50, into 2009 (30 at report date, went bankrupt)

RIMM-48.75-crash leg, 24.00 into 2009 (102.60 at report date, crashed to 35.05)

FSLR-120 crash leg, 52 during 2008 (177.70 at report date, crashed to 85.28)

GS-70 into 2009 (214.71 at report date, crashed to 47.41 and was saved by bailout)

GOOG-293 into 2008 (632.07 at report date, crashed to 247.30)

BIDU-187 into 2008 (310.50 at report date, crashed to 100)

LM-23 possible on crash leg or into 2008 (72.86 at report date, crashed to 10.35)

Here’s the link to the full report from November 12, 2007 if you’d like to review it.

Apple Sauce?

OK, lets get back to the current prediction by showing the a chart of AAPL along with a detailed description of the expected decline.

Apple, Inc stock crash zone

Apple Inc stock crash zone

We should see an initial fast-market collapse to the 155 price level on the first leg down and that will most likely occur this summer or very early in the Fall of 2010.  It would be typical to expect vibrating at the 155 level and the move to 45 dollars would then be a violent thrashing affair as bulls are stopped out in a grueling decline to the 45 dollar target (a BAM Magnet).  The move to 45 dollars per share will likely be achieved during 2011, but there remains a small possibility that we could see a collapse to 45 during 2010, so we suggest caution if you’re planning on trading the decline.