Is It Too High or Too Low?

Here’s something to consider. This is a chart of Apple‘s (AAPL) stock for the first five years after its IPO.
AAPL.gif
In June 1983, the stock ran up to $7.84 a share (adjusted for three 2-for-1 splits), then plunged about 75% to less than $1.82 a share. So it was overpriced at $7.84, right?
But if you were unlucky enough to have bought it at the exact top, the stock is still up about 1,100% since then compared with 775% for the S&P 500. Including dividends, the S&P 500 would still come out ahead, but it’s interesting to think about “too expensive” means.

Posted by on April 4th, 2007 at 10:16 am


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