For those who were here last quarter, you will remember that we spent a lot of time answering the question: Should we hold Apple going into earnings? WIll the stock rise or fall the day after the results?
This Chapter in the Fiscal Q4 survival guide will focus exclusively on this question in the broadest and most general sense. Meaning, in this particular chapter, we’re only going to spend time answering the question of whether it’s a good idea to hold Apple heading into any quarter in general and not fiscal Q4 specifically. We’ll answer the Q4-Specific question over the next 5-6 articles. This is a sort of introduction. So it’s better to frame the question this way: “Generally speaking, is it better to sell or hold Apple heading into its earnings results?”
Yet, before we even get into the analysis I should say that this is not even a valid disjunctive syllogism and it’s really a false dichotomy. The reason I say this is because the question that should be asked or the question that is far more superior is whether you should hedge going into the results. Is it better to hedge before or to hedge after the results? In fiscal Q3, we explained why Hedging is Far Superior to Selling.
Selling is an all or none type of a transaction whereas a hedged position addresses both the upside and downside risk element of the trade. A well hedged position properly contemplates mitigation to both the upside and downside whereas selling only address downside risk. When you sell, you assume unlimited upside risk while fully mitigating against downside risk.
Please continue reading to find out whether it’s better to buy or to sell heading into Apple’s earnings results. I’ll say this, there is overwhelming and very clear evidence in support of…