Guest Author - Guido Deboeck

Last Friday I went to a local Apple store at Tysons corner. After reading the whole week the hype about the iPhone, and after viewing the demo on the Apple website, I could not resist my curiosity to learn first hand how the iPhone would be doing. When I arrived at the store about 8 pm, two hours after the iPhone was launched, I could not belief it that I could walk in right away…

In the store there were lots of people, most crammed around one or two tables where iPhones could be tested. Plenty of young people were trying their first walks trough this incredible gadget that integrates a phone with an iPod, a video player and internet access. Most people around the demonstration table seemed to have no problems getting around the easy to use menus. Apple employees were available to answer questions like: can I switch my current plan to this new AT&T plan? what about my family plan? What if the battery does down?

You may have read the New York Times, the Wall Street Journal or other articles who all pointed out to all the potential pitfalls of the iPhone, but few or none dared to raise the question: how is the iPhone going to change our lives?

By nine o’clock the crowd in this particular store at Tysons in Virginia was still busy tapping on the 3.5 inch screen, but there were no more lines at the cashier for buying phones. All the people who waited so long in line to get a iPhone, could have gotten one if they arrived around 8 pm and waited till 9 pm to pick up a phone. The investment lesson: never buy an IPO at the opening.

Assume that after your first few minutes of tapping on the iPhone you are convinced to buy one, but find the price tag a bit steep, especially if you already are using a black berry or a Treo. Or you think: if I wait just a few months maybe the “issues” that the papers reported on will be resolved and Apple will come up with a better battery solution, faster G3 network access etc. When is really the best time to get an iPhone?

The best time is when you can get one for free! Why not let Apple provide you one for free? Looking at a weekly chart of Apple you will see that there are cycles in which it is wise to own Apple stock. Starting in mid July 05 you could buy “apples” at $41.55. Six months later by end January 06, it was time to sell “apples” when they broke a key moving average at about $72.03. In April of 06 it was time to get back in at $68.03 for another ride to $82.20 in late December 06.

Early this year on January 12, “apples” went for $94.62 and rose to $127.6 on June 7. A daily chart shows that the price has come down some, that there is a nice cup-and-handle formation with the current Apple stock at about $122 (at the time of this writing on Monday July 2). A daily chart also shows that the average daily volume is about 35 million shares and that this was exceed in the last couple of weeks only on Friday when the volume rose to 40 million.

How can you get Apple to get you a free iPhone? Wait till daily volume on the Apple stock climbs higher than 40 million and climbs back to $125.18 (or $125.28 to be CANSLIM correct). Note both conditions need to be met before you take the next step. Then buy, say, 250 shares (or multiples thereof if you cash situation allows). When the price of those initial 250 shares go to $127.78 (2% above $125.28) buy another 125 shares (or multiples of the initial amount). When the price of Apple goes up another 2% over your initial average cost, add another 62 apples. Getting the picture?

Without trying to predict where Apple stock will be by the end of the summer or the fall, if the iPhone becomes as successful as most people seem to believe it will, it is quite possible that you get a free iPhone solely on the basis of smart investing in Apple stock. A move from say the current $122 to just $128 in a few weeks time, employing the above described investment strategy, would quickly get you to an iPhone with 8 gigabytes of storage -- because $599, the cost of an iPhone with 8 gB, divided by 375 shares (first and second step) is $1.59 which added to an average of $125.98 (250 shares at $125.28 plus 125 shares at $127.78) is $127.57 or 4.5% above the current price of Apple stock.

Remember, unless the daily average volume jumps to 40 million or higher you ought not to trust your “feelings”. The hard evidence that Apple will provide you a free iPhone comes when both the volume and the price moves according to the above specified criteria. Until then, just dream about what you will do with your iPhone!

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