14 DAY TRIAL // The Chief Investment Officer of Sizemore Capital Management LLC, Charles Lewis Sizemore, has put forth a bold claim on his blog, saying he believes the Apple Watch will be a flop. This, and other juicy predictions from a guy who says AAPL is a buy either way, below.
A frequent guest on CNBC, Bloomberg TV and Fox Business News, Charles prides himself on being quoted in Barron’s Magazine, The Wall Street Journal, and The Washington Post. He’s also a Forbes contributor, and dishes out investor advice on GuruFocus, MarketWatch, and other finance-centric outlets.
What’s a financial analyst without a solid book under his belt? Case in point, Charles is also the co-author of Boom or Bust: Understanding and Profiting from a Changing Consumer Economy (iUniverse, 2008).
A reputable figure
Safe to say the guy’s lock, stock and barrel. Unfortunately, these credentials don’t ensure that an analyst is qualified to make pertinent assumptions about Apple products, or human nature for that matter.
In a finely knitted post over at his blog, Charles relays his thoughts about how Apple’s new wearable computer will be a total flop, how Apple doesn’t care that it’ll be a flop, and that you’d have to be insane to buy the gold model.
“Who in their right mind...?”
The 800-word post is admittedly a good read, and there’s even a chance Charles is right on some data points, but his forecast is far too bold not to share with my readers. I’ll just give you the first paragraph here. You can savor the rest for yourself at charlessizemore.com.
“Rumors broke last week that the high-end version of the Apple Watch—the Edition—would have an 18-karat-gold case and could cost $4,000 or more. Some rumors have the sales price closer to $10,000, or about on par with an entry-level Rolex. This immediately begs the question: Who in their right mind is going to pay Rolex prices for a kitschy piece of wearable tech that will be obsolete in two years?”
Answer: rich people
I seriously doubt anyone willing to spend $10,000 / €10,000 on anything has a problem lavishing that same amount two years later, even one year later, if the marketing is right and vanity is in the air on that particular day.
Whomever can afford to buy the first one will probably upgrade to version 2.0 next year, or the year after that, with little remorse. Provided that they liked the first one to begin with, of course.
While the iPhone certainly pales in terms of value, mind you it'll be the exact same upgrade trend, only targeting the smaller demographic that considers $10,000 / €10,000 pocket change. Think David Beckham will gasp at that price? How about every living being in Hollywood?
For someone who claims to offer invaluable trading advice, Charles seems a bit nearsighted with this particular argument. The Edition model is one of three versions. Apple never (well, almost never) puts out a product just to look nice on display tables. Everything Apple does Apple sells. What doesn’t sell either gets scrapped immediately, or doesn’t get introduced at all.
You’d think Apple did its homework before spending billions on R&D, hiring medical experts, acquiring fancy sensors, poaching Angela Ahrendts from Burberry - only one of the most prestigious fashion houses in the world - and the redesigning of its iconic stores, just to make room for this “questionable” product. Honestly, Charles. Where’s your vision?
History has shown it’s never good to bet against Apple. To his credit, Sizemore understands this much when he says:
“If Apple Watch sales come in lower than expected, Wall Street might dump AAPL stock in a short-sighted temper tantrum. Should that happen, use it as a buying opportunity. Apple is a dividend-raising, share repurchasing powerhouse with a bullet-proof balance sheet.”
Disclaimer This is a Personal Thoughts piece reflecting the author’s personal opinion on matters relating to Apple and / or the products associated with the Apple brand. This article should not be taken as the official stance of Softpedia on Apple-related matters.