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Much has been made of investor worries about Apple’s (NASDAQ:AAPL) future as a company resulting in the stock’s fall, but according to Jim Cramer, the simple explanation for the heavy selloff is the oncoming capital tax hike.
Why Has Apple Spiraled Down Over the Last Few Weeks?
“Apple is going down for one simple reason,” the Mad Money host said on CNBC. “The vast majority of people who own the stock have big capital gains, and those gains will likely be taxed at higher rates next year.”
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Cramer is referring, of course, to the hike in capital gains taxes set to be implemented if the fiscal cliff comes into action at the start of 2013. According to the investment specialist, investors are pretty much trying to make the most of profits from selling their high-value Apple holdings by paying lesser tax.
CHEAT SHEET Analysis: Catalysts for a Stock’s Movement
One of the core components of our CHEAT SHEET investing framework focuses on the factors that could affect a company’s stock.
In short, according to Cramer, business-related worries about Apple may be overstated as investors are solely looking for their own short-term profits. “If I told you that sales taxes are going to go up, maybe big, on large screen TVs come 2013 and you wanted one, wouldn’t you buy it before the year ended?” Cramer asked.
“Believe me, it’s the same calculation with selling Apple. It’s as simple as that.”
According to Cramer, the selloff may continue for a while for this reason. “I expect the selling to go on as long as people have big gains,” he added. “Conversely, it should let up when you can’t get the tax break anymore,” or in January.
Don’t Miss: Doug Kass: Don’t Be Long-Term Apple Fools.
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