Trees do ot grow to the sky- even Apple trees

My posts may seem hypercritical of Apple (ticker AAPL), but my contrarian nature says that the cult following the company is overdone. Again, I have no skin in the game in in of itself, but make mention of the company and the stock as it relates to the market as a whole, as it is such a large a weighting in the indexes. It has been my belief that the stock and the growth rate at the company will soon run headlong into the law of large numbers.

Previously, I had completed a study looking at the performance of mega-cap stocks after they reached this vaulted status. The study can be found here. The gist was that mega-cap stocks significantly underperformed the market after reaching this plateau. Now, this is not a timing indicator per se, but does suggest that the upward trend in AAPL's shares will not continue indefinitely. 



As for the growth rate of the company, a couple of stories coming out last night and this morning show dents in the company's growth story. For instance, we have this report from Daily Finance highlighting the slowing growth in iPhone5 phones.


Then there was this report at Streetinsider that suggests that AAPL may issued an earnings warning. The full story can be found here, but to highlight one section....

So what's the big deal about a push out or a few weeks? Well, Apple's fourth quarter ends on September 29th. This means there is a risk that the company could miss some bloated expectations for iPhone units and sales in the quarter. Many analyst expect 10 million+ iPhone 5s in the quarter, so double the current amount sold. With supply limited, this could be a difficult feat.

Tree do not grow the sky, and this may become a problem for AAPL shares and the market as a whole.