Apple Inc. (AAPL): The Huge Mistake Cupertino’s Investors Are Making

What’s really important
To avoid making mistakes based on anchoring, it’s critical to remember that fundamental events rather than arbitrary milestones are responsible for changes in the intrinsic value of the companies you invest in. So if yesterday’s announcement from Cirrus Logic truly reflects a drop in long-term demand for Apple’s products, then its decline may be justified, even if the coincidence of its decline to $400 is irrelevant. If Facebook can monetize its mobile platform and build profit, then climbing from current levels to $38 per share may be just a stepping stone to even larger future gains. If stories that Cypriot central bankers may need to sell off bullion reserves prompted investors in SPDR Gold Trust (NYSEMKT:GLD) to dump their gold holdings and flood the market with a glut of supply in the face of weak demand, then the big decline in gold prices earlier this week makes perfect sense. But don’t make the mistake of thinking that the particular levels they hit along the way are necessarily an exact reflection of those fundamental changes.

Experienced investors are constantly on guard to avoid emotional responses to market movements. Being aware of the temptation to anchor on meaningless metrics will help you avoid making false conclusions from them.

The article The Huge Mistake Apple Investors Are Making originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger owns shares of Apple. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Apple and Facebook. The Motley Fool owns shares of Apple, Cirrus Logic, and Facebook.

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