Two ‘Bearish’ Signals That Apple Inc (AAPL) Investors Should Just Ignore

Apple Inc (NASDAQ:AAPL) has been the subject of a range of price targets over the past few weeks, but on the whole, we still see reason to be bullish. While many have likened Apple to a company that cannot be valued using traditional metrics, that sort of talk seems like poppycock, and quite frankly, comes from investors who are overthinking the situation. Using any traditional metric under the sun, the tech giant is cheap, but it’s likely you knew that, so we’ll spare you the boredom. Here are a couple misleading signals that Apple investors may take as bearish, but the truth is they should probably be ignored.

Talk of an iPhone 5S is rumor, not “reporting.”

Something you may not have known is that China Mobile Ltd. (NYSE:CHL) is loosely rumored to be advancing in its talks with Apple Inc (NASDAQ:AAPL) to provide the iPhone 5 to its subscriber base of nearly 700 million, but we caution investors to trade based off of rumors. Moreover, there have been plenty of rumors disguising themselves as “reports,” claiming that Apple is hastening production of the iPhone 5S because of worse than expected iPhone 5 sales. We’ll let our former words speak for themselves, but let’s just say that we don’t agree with the mainstream on this one:

Making its way across social media and a number of credible sources this morning is a story from Taiwanese tech site DigiTimes, which reported that Apple Inc (NASDAQ:AAPL) “is expected to begin trial production of a new version of its […] iPhone 5S in December” […] While this is a tempting chain of logic to follow, one must remember that DigiTimes has been wrong about Apple speculation before. Discussed rather brilliantly by AppleInsider here, “both Commercial Times and DigiTimes have poor track records with respect to Apple-related rumors,” as their most infamous blunder was confusing iPad supplies with the production of a non-existent netbook.

Moreover, we had this to say:

Now, CNBC has said that the “Taiwanese technology website that has a mixed track record when it comes to making accurate Apple predictions,” but that hasn’t stopped the media outlet from pushing the story through its channels. Heavily frequented sites like Business Insider and Mashable going as far as re-categorizing these rumors as a “report.”

In short, we’d recommend that ardent Apple Inc (NASDAQ:AAPL) investors avoid these rumors, as they should be wary of fear-seeking headlines.

Take Apple’s recent insider selling activity with a grain of salt.

Another piece of Apple news that some investors have likely taken to be bearish is the reports of insider selling activity last week. In total, general counsel Bruce Sewell has sold more than $5.8 million worth of his company’s stock since the start of November, and board member Arthur Levinson has sold over $4.2 million worth of Apple Inc (NASDAQ:AAPL).

While it’s tempting to think to yourself: “hmm, they must know something the general public doesn’t know,” these sales are most likely a result of profit-taking and tax avoidance. Even with its recent troubles, Apple’s stock price has still risen over 34% in 2012 – a great haul. Plus, if the Bush-era tax cuts aren’t extended by the end of this year, the U.S. capital gains tax will rise overnight to 20% from 15%. Both of these reasons make far more sense from an investing standpoint to be selling.

With Apple Inc (NASDAQ:AAPL), or with any stock, we’ve always implored investors to consider both sides of the coin when it comes to insider trading activity, but mentioned regularly that buying is a much stronger indicator of future performance. Here’s our research, and a summary of various empirical studies covering the phenomenon.