Apple Inc. shares recover from Steve Jobs Health Concerns

Rumors of Apple Inc. (NASDAQ:AAPL) CEO Steve Jobs and his deteriorating health whacked AAPL shares last week, a lesson that rumors are just that and not investment advice.

After Gizmodo.com reported a "rumor" that Apple Inc.'s (NASDAQ:AAPL) Steve Jobs's health was declining, everyone freaked. AAPL shares lost $4 on Dec 30th after the news was released, instantly dropping from $88 to $84, then finishing the day at $86.29.

By Friday, thanks to a Bullish Jan 2nd run on the market and Wendy Abramowitz from Argus Research going on record saying she does not believe Apple CEO Steve Jobs’s health is deteriorating, back AAPL shares went to $90 a share.

Rumors and Fear - its what we are dealing with as shareholders these days, thanks to a uncertain economy, expect more of the same in 2009.

Argus Research did lower their price target on Apple Inc. shares to $145 from $155.  Wendy Abramowitz lowered her earnings estimate for Apple for the December-ended fiscal Q1, from $10.1 billion and $1.54 in EPS to $9.7 billion and $1.52, which appears to have mainly to do with the fact that December’s margins will be lower than the December quarter of 2007 when the company was riding the release of the Leopard operating system.

Argus Research says Apple remains in a strong position, except for questions surrounding the health of CEO Steve Jobs. If Mr. Jobs is unable to lead the company in the near future, Apple may face some transition-related challenges. But they believe that the company will begin to expand the responsibilities of other top executives to plan for a successful adjustment. 

So do we continue to trade on rumors in 2009?  Of course we will but if you had taken a chance on Tuesday and picked up shares at $85 or even at the start on trading on Friday, you would have made a 6% return in just two days or a few hours.

The lesson here is trading on rumors can kill your portfolio, this is Apple Inc. we are talking about, not Crocs Inc. (CROX).  

But Apple shareholders now have to worry about more rumors, next week it will be the Macworld Expo, starting Jan. 5 in San Francisco rumors. How will the Macworld Expo impact the stock price? 

Apple Inc. may release a breakthrough device to the world or new modifications to their existing products that may bring in big money.  But what if they do nothing?  Will the stock fall again, but regain its losses two days later?

Bottom line, don't trade on rumors, be aware of them, but dumping your stock can cause more pain than profit.

Disclaimer: Long AAPL.