and she said.. "how you interpret the dream is probably more important than the dream itself"

o give you a little look at how truly psychological the financial markets are, let's take a look at yesterday's Apple news - the announcement of an iPhone. The iPhone looks to be the end all be all of portable productivity devices, but will it fly? At the moment there seemed to be mixed opinions on how well the touch-screen will be accepted (there is no input other than the 3.5" non-stylus touch screen). Likewise, they are choosing to tie themselves to Cingular for their cell coverage and Yahoo! for their free email. Google gets a swing at things too, with their maps. Will such a disparate, wide array of companies get along long enough to seamlessly provide all this?

My guess is that they will.

Will people want a music and video playing, cell phone with full-fledged web browser and "random access voicemail" (I do love the idea of that)?

My guess is that they will.

Will people drop their cell carriers ($$) and switch over to Cingular ($$) and drop the $499~$599 it costs for an iPhone?

My guess is that they will.

But does this justify AAPL's stock price? Probably not. At a P/E of over 42, they are the most expensive by far in the cell market (RIMM - the blackberry company, Palm - the aging PDA maker, and Nokia - the cellphone producer). The singular iPhone announcement (or should I say the cingular iPhone announcement?) caused a 7% gain yesterday and today it is up over 4%.. but they were at about this price only a month ago!

We won't even get the iPhone till June.

In my mind, the bigger (but quieter) announcement, in the long run, will be the Apple TV. It's questionable whether people will be willing to adopt these things in their homes but the potential is there and consumers have said again and again in the last few years that they are very willing to trust Apple's technology and design. The iPhone delivers to Apple a new market, and breaths a bit of life into the aging iPod platform. The Apple TV, however, provides a veritable cornicopia of new revenue streams. This move - even for Apple, a "hardware company" - is not about selling hardware, it's about selling music, movies, and anything else new media.

The real irony here is that they've made it all work and come together with a piece of software - iTunes. In a "web 2.0" world, they created a stand-alone, non-web browser based application - blasphemy! They parlayed this into over two billion song sales, and have already sold 50 million movies at the ridiculus price of $14.95 with a horribly puny selection. They announced yesterday a partnership with Paramount, so now there are new movies are on the way.. new movies you will not have to watch on your iPod or computer screen when you buy the Apple TV for a low-low price of only $299! It is only a matter of time before other movie houses accept their fate and climb aboard the S.S. Apple to sale away on an ocean of dollars.

So it sounds like I'm heralding them, right? But I'm not. The price does not reflect the value, and that's the bottom line. That makes them a bad choice for a short term investment and it makes them a mediocre choice for a long term investment. You want in? Then buck the trend and buy at the bottom. Buy when Apple is on it's knees and puking in the toilet sometime down the road (and yes, you may have to wait awhile); buy when everyone is running scared.

The well known secret of the stock market is to buy low and sell high. I say this is a secret because, while we can all quote it, millions fail to follow the advice. As I write this, people are purchasing AAPL shares at 97.61 - up another 1% since I began writing this. They're buying at a very literal top - it's the highest it has ever been.