AAPL and the "Butler Curse"

My dad has always joked about the “Butler Curse,” a curse that dooms any stock that a Butler invests in to sinking share prices or something worse. He came to believe this after having the two or three forays he made into the stock market plummet quickly after he took ownership of the shares.

At times, I almost think there was something to it. As you may recall, I purchased a small number of shares of AAPL (that's Apple, if you don't keep up on your stockspeak) right before Jobs' keynote at MacWorld in January. The stock went up about ten dollars beyond what I bought it at ($72 a share, I believe it was), but then began a steady decline that continued until about two or three weeks ago. The shares sank when the new Intel Macs came out ahead of schedule. They sank when critics lauded the new Intel Macs. They sank when more Intel Macs came out. They sank when Apple outperformed the rest of the industry. They sank and sank, bottoming out at about $50.

I planned to buy more before WWDC '06, but it started going up just before I did so, and I almost did not go through with the plan to buy my pre-WWDC shares. I decided to go ahead and buy some at $69.50 yesterday and then sell it when it appeared to top out after the keynote — I'm thinking we'll see it hit between $85 and $90 after the keynote.

That sounded really good when I ordered the shares right before the market close yesterday. I logged on this morning to find something had happened last night: Apple announced it would have to restate its earnings back to 2002 due to accounting irregularities with stock options. Fortunately, my order did not go through until this morning, when after-market trading had already forced the stock's opening price down to $67. Unfortunately, it was already about a dollar lower than that and sinking by the time I looked.

I almost decided to cut my losses and sell. I actually setup a trigger to sell if it hit $64. The Butler Curse had struck AAPL shares not once, but twice — in six months! I was a believer, I really could destroy companies by buying their stock. Sure, I own a bit of a few funds, but the only standard stock I own falls every time I buy it. (This could actually be a thing I could make money with, I suppose, but killing companies isn't exactly my type of business.)

Fortunately, the stock closed up about a dollar from where I bought it, but I'm still not so sure. Beware if I buy into any company you own equity in or work for.