Searching billions of web pages, we were unable to find even a single stock chart showing the spectacular ascent of RCA prior to the 1929 Crash. (The one shown at bottom will give you a rough idea, though.) Our hunch is that the final, manic leap of “Radio,” as it was popularly known, would bear a striking resemblance to the world-beating parabola shown in the Apple Inc. chart immediately below.  Like RCA before it, Apple Inc. has come to be perceived as an innovator with nearly limitless potential in the consumer electronics/entertainment market. Perhaps this will prove to be no exaggeration. Even so, we remain unpersuaded that the company’s latest sensation, iPhone, is destined to dominate its product category as iPod did, nor do we share the apparent belief of many investors that Apple stock will turn out to have been a fabulous bargain at these levels.

(Click on chart to enlarge)

Having said that, we must acknowledge that the prospect of Apple eventually overtaking Microsoft is hardly unthinkable. To the contrary, we see it as inevitable – not so much because of Apple’s genius, but because of Microsoft’s bottomless stupidity, arrogance and ineptitude. Microsoft, after all, is the company that most recently brought us Vista, yet another overhyped Windows operating system that’s about as “new and improved” as a dish detergent to which lemon scent has been added. At least the detergent doesn’t take two-and-a-half minutes to “activate” when you squirt it onto a sponge. Vista has been selling briskly, of course, but only because it is being rammed down our throats by the likes of Dell, Hewlett Packard and Gateway. But would anyone dispute that each successive Windows operating system finds buyers increasingly resistant and resentful?

Buggy Game Console

Microsoft is also about to take a billion-dollar-plus hit for a wiring defect in the X-box that causes it to overheat and fail. And, the company has been playing catch-up in the Internet advertising business, recently paying five times what competitor Google had paid earlier to acquire a going concern.  To be sure, Microsoft has many more billions of dollars to buy and monopolize that which it cannot innovate. But just give them some time to piss it all away. In the meantime, the handwriting is on the wall for their cash cow O/S, especially with Google breathing down their neck.

Currently, Apple has an approximately 6% share of the desktop computer market, up from a pre-iPod low of around 4%.  Like tens of millions of PC-users, we avidly await the day that Apple, or some other innovator, drives a stake through Microsoft’s obsidian heart, freeing us forever from Windows-based frustration and mediocrity. But that will take many years to occur even under the best of circumstances, assuming it occurs at all.  Remember, it took RCA, with many great products, two generations to die quietly.

In the meantime, and notwithstanding our long-term optimism toward Apple, we see the company’s shares as an especially attractive short in a bull market that has completely decoupled from reality. For this reason, we recommended shorting AAPL on Friday at exactly 133.43. A subsequent $3.38 selloff provided us with sufficient partial profits that we could expect to exit without a loss if AAPL gets second wind and thrusts to new record highs.  This it may do; however, we will continue to re-short AAPL at higher and higher prices, as well as the shares of some financial-sector bellwethers, as long as we can do so without risking more than relative nickels and dimes.