The first two weeks of this year were hectic, with dosh galore coming the monkey's way. Last week was much quieter, with no new positions and not a lot of change in my existing ones.

Elan continues to look awful. I seem to say that almost every week, but what can I do? The chart looks, well, awful. I expect last week's low of $12.75 to be taken out sooner rather than later. CRH has barely budged over the past week.

Enough said there.

As for Apple, I trimmed my position further on Wednesday (at $96), just hours before earnings were due to be reported. The company reported blow-out earnings after the close, trouncing analyst estimates, while simultaneously warning that results for the next quarter would not be as stellar as analysts were expecting.

Shares initially surged above $99 in after-hours trade before the cautious guidance pushed them back to $94. (After-hours trading refers to trading outside the traditional trading hours - a few hours before the official market opens and after it closes. Most traders don't bother with the after-hours session, as it tends to be thinly traded and erratic. ) Anyway, if price dips below $92.50, I'm out.

Regular readers will see the same pattern in my trading - give a stock room to move, but not so much room that it substantially endangers your profits.

Earnings season is under way, so stock reporting will see increased volatility. I rarely take positions in advance of earnings: it's too unpredictable. Nor am I glued to my computer screen when the reports are due. Newbie traders often jump in if a company reports a good number, but it's more important to hear what a company has to say about guidance for the coming quarter. Markets try to divine the future, they are not fussed about the past.

It's an obvious but important point and should be borne in mind by readers who plan some earnings plays in the coming weeks.

Apple is infamous for being over-cautious in its earnings outlook, setting conservative estimates that it almost invariably beats.

All companies like to play this game - that's why twothirds of companies typically beat estimates - but Apple is renowned for it.

Accordingly, a price drop in the coming days is as likely to be a product of profittaking as much as concern over future quarters.

Apple is a polarising company. Bulls love it, bears hate it, and never the twain shall meet. It's best to be neither a bull or a bear and to keep an open mind. I've long been a fan of the company. It makes cuttingedge products that look great. In Steve Jobs, its got one of the best CEOs in the business. That's not to say the current share price isn't full of speculative excess.

I read an interesting article last week that sought to extrapolate how much value the iPhone had added to Apple's market capitalisation. In it, Doug Kass, an American investment manager, guessed that about $5 to $10 of pre-introduction hype was already incorporated into the share price.

Certainly everyone was expecting an iPhone announcement so this is not unreasonable. The share price jumped another $10 after the announcement, so the iPhone has contributed about $17.50 - that works out at $15bn - to the Apple share price.

Seems steep? There's more. Kass points out that the iPhone "is intended to and will cannibalise a significant portion of the iPod sales. . . at the minimum at least one-third of sales will be almost immediately lost. Doing the math would suggest that the iPhone's introduction has provided nearly $20bn of additional market cap". That's nearly 50% of the market capitalisation of mobile phone giant Motorola.

So is it time to short this pup? Steady on. Sure, Apple looks very over-valued.

Technically, it's extended (a near vertical rise of almost 30% over the last month).

But bears have been protesting that Apple has been over-valued for years.

Trouble is, the stock has kept rising and long-term shorts have lost their shirts in the process.

If you're a long-term investor and are concerned by the above figures, then avoid Apple. If you want to be a profitable short-term trader, then don't worry about balance sheets and price-earnings ratios and the like. It doesn't matter.

Contrary to what dozy finance professors think, markets are not perfectly efficient. Most market participants do not spend their time gazing at ledgers and working out 'fair' valuations. They look for share price catalysts. The iPhone was an obvious catalyst, so smart money got in in advance and made a bundle. The accountants out there who went short because Apple was 'overvalued' got buried.

In the next few months I expect Apple to announce a stock split, generating a brief price pop. With a 2:1 stock split, instead of having one share worth $100, shareholders will have two shares worth $50 each.

Splits are entirely cosmetic affairs. They should have no affect on the share price. But they do. That's why companies split their stock.

I'm not telling readers to buy Apple. Indeed, I wouldn't be a buyer at these levels. A correction is due.

But nor would I be a seller on valuation grounds alone.

Companies get over-valued and often stay that way for a long time. That's one of the reasons you'll never read of economists or academics who got rich trading the markets.