Until last fall, Apple (symbol AAPL) was one of the decade's most compelling success stories. With the iPhone and iPad breaking sales records, analysts contended that even though Apple was trading at a record high of $705, the stock still had room to run.

But Apple shares were recently trading at $400, and many of the analysts who had predicted a price of $800 a share a year ago are now hoping that the stock will bounce back to the $500 to $550 range.

What lessons does this story teach investors?

-- Watch the innovation cycle. The first iPhone was introduced six years ago, and the iPad is three years old. Although both devices have since been refined, the dearth of new, unique products gave competitors a chance to catch up and develop similar devices.

-- Exponential growth becomes harder with size. Stock prices tend to track earnings and revenue, and every time a company's earnings and sales double, it becomes harder for them to double again, says David Tan, assistant professor of strategy at Georgetown University's McDonough School of Business. A company with $171 billion in annual sales, which is what analysts estimate that Apple will ring up in its current fiscal year, has to add another $171 billion in sales to grow twice as large.

-- Winners take chips off the table. Unless every stock in your portfolio doubles each year (in which case Warren Buffett would like to hire you), the rise of a stock such as Apple can cause it to become a disproportionately large share of your assets. That makes your portfolio riskier and less balanced, and it's a signal that it's time to sell a portion, says Lance Roberts, chief executive of Streettalk Advisors, a Houston money-management firm. So if a stock doubles, sell half your shares, Roberts advises.

-- The market loves and hates with equal intensity. Wall Street is a lot like Taylor Swift, adds Roberts. It sometimes falls head over heels in love, and it will forgive many a transgression with a company it adores. But after one too many slips, the market can turn as unforgiving as a jilted lover and sing "we are never, ever, ever getting back together."

-- Things may not be as bad as they seem. Apple has tough sledding ahead. Yet its products are highly coveted, and the iTunes site is the most popular online music, television and movie portal in the world. The company is a cash cow, with a pristine balance sheet and vast financial reserves. In short, news of the technology titan's demise is almost certainly premature.

(Kathy Kristof is a contributing editor to Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit http://www.Kiplinger.com.)