It’s been a wild week, what with an election for leadership of what’s left of the so-called free world, ongoing and accelerating debt crisis in the EU and focus on the long-known, but soon-coming fiscal cliff. Apple’s stock has the flu and yesterday we finally had a panic enough to drive the bulls into utter fear and the bears into cockiness. None of that means that the markets will rally tomorrow or even into year-end, but if, if, if earnings for Apple and corporate America writ large grow at all next year over this year, this current market trashing will seem like a gift to the bulls.
That said, as bullish about the markets and the corporate economy as I’ve been for the last three years as I’ve aggressively bought every major panic and just trimmed on every major rally, I’m just not ready to get as aggressive on this decline at this point. I think there’s more risk about next year’s corporate earnings vs. the current stock prices than there’s been in the last four years. So while I continue to scale in with tranche buys of my highest-rated stocks, I’m not getting aggressive about it quite yet. You don’t have to draw a line in the sand.
Here’s some of what every investor and trader should be reading into the weekend.
Post-election ugly: Buy Apple cheap – I’m buying back some Apple calls, rolling them out into longer-dated strikes, as I’d planned when I’d trimmed the calls when the stock was $100 above its current quote.
Are some corporate bonds safer than Treasurys? – I doubt it. But I would argue that with Apple yielding 20% more than 10-year Treasuries (1.9% dividend yield for AAPL, 3.3% for CSCO and 4.3% for INTC shareholders vs. 1.6% rates for the 10-year) is for sure a major red flag about just how badly our nation’s money is being misallocated and how the markets are currently mispricing risk. Long-term problem though, not something to suddenly decide to freak out about today.
Apple Stock Price vs. Key Product Dates Beginning in 1983 and Did the First iPhone Launch Even Matter? – This isn’t the first time and probably won’t be the last time we see AAPL tank after a major product launch, even if the march to the $1000 price target I’ve had since the stock was at $200 a share gets back on track.
Why I’m Returning my iPad Mini – I’ve read about three or four articles in the last week with this theme — the iPad Mini is replacing the iPad as the Go-To tablet. My guess is that the iPad Mini will outsell the larger iPad this xMas iPhone/iPad season. Estimates for both the iPad Mini and the iPhone need to go higher before year-end for AAPL to rally before then.
That 100% Recession Chart!! – Aaahh, run for the hills everybody! Then again, see my more cautious economic commentary in the opening paragraphs above.
Ex-Goldman Trader Accused of Hiding $8.3 Billion Position and RBS, UBS Traders Said to Face Arrest in Libor Probe – It seems the traders will continue to be the fall guys for the heinous financial crimes that every executive at these major firms probably knew about the whole time too. Justice ain’t blind no more.
Muni Yields Plunge to 1967 Low as Obama’s Tax Plans Stoke Demand – That kind of headline is either a great contrarian indicator or a major red flag about just how misallocated our money is right now as a result of decades of these Republican/Democrat policies.
Videogame sales collapse ahead of holidays – That’s not an economic indicator, it’s the rush to smartphones as the dominant gaming platform and the fact that games cost 99 cent instead of the $49.99 for the console disks of yore.
Our dangerous illusion of tech progress – Money quote: “Today when people say “tech” they think of a small cohort of computer-related companies rather than the continuing transformation of every industry that people envisioned back in the 1950s. On the campuses of Google and Apple, high-design bathrooms or espresso bars might look very different from the average non-tech company but their balance sheets show the same vast piles of idle cash you’ll find at Pfizer or Chevron. If we were living in an era of accelerating technological progress, Apple could reinvest its returns in new projects instead of fighting patent battles over old ones while moonlighting as the world’s biggest hedge fund.”
Have a great weekend.