Trade Alert: Now is not the time to panic

It’s a down day to start the day, again. Do you remember back when Apple went straight from $500 to $620 just as the first annual Apple Investor Summit hit and how it felt like stocks would never go down again? And now…can you imagine the relief you would fell if Apple were to rally to new all-time highs? Will you remember this feeling of dread and how it seems like stocks just might not ever rally again?

How about this comment from my Marketwatch blog this morning from an article I wrote yesterday about why we should be buying the latest EU panic:

“At very least Cody we’d like to see the way is clear and get in long after a few percent uptick. If things are really going to hit the fan you don’t want to be bludgeoned along with it, it doesn’t seem like they have yet.”

The time to have worried about being bludgeoned was when the markets were celebrating the end of the EU/Greek crisis when I kept writing those articles reminding you how you have to sell when it seems like stocks will never go down again and why you have to panic about the endless EU crisis when the mainstream media is celebrating that the EU crisis is over.

Look, we’ll likely get another declaration of victory whenever the EU/Spain figures out how they’re going to kick the can down the road and put off their pain again. And the markets will likely be quite a bit higher when they do declare victory again. And then in a few months after that, we’ll get another panic about how Spain/Portugal/Italy and eventually Germany can’t afford to bailout their banks any more. It’s all incestuously tied together and its all a big distraction and none of it matters to Apple’s earnings and stock price for the mid- and long-term.

But the playbook will remain the same — buy the panics, sell the euphoria. We’re seeing panic right now. I’m buying some FFIV which is down 6% this morning because…well, here:

UBS lowered F5 Networks estimates based on increased European macro risks. Additionally, the firm believes the head of salesdeparture could pressure shares near-term. Shares are Neutral rated.

I have written before about how analysts who downgrade companies like FFIV because the analyst suddenly realized that there are problems in the EU macro economy? He’s realizing that after FFIV is down 30% from its recent highs — and the main reason FFIV is down 30% from its recent highs is because of market concerns about EU macro risks. When was the time to sell FFIV because of EU macro risks? Now?

A few years ago when FFIV was at $20 a share I wrote an article similar to the paragraph I just wrote above about FFIV for the Financial Times about why I thought FFIV was a must-own for the long-term no matter what the analysts were panicking about at the time (“the commercial real estate market is going to crash” was the big worry at the time, not the “EU crisis”).

To be sure, there are certainly risks that the EU crisis hurts FFIV and there are certainly risks in losing their head of international sales. But that’s why the stock is down 7% today — and I think the risk/reward set up here is favorable for me to add to my FFIV position. I’m buying some FFIV common stock this morning.

I’m also about to head out to Albuquerque for a University of New Mexico Alumni Finance Committee meeting where I’ll be paying particular attention to just how much palpable fear there is in the room from the money managers and committee members I’ll be with.