As I've been harping on for too long now, I've been looking for the markets to sell off as investors needed to digest their gains and take a step back from the momentum investing that we've seen of late. As I type, the markets are down by over 1.5%, and if we close down today, it will be the 5th consecutive day we've been down; this coming off the worst week of 2012. Aside from investors just locking up gains they recorded so far this year, many people (including money managers) are concerned about 1st quarter earnings reports which started yesterday..while business has definitely picked up, the two things to worry about are how inflation (the cost of bread, gas, ice cream, etc) is hurting businesses bottom lines, and also what kind of guidance companies will be providing for the 2nd quarter. I expect most companies will come out and say how difficult it is to estimate how buiness will be going forward considering the high cost of gas, the instability in Europe, and the uncertainty regarding the strength of our economy.
In other news, it appears that Spain and Italy are seeing the same financial issues that plagued Greece for so long..this should by no means be a surprise because as I've written, a great number of countries in Europe are facing debt issues (meaning they've spent more money than they've brought in). So, that being said watch and see how the nightly news or the business section of the newspaper start mentioning how the spread of financial instability could affect the U.S. (however when you break it down, our financial system is still in solid good shape and therefore we are somewhat isolated from those events - they do affect our manufacturing industry, as well as companies that sell products overseas.
Of note, I had a good number of people ask me lately what I think about Apple stock and whether now is the time to buy it...well, what I've said is this:
- the stock has already seen an incredible run up, and as we know stocks don't go up in straight lines and at some point the stock will see a pullback and will selloff.
- the Apple products, which mostly cater to the middle to upper end consumer, has been embraced by a large number of people so you have to wonder if Apple will tap out their targeted consumer class.
- I follow the company, but I don't what catalyst there is for the stock to continue its surge..I have heard that their are looking to incorporate media and possibly tv into their product network, but I'm not sure how far out that is.
- finally, I think the stock, which has been the forefront of momentum investing, has overstayed its welcome as the momentum stock to own. Remember the saying, "to whom wears it, heavy weighs the crown", and I think Apple has a lot to prove that they are still as on top of things as they are (and don't forget about competition from other technology companies!)
Once again, this is not a recommendation to buy or sell Apple, I'm just merely throwing out what I think about when someone asks me about what I think about the stock. Other than that, as the market continues to drop in price, it becomes more attractive to me and I'm keeping an eye on the price points I've established in some of the stocks I'm watching to pull the trigger and start doing some buying.
I hope everyone had a wonderful Easter, and how bout Bubba Watson? They are actually interviewing him on the business channel CNBC right now!
