The stock market action over the past month has me thinking of the old adage "what goes up must come down"...as a fellow money manager pointed out this morning, look at the stock chart of Apple Computer (AAPL). Last year, Apple's stock was the world's fair, as the stock moved up to over $600/share; as of today, the stock trades at $450/share. My point is this, the stock market is not like a tree that continues to grow (move) upwards, it's more like a balloon. You fill a balloon with helium and it will rise, eventually however it will fall back to earth. Now if you could refill the balloon with helium, it would rise again (of course). My point is this, be careful getting carried away with the idea that the stock market will continue to rise when it fact it will not. As my blog is titled "Riding the Rollercoaster", that is exactly how stocks move in price. I've mentioned over and over again how I think stocks are ripe for a selloff and I have been taking profits on stock investments that I have and building up my cash reserves so that when the markets do eventually move down, I won't see my profits eroded and I'll be able to buy stocks/mutual funds at a lower price.
This morning, one of the most successful money managers ever, Byron Wein of Blackstone Group was on TV saying how he believes we will soon see a major correction in stock prices...while I'm not sure if the selloff will be a "major" one, I think we could see a move down of 5-7%. My point is this, don't be surprised if the markets turnaround over the next week or so b/c sooner or later what goes up.....
The only active thing I've done so far today in the markets is that I've bought a little more Dell stock. It's been known for quite some time that there was a big possibility that DEll Computers would be taken private by its founder Michael Dell and an investment bank...the stock is trading at $13.80/share or so and from what I've been able to piece together, the acquisition price will be somewhere between $15-$17/share. I've only bought a small position in the stock for clients so if a deal is announced this weekend, which is what I've heard, I will stand to make a small profit; whereas if a deal is not announced and the stock sells off monday which it will, then I can add to my existing position and await for the eventually buyout to take place.
Other than that, TGIF!
