Sep

16

The new ECB plan may add liquidity to the system but I do not see how it can solve the sovereign debt problems, which are getting worse month after month. It seems, however, that Mr Market believes that the story may have a happy ending, which looks totally nonsense to me. In the meantime AAPL is once again near its highs regardless of negative economic data and the fast growth of Android.


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3 Comments so far

  1. leonardo on September 16, 2011 3:22 am

    …but let’s ignore the (continued) fast growth of the iPad2 and the pent-up demand for the iPhone 5

  2. Anatoly Veltman on September 16, 2011 10:51 am

    You know markets: they trade on perception, not on reality. Also, often “tail wags dog”. I pointed out last week that WAY too many traders jumped on EUR shorting bandwagon and captured as much as 10 quick figures on way from 1.45 to 1.35 - which is a huge windfall given FX leverage…

  3. R. Kumar on September 17, 2011 9:32 am

    Interesting that you mention AAPL but leave out AMZN.
    AAPL’s performance perhaps can be rationalized by its business metrics, i.e. PE, earnings growth, balance sheet etc. The question is why AAPL is not valued at least on par with other market darlings when its prospects are stronger and real. Perhaps the answer is its market cap is already too big and it takes too much effort to move the needle.
    AMZN’s is pure “blue sky” potential. Its sub-par financial performance is explained away as “investing for the future”. Its upcoming tablet is to be a “game changer” in price and a ramp to its “whole world catalog” merchandise. And it operates on the beggar thy competitor “lowest price” model which we are led to believe will be made up by economy of scale. Fact is, none of its biz lines has much of a moat.
    I think the powers that be rotate among a handful of stocks selected on the basis of a plausible blue sky storyline, market cap (not too big like AAPL), float and ownership profile to serve as keystones for the market at large. At one time it was CSCO and until recently NFLX was among the elite group. Relying too much on classical notions of the stock price reflecting quaint calculus of PV based on realistic discounted expectations of free cash flow etc. only clouds our judgment and keeps us from rolling the dice in this casino.

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