Jan

24

"You could never know when the elephants would come back, but when they did they always traveled the same path" . And the natives (and R. Humbergola) were always waiting for them.

Rocky "Humbergola" Humbert comments: 

Let the record reflect the fact that I have never traded a single share of Apple stock (long or short), however, I told a friend on October 9, 2012 that if I were inclined to trade this elephant, I would have shorted some on the most primitive moving average cross. But I didn't. And so I have nothing to brag about or substantive to say except that I continue to consider AAPL the single most difficult investment possible — a melange of technology, fashion and retail — all of which are well above my pay grade. And I would add that there is compelling (statistical) evidence that a company is biased to underperform the index after a longterm charismatic CEO leaves the helm…market capitalization and valuation not withstanding. As for my belief that the S&P at its current valuation offer a likely return in the very low single digits with a 3-5 year time horizon (which is still better than fed-targeted fixed income right now), I am continuing to sell individual securities but replacing them with S&P calls with single digit volatility as this strategy will ensure that when the ephelumps turn, I will not be left with a steaming pile of dung.

I hear a bunch of people calling tops and looking at the 1962-1982 analogies and so on, but I see very few people who were formerly bullish turning bearish and I see many smart people lagging the index and I've learned that it's better to be right than to be smart and I have demonstrated a utter lack of ability at calling the market in any timeframe relevant to people who sit in front of screens all day; hence I am using the gift of low vix to ensure that when the trend changes it will occur in a way that I will be profitable and wise but only after the fact. One last thing: the SPY historical vol at 30 and 100 days is 13.1 and 12.5. The TLT vol at 30 and 100 days is 12.6 and 13.17. SPY calls at the money cost 10.4% vol; and TLT at the money options cost 12.5%. There is some predictive grist here but the proof and execution are left as an exercise for the reader.


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3 Comments so far

  1. Steve on January 26, 2013 8:52 am

    Apple is a very difficult stock at this particular juncture. There is a very old sayings There are great companies there are great stocks and they are not necessarily the same. I dont have the energy to comment beyond except to think how network marketing companies work. They expand until they reach critical mass and then cannot grow further. Time to sell. One of the great entrepreneurs and investors Wayne Huizenga understood this concept exceptionally well. He organized Waste Management to a National refuse company they sold it. He then purchased Blockbuster built that company to the heights it attained and sold out, did the same with Autonation. He has impeccible timing and an understanding of how markets work.

  2. bas agtereek on January 27, 2013 4:58 am

    As i am a foreigner; the US dollar is relatively low now, with the debtceiling sullution near, i think the US dollar will do better against the euro zone (were i live) argument 1 to buy apple.

    2) George Soros in Davos: ‘I think interestrates will spike in 2013′. Thats ok with Apple fallen already 37.6% from the top (sure can be more but will be back on that) and the ever growing cashhorde will do well with higher rates. One can use a mortgage with fixed interest for two years if no money in the bank right now to buy Apple shares.

    3)I believe $ 16 billion in cash every quarter; buy for every 100 shares Apple, putleap (now)440 jan ‘15. app 7800 US dollars. 8 X 16 (8 quarters)= 128 billion US dollars above the 137 billion US dollars already. With grosso modo 1 billion shares outstanding in my view (no optionsexpert)the Leap could have cost 12.800 US dollars you still got your premium back in cash(horde)I do not believe they give it away to charity (i hope not)

    4)not growing with the same rate is normal but i think the 16 billion US dollars is still conservative. So earning more

    5)Human Capital, lots of books talk about it as the greatest asset, not now, cynics only talking about the late Steve Jobs. Compensation can be bigger now that there is more fantasy in the stockprice for promising co-workers/employement.From other companies and universities.

    6) the Obvious ones; superdividend (with higher taxes); sharebuybacks, higher dividend, 1 or more takeovers and/or a mix of the former. Other products and businesses will evolve.

    The only negative is sentiment and the media (in my opinion) to talk the company down and the stockprice….we will see. I believe its time to go long with a bit of Insurance (i hope not ’schmuck’)

  3. bas agtereek on February 8, 2013 1:56 am

    Right now. Would you invest in BrkA and/or B or Appl. Mr Buffett did app. 60 years to build an empire worth 36 billion in maketcap less than Appl.Appl is in business app half of that time. Value-growth? it is a suckersgame/namegame. You can Always sell your shares says Mr Cramer to Mr Einhorn, and truely so, but he is a bit sour about the money missed had he been selling at 700/5. Now my advice to people is to sell some maybe GS or German carmakers at these prices to make money free for the preffered shares on Apple. For the rest the market seems a bit toppy.

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