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Wednesday, January 25, 2012

Time to short Apple?

Apple reported stellar performance for their fiscal first quarter, mainly on explosive iPhone sales.  As of today, with the stock up about 8% for the day and to around $450 per share, Apple is not the largest company in the United States by market cap, surpassing ExxonMobil for the top spot.  You will hear nothing but positive opinions on Apple from pundits across the board, whether they be value or growth managers, fundamental or technical analysts, etc.  So why would I suggest shorting Apple?  Exactly!  Everything positive that could be said about the company has been said, and they have milked their current product line for all it's worth!

I wrote an article not too long ago about Apple and about the loss of Steve Jobs specifically.  My contention is that he was the driving force behind the innovation at Apple, and without his direction, leadership, creativity and all-around genius, I do not feel that Apple will be able to continue to innovate at the same level of quality and output as before.  There are a lot of highly talented people at Apple, but my feeling is that without the glue that was Steve Jobs there, day to day, to hold this team of diverse, highly talented and skilled individuals together, the team will disperse, with members leaving for other, possibly more lucrative, fulfilling, opportunities.  Even though under some valuation metrics Apple is still "cheap," the reality is that the stock has rallied from a low of $310 a share 6 months ago to the current $450, or by 45%.

Shorting is not for everyone, but for those who can handle the risk, and for whom shorting is an appropriate strategy, Apple, to me, is a compelling candidate.

Thursday, January 19, 2012

Why is Jim Cramer on television?

Readers may recall that last month, I wrote a blog post slamming Cramer and others who are consistently (dead) wrong about their calls on the market.  Last month, Cramer, on CNBC, stated that the banks, especially Bank of America, should not be owned because one of them might have to file bankruptcy.  He strongly hinted that B of A could be the one to do so.  Since that time, B of A has rallied over 40%.  They just reported much improved numbers today.  In fact, the financials as a whole have rallied significantly in the past month or so.  Moral to the story: As I wrote previously, one could likely make a lot of money just doing the exact opposite of what people like Cramer advise.  This certainly proved to be accurate regarding the financials, and has been consistently true over the long-term.  Cramer tried to manage money and failed miserably in the past, which is why he is on TV talking about it instead of actually doing it.  Do yourselves a favor and do not listen to this fool.  He will lose you money.

Wednesday, January 18, 2012

IMF looking for up to $600 billion to bail-out Europe - Guess who they are asking

We have our own problems in the U.S. to deal with.  Our national debt, which has had its limit raised twice in the past year, is pushing $15 trillion and rising very quickly, with no top in sight.  We simply cannot foot the bill for Europe, or for anyone else for that matter.  We can't pay our own bills.  This situation would be like someone who is deep in debt borrowing even more on a credit card, so they can loan someone else money to pay their bills.  We just don't have the capacity to borrow another $600 billion to help Europe, period.

As I have written many times, the IMF and World Bank are really just fronts for distributing U.S. funds to other countries.  They can muddy the waters surrounding the process, adding a hundred steps in between the U.S. providing the funds to the IMF, and the IMF then distributing (our) funds to these other countries, but at the end of the day, we are paying the bill.  We just can't do it anymore.

We knew this was coming.  As soon as countries across Europe began having financial problems, I knew (and I wrote) that the IMF would be asked to help (read the U.S.), even though these same European countries know all too well that we are having massive financial problems here at home.  In the past, our economy was strong enough, and our outstanding debt manageable enough, that we could help.  This is simply no longer the case.  We are tapped-out.  We are coming dangerously close to not being able to access foreign capital sources to sell our bonds (borrow more money).  If we don't get this situation under control soon, we are going to blow up.  If we can't sell bonds, we can't service our debt, and therefore we would be forced to default.  It is closer to our reality than most think.

Apparently our government has told the IMF that we cannot help and that Europe must foot the bill for their own problems.  We all need to watch vigilantly to make sure that behind the scenes, Congress does not vote to provide this funding.  This would not be the first time that they have tried to sweep aid under the rug, hiding it from the public.  These are precarious times.  We cannot afford to be complacent, 

Thursday, January 12, 2012


What happened to the Occupy Wall Street Movement??  Isn't it obvious?  The weather got a little cold and they went into hibernation for the winter, spending the holidays with mommy and daddy.  This underscores the point that I have been making about OWS since its inception, which is that they have no organization, no real leadership, no real point, and are completely ignorant of what is really going on in the economy.  This "movement," if we can even call it that, is comprised almost exclusively with a bunch of college students living off of their parent's dime, skipping the classes their parents are paying for, to go out and show their asses.  They are weak, ignorant of the facts, and completely misguided.  I guess we can blame the parents for not teaching their children a little about the world and the economy, so maybe they deserve to have kids like these. In any event, I am pleased to see them fade quickly from the public sphere.  It will be laughable if they re-emerge after the weather warms a bit.