The Stock Market and Investing

houdini1

Since I was showing a small profit because the stock was up today, I also sold all my shares with 1 minute left in the trading day. I was afraid I would jinx myself if I admitted I sold before the numbers came out. For once I jumped in the right direction. If the price had gone down today I probably would not have sold. So blind luck in a way.

Not a huge drop so far as the numbers were not that far off. I am very curious to see what happens tomorrow as I will be looking for a new entry point.

anthonyp

Uncanny how the options people can peg a stock.....40 points if a miss, and it is down 40......Sure wish management would not ignore the media and analysts , and give updates regularly so the stock doesn`t have such wide gyrations....Painful for my trading account ( which might turn into an investment account at this rate) and also to be `wrong`...Tony

ljflx

They sell 48 million phones, grow cash $16bln (that's $16bln!) and this is bad news? They now have $138bln in cash or $153 per share. In a year they'll have $225 per share. I keep saying it - if I'm management I'd build that cash and hope Wall street keeps dropping the share price.

gagrice

I don't see any significant insider trades lately. Early in 2012 several execs unloaded at around $600 per share. One interesting trade and the only one so far this year is Al Gore took his option of 59,000 shares at $7.48 each. That was Jan 15th 2013.

I just don't understand a lot. Earnings were above estimates. Yet in after hours trading the stock dropped to $463. I would be happy with that earnings report. Is it a buying opportunity at the bell tomorrow? Or will the stock shrink more?

cyclone4

I am lost for words as to how they can continue to pound this stock with SO much going for it. I am very depressed about it. As you stated above, how can there be an additional 10% drop in the stock with this report? How could they have sold it off from $700 to $460 if the Company is adding many $billions of dollars to the bottom line every quarter? I am very depressed about it and I just do not understand it. I know that if I throw in the towel tomorrow, it will probably be the low of this horrible move.

robr2

I am lost for words as to how they can continue to pound this stock with SO much going for it.

Analysts set targets based on information from industry and company research. When the company fails to meet those targets - even if numbers are better than last year or last quarter - the market withdraws it's support for the stock.

The only expectation that Apple beat was EPS - $13.81 vs $13.44.

Last quarter Apple sold 47.8 million iPhones (all models) up from 37 million last year same quarter. Analysts expected 50 million. 70% of Apple revenue comes from iPhones - do the math.

Record iPad sales were less than analysts expectations - 22.9 million vs 23 million.

iMac sales were down 20% compared to last year.

Operating margin was 31.6 vs 37.4 from last year - they may have sold more units but the margin was less on each one.

Remember the market only cares about what you did for them (and us) this quarter.

ljflx

For all the news that Tim Cook is an operator Apple's problems this quarter (if a $16bln increase in cash is a problem) were that they couldn't get enough supply out to meet demand across the board. That's not a bad problem to have and it reads in the media that Apple has a demand problem instead even though the company is telling us the exact opposite. For the first time I finally hear what the big increase in capex is. They are buying huge amounts of equipment to place in their partners facilities to increase supply to meet demand and possibly to build a new product like the rumored TV's and wrist watches. That hardly sounds like a company that has dying products like the media keeps reporting. So we have a company telling us a very different story than media reports and backing it up with tremendous spending. For that reason I will buy more shares today or this week depending on trends. The problem I have is that the stock is trading all on media news of it becoming Microsoft. But I look at the cash build and its not going to be too far out before Apple has cash that equals its market cap if the share price doesn't rise a lot. One major problem the company has is investor relations. They could have counterred the negative sentiment stories a lot better than they did. They could have previewed this quarters earnings when they reported last quarters earnings by indicating demand was sky high but supply would be a problem and that they were making major capex investments to thwart that in the future. But they are very lousy at that stuff and the fall in share price, which is so badly overdone is the result. Ex-cash the company is now trading at 7X which is absurd.

http://seekingalpha.com/article/1130391-apple-disappointed-in-part-due-to-supply- - - - - -constraints?source=yahoo

houdini1

I bought back in at $455. this morning.

robr2

Apple's problems this quarter (if a $16bln increase in cash is a problem) were that they couldn't get enough supply out to meet demand across the board.

If that was an issue, they should have released a statement to allow analysts to change their estimates. Companies do that all the time.

They are buying huge amounts of equipment to place in their partners facilities to increase supply to meet demand and possibly to build a new product like the rumored TV's and wrist watches.

Again, release that information so analysts can make informed decisions.

One major problem the company has is investor relations.

As noted above. I think that's a holdover from the Jobs' era. He had no use for investors even though they are what allowed him to grow his business. IMHO, Cook will have to drop that stance and be more open.

ljflx

Totally agree. Jobs always kept people in the dark and ruled with an iron fist. Apple under Cook needs to get out of that dog house. A supply problem like they had (and you have to believe it as the capex substantiates its proof) could have been painted as positive. Even the explanation of why the WSJ got it wrong should have been spun a lot more positively.

One thing the street is missing badly here is the power of the company and its phenomenal cash hoard which will get bigger and bigger. I want to see its Balance Sheet to see what happened with AR and fixed Assets. But I have my own business to attend to these days and its much much more important to me than analyzing Apple. But Apple has the economic might of some countries. I read one story in the NY Times that said had they kept up last years growth for 5 years they'd have matched the GDP of Australia. You should never underestimate the clout of a company like this and new ways it can spin itself. They can buy Netflix with less cash than they built the past quarter. They'll be able to buy themselves off the market debt free in a few years if the street keeps ignoring its clout. A new product in conjunction with a strategic acquisition that would back it would be a great way to go.

robr2

I want to see its Balance Sheet to see what happened with AR and fixed Assets.

Here it is on page 9:

Apple's 2012-12 Balance Sheet

AR up about $600m.
Fixed assets up $5b but almost nothing in plant and equipment. So where are all the robots?

Look at inventory - it jumped by $664m or over 84%. I thought supply was constrained?

ljflx

Don't have time to look at it in depth. Just took a peak though and F/A is not up $5bln. It's flat. That $5bln is cash transferred to LT assets. They have $137bln in cash and LT securities (cash transferred to investments). That's about $147 a share in cash. Amazing cash production as it exceeded earnings.

ljflx

If you are buying individual stocks then you need an iron stomach. You need to either look LT and forget what goes on ST or just buy mutuals - which has become the way to invest the way it was done in the past. Because buying individual stocks is pure gambling now and Wall street in the ST is a gambling parlor not an investment place. Just look at the last line in this blog. It couldn't be truer if you are a ST investor. The ST is pure musical chairs.

In the end, it’s not about the earnings themselves. It’s about a trading opportunity. It’s about an inning in the game. It’s about trying to figure out how the other guy on the Street is going to respond to the earnings, and to either get in or out ahead of him

cdnpinhead

cdnpinhead

would be a far clearer description of this board, and that's obviously what those who still hang here prefer.

Either way, it's interesting to observe. I'm one of those dinosaurs who invests long-term (measured in actual decades), mostly in mutual funds. I come here to see how the "other half" lives.

cyclone4

First of all, I'm still alive but just barely. Here is a voice of reason from a CNBC (believe it or not) guy. I have always liked and respected John Fortt.

http://www.cnbc.com/id/100405309?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par- - - =yahoo

Kirstie_H

I live in your world, cdnpinhead. I did some day-trading for fun for awhile, but it was too hard on my nerves. I prefer long-term stuff primarily now, and also mostly funds. It doesn't work well for me to be checking on a particular investment day to day.

houdini1

LOL, you shouldn't believe all the stuff you read here...just think about that poor kid at Notre Dame and what happened to him.

1. I am actually a fry cook living in my mother's basement.

2. robr2 is penniless and living in an old folks home.

3. cyclone4 is an out of work weatherman who delivers pizzas.

4. anthonyp is an old retired farmer just getting by.

5. ljflx is homeless and posts from an internet cafe.

6. gragrice is a part time fruit picker in California.

7. fintail rides with a motorcycle gang and sells apples.

So, there you have it. We all manage to get together for a few laughs once a year to compare notes, etc. and keep our scam going.

Kirstie_H

Guess it's time for me to come clean, too. When I'm not here, I'm working as a sea monkey trainer, a skeet taxidermist, and I'm petitioning to get my self-designed "Famous Kings of Norway" brass belt buckle collection on one of those "As Seen on TV" infomercials. I'm expecting a quick sell-out - stay tuned.

cyclone4

Thank you Houdini! You made me laugh for the first time in a couple days.

Signed,

Charlie, the pizza delivery guy

anthonyp

Ha-----A nice bit of laughter is wonderful...The thing that hurts so is being `wrong`for whatever reason, and the loss of money is the `salt` that is poured in the wound...That is what I told my Grandson....

For crying out loud, as I bought in the mid five hundreds, and now it is in the mid four hundreds---maybe this is the time to have bought....? :-) or better yet, if the Grandson wants to buy FB encourage him to do so Tony

ljflx

Nah - I'm a sanitation worker. I always wanted to operate one of those sweepers that clean up the curbs or drive a sanitation truck with a snow plow.

houdini1

I am glad you guys are all being good sports !

gagrice

You got me pretty close. I do pick my own fruit. Been a good year for oranges. The APPLE Crop was lousy....

fintail

Because I source my apples from your orchard :shades:

I haven't even checked my relatively meager (compared to the high rollers here) portfolio yet this year. Seeing as it is eons of from being cashed in anyway - I think I will not touch it for awhile and see if it makes any difference from when I would shake things up on occasion.

gagrice

I sold almost all our stock in both my IRA and our Scott trade account. Last I checked I would be ahead if I had kept them all. Not sad I am ahead and most is in a MM account. May buy more real estate. My son is ready to start on the second house since October. Second one to close this week. This should be a real money maker. Have two more lined up to make offers on. There are deals outside of CA. I would not buy anything in this bankrupt state.

cyclone4

On another day when the stock is falling as if it is headed to zero, here is a very reasonable article on AAPL.

http://www.minyanville.com/sectors/technology/articles/What-Apple-Needs-Right-No- - w-aapl/1/25/2013/id/47648?page=2

houdini1

You should do very well with those properties. We are getting ready to put our second one on the market...as soon as it warms up a little.

gagrice

I am not sure we will sell them. My son would like to try his hand at being a slum lord. :shades:

If we rent the one he is just finishing up at local market we will be getting about 18% ROI. I would be happy with half that. Then we don't have to worry about CG taxes on the sales. I am not inclined to invest in this stock market at all. People will always need a place to live.

houdini1

The idea of renting sounds tempting at times. Then I start thinking about all the horror stories you hear about the renter from hell, etc. If things went well you could certainly make a nice profit...but, for me, life is just too short.

gagrice

The laws in Indiana allow for credit checks on prospective renters. That goes a long way to protecting yourself. I learned from experience you DO NOT rent to Section 8 people. The best part is you can get about $1000 a month for a 3 br house that costs with remodel about $60k. I can't buy a lot for $60k in San Diego. And we found renters paying $1800 per month for homes worth $400k here in SD. That is less than 5% ROI. Even with the devaluation of real estate, a fixer is $350k.

houdini1

A 3 bedroom remodeled house for $60,000. is a fantasy in my area. That would be at least $100,000. here.

anthonyp

Does SD stand for South Dakota ? Just curious as a friend of mine has a son working out that way, and they are all living in Container Boxes working and saving good money in the oil business....A real housing shortage out that way...

What does Section 8 people mean? My wife may rent out a house of her`s...as she nor I have rented anything to someone, what other problems should she be on the lookout for? Thanks Tony

robr2

A 3 bedroom remodeled house for $60,000. is a fantasy in my area. That would be at least $100,000. here.

That would be a parking space to go with the $500K 1BR/1BA townhouse in Boston proper.

gagrice

SD is San Diego where I currently live. I am very familiar with living in container style housing. That was my home for 25 years working in the Arctic oilfields. They are usually called ATCO buildings.

Section 8 is a government housing assistance program. The person on welfare has to pay about 20% of the rent. The state picks up the most of it. I had a renter in Hawaii that did not pay her part most of the time. If you report them to the state, they cut off their portion and you are stuck with getting a single mother with 5 children out of the house. In my case she found a new house available and left on her own. She owed me $9319 when she left. Ironic part is her new landlord booted her out in 3 months and she called asking if she could move back in. I am not cut out to be a slum Lord. I think my son is a lot tougher than I am.

gagrice

A 3 bedroom remodeled house for $60,000. is a fantasy in my area.

That is what makes it so appealing for me. I can spend $20k to $40k for a fixer and have a nice $1000 rental for under $60k. The house my son is finishing and living in would sell in a poor part of San Diego for minimum $250k. And you would not get any more rent and likely poor renters. This house is right near downtown Evansville and less than 2 miles from the bridge to KY. Here is the Kitchen before and after his remodel.

anthonyp

Nice Job Tony

fintail

Don't cry, a 3 bedroom remodeled house in my zip code would be a minimum of 500K. Guy I rented a garage from just sold the attached house, a 5 bedroom in a less central area, needing at least a good 30-50K in renos I bet - got 450K for it. It was something like 650K at the top of the market. He just wanted out (mommy and daddy bought the house ages ago, and gave him the small mortgage, which I think he HELOC'd out).

Funniest thing is you can rent a ~450K house for maybe 2K. Still a "why buy?" area.

fintail

Stocks will go up and down many times before I am able or ready to cash out. Maybe that's a blessing of being a ways off and not having 7 figures to deal with - it's not always on my mind.

You know, there are roads leading out of CA

imidazol97

Where did the refrigerator go?

cyclone4

I realize that some of you are bored by my Apple stories by now, but if you have a few minutes, take a look at these stories/video. They will surprise you. Apple's days as a growth stock are NOT over in spite of what you hear. The first story is from an admitted Apple hater.

http://seekingalpha.com/article/1135031-i-d-pay-400-for-this-apple?source=yahoo

http://www.bloomberg.com/video/is-wall-street-being-too-hard-on-apple-AZGy_ukuSe- yXkIRewEUTCg.html?cmpid=yhoo

http://www.fool.com/investing/general/2013/01/25/no-one-appreciates-apples-ipad.- aspx

kyfdx

LOL. That's what I wondered..

gagrice

Where did the refrigerator go?

That is a good question. They moved it to the other side of the kitchen when he knocked the wall out into the living area. The house was built in 1952 and dated. It is now more the open concept people prefer. He got an electrician to upgrade all the wiring in the kitchen so it is all up to code. All the rooms had cheap paneling. That is all gone and my son textured and painted all the walls.

The next one is a bit more of a challenge. I am buying it from the bank. The guy started to remodel and ran out of money. Owed the bank $90k when it was foreclosed on. We are buying for $26k cash. Expect to spend $30k to $40k remodeling it. Needs new roof and a lot more. 2400 sq ft on one level. Sits on a little over an acre. 2.2 miles to a Walmart Supercenter. I think they may want to stay in this one. Beautiful farming area yet close enough to have natural gas for heat.

anthonyp

I`m with you Charlie, both on the up side and now on the miserable down side...my grandson even more so....I told him I would front him some more money if aapl were to go to the higher three hundred dollar side....Which I hope it doesn`t

I think Len may have said a really worthwhile thing the other day when he said `funds were the way to invest in the market` as individual stocks were such a risky thing now a day----or something along those lines...I have always purchased individual stocks during my lifetime, but did buy the etf that are bond orientated, back when they were so reasonable and the market so poor ....I was lucky by following that advice then (although I did not know it), as I did not really know much about bonds---just appreciated the yield.....I now extrapolate that to individual stocks---with the knowledge that the big pools of money can and do make for wild swings in individual stocks----as we both have learned lately with aapl...

The media is really trying to get individuals to move out of bonds into stocks, so I guess the big guys are well positioned in stocks and want us little fellows to pump up the value for them....I`m not biting right now, but do think I will in time..

As i said , aapl should bump up the dividend, and have a better rap-ore with the news media....Frankly they should have anticipated this `report` and laid the groundwork ....When I was trying to buy the iphone last fall I reported to all that Galaxy had a good product and aapl had to rush their product before they were ready....This difficult time for aapl will be very revealing as to how they respond---after all they themselves are very heavily invested Tony

ljflx

Yes Tony that is what I said. They also help you get in and out of the market very easily especially if they are pre tax. I'm thinking of getting of my funds out right now as I feel a correction coming. I think this will be a very good stock year but I'm thinking a Feb berief downturn. Apple though should rise a lot once Wall Street realizes how much of a lunatic it has been here.

In the meantime I thought you'd guys would enjoy this story on famous cars recently auctioned:

http://www.nytimes.com/2013/01/27/automobiles/how-much-roll-the-credits.html?_r=- - - 0

ljflx

The media is really trying to get individuals to move out of bonds into stocks, so I guess the big guys are well positioned in stocks and want us little fellows to pump up the value for them....I`m not biting right now, but do think I will in time..

You may have nailed it perfectly Tony.

Today's NY Times:

http://www.nytimes.com/2013/01/26/business/daily-stock-market-activity.html?_r=0- - - &adxnnl=1&ref=todayspaper&adxnnlx=1359234290-5033ibeTAPHeEap21uHibA

houdini1

Wow, you stole that one. Your son does good work. Looks like his tastes run similar to my son's.

gagrice

I think the foreclosure market is just now peaking in many locations. Whirlpool shut down a factory there in 2010. Putting about 1200 people out of a job. With unemployment running its 2 year course, many will be giving their over borrowed homes back to the banks. It makes for good buys if you have cash. I don't think the banks are big now on loaning to flippers.

ljflx

Without mentioning who told me, I can tell you that Apple is dead against splitting its stock. One reason for its precipitous fall this past three months is that many value funds can't or won't come in to such an expensive stock (so Google will also have this problem if it doesn't split). Apple has been told over and over again to split it's stock but management - which is quite cocky according to my source -wants a high priced stock. No one understands why. They just want it even though a stock split of 5 to 10:1 would bring in so many other buyers. And buyers would have minimized this whole sell off to about 10%, 15% at most. Plus its turn back up would occur a lot more swiftly. This is a throwback to Jobs from what I understand and the current management team has inheritted his stubborness. But the big stock split strategy has been discussed with Apple many many times and the company foolishly keeps rejecting it. Maybe this big whooping they took will at least start to let some light get thru to them. They have no buyers in retail because the stock is so expensive and they are missing the boat on value investor managers who have access to big money. Very stupid and its part of the reason why many of us who look at fundamentals, stats and that remarkable Balance Sheet of theirs with its huge cash position, are missing the boat on a floor to the stock price.

houdini1

Yes, I agree. All of our deals have been cash. Big advantage.