I continue to watch Apple fall - losing money yes, but far more bemused than upset, still remembering what an ass this GoC guy made of himself a year ago when I suggested WMT was the better investment. https://www.google.com/finance?chdn...E:WMT&ntsp=0&ei=4zVwUaCtJceM0QHYWg&authuser=1 Markets are endlessly fascinating and the Apple story is one for the books. I've done the anti-Peter Lynch, disposing of my WMT and holding onto Apple. I would urge everyone to use the near-10% correction in BAC to pick up the TARP warrants on the stock. AIG warrants were being given away until recently, but have had a nice run.
I can find two explanations for this, the end of the great moderation and the speculation mindset that investors have been taking on due QEs
y Consider the role of algorithmic manipulation by the largest participants in the intraday structure as enhanced by intraday qe operations. My ability to anticipate intraday structure has greatly improved by adopting this mindset.
http://online.wsj.com/article/SB10001424127887324744104578475273101471896.html Reverse Tepper principle? Things continue to be fine(strong economy or ok economy) = fed talks hawkish, stocks tank Things go bad (economy weakens) = stocks tank, then after 10-15% correction, Fed comes to the rescue The issue could be that stocks might hold if things go bad because of the perception that the Fed will always rescue. But that perception could be wrong because a stock decline might be NEEDED for the Fed to 'wake up' and do something about it, its easy to get complacent with stocks at highs
The boogeyman lurking in the background here is margin compression driving a fall in corporate earnings - which on a cyclical basis seems inevitable, and in fact Q3 and Q4 of last year saw contractions in earnings on an annual basis. Congress can re-inflate margins by increasing the deficit (assuming wage growth remains stagnant) but the Fed cannot. The Fed can try to boost P/E ratios to compensate, but this can only go so far.