While the implications for stocks in general are extensive and were previously discussed, it is worth noting that the Israel Monetary Authority now has a big MTM loss on its Apple investment (although as Greece and the ECB have taught us, a central bank can book a “profit” even when a given security is trading at an all time low, and completely irrelevant of what one’s cost basis is). And where Israel is, it is quite certain that other central banks have boldly ventured as well. So how long until the Fed has to open an FX swap line with Tel Aviv to bailout Stanley Fischer in this latest of hare brained schemes to keep the Ponzi system going? And how long until it has to be extended to the nearly 250 hedge funds who are now also long the stock, with the universe of incremental buyers disappearing by the day? What is most stunning is that Apple dipped a modest 3% intraday… Which just happened to be the biggest decline since November 2010.
Guys, you do realize that a foreign central bank of a nation who is essentially a global power just took a hit because the new iPad3 announcement (or whatever) didn’t make the street happy, right?
As mentioned before, this is just another bucket in a long line of buckets in which they are trying to dump fiat currency in order to inflate some kind of bubble where there wasn’t one before.
Of course, as with previously disastrous information related to the economy, this will go unnoticed and unreported by any media outlet that is not Zerohedge or a blog. This is akin to the Fed monetizing the debt back in 2008/2009. Only this time, you will see noticeable results in the very short term.
It is not often that one gets this sort of rotational warning in such a clear form, but you’re getting it now. The same thing is true in the DOW, with IBM being the power mover there.
Beware folks. Be very, very careful.
Though, my opinion is that we will see a run up to uncharted territory before the fall if crude doesn’t skyrocket over the summer. When you see the DJIA in the 19,000 to 22,000 range, it is literally time to head for the hills. The end result of that one will be five times what 2000 & 2008 were.
Yes, I know that Apple has 10% of its enterprise value in cash. I know the firm has no debt. But I also know that the company spends like crazy on R&D and sell-through is everything to a firm that is playing in this space. The problem with these sorts of firms is that when you’re running on afterburners it’s nearly impossible to pull back without losing control and crashing, simply because you’ve built a culture and corporate environment that is filled with “true believers” operating at a corporate level where everything has gone right — and thus you all believe it will continue to.
Amazon’s primary “lever” is the ability to play around the edge of the sales tax system. This gives it an instant 6% (on average) price advantage over everyone else, more than enough to offset the shipping costs (which you pay in any event; whether shipped directly to you or to a retail store, you still pay for it in the product price somehow.)
But that sales tax loophole is going to close. Over the next few years states will find a way, as the revenue shaft is getting out of hand for them.
Like Karl said, not a “crash coming tomorrow” kind of thing, but a future speculation. Tax loopholes such as the one that powers Amazon close. Unless there is some kind of majick lobby by Bezos, this is bound to happen as tax revenues further contract at the state level. The Apple thing is also simple. Markets dry up for stuff like this, though I do see the consumer public in many cases giving up on other necessities before their techno-baubles.
When I first entered the professional workforce, Apple as an entity was struggling and took money from Microsoft to stay alive. After watching the Pirate of Silicon Valley on TNT years ago and Triumph of the Nerds, I was drawn into the story of Apple & MS.
Back before the dotcom bubble, Apples were a a flat out joke. I also remember back in 2005 or so when they switched to Intel procs that even Leo Laporte and the TWiTs called out, “This is the beginning of the end for Apple.”
It was shortly after that very prediction that I started to see the hardcore engineering crown (network nerds) begin migrating to the platform. By 2008, every CCIE I knew was on OS X – happy to leave Windows behind.
I made the transition around this time as well and have never looked back.
I approach Apple from a very technical point of view and quite honestly, marvel at how well they are put together. From a control and marketing standpoint, they are light years ahead of their nearest competitor. Though, as with all things, this leadership will eventually fade.
I place the credit for that consumer marketing success squarely at the feet of Jobs.
Random thoughts from a long standing nerd on a Thursday morning.