Markets update and must-reads
Markets are in the red, tech leading on the downside. Apple itself has now pulled back some 6% from its all-time highs, which were set just last week. As a subscriber wrote on the Subscriber Chat last night:
“I think the last couple of days have been just a great illustration of what we have been learning here. Trim on high euphoria, and feel a bit of relief on the lows, when we can buy back at sale prices.”
If you don’t have any Apple yet, or if you sold some Apple near its highs, I’d start to build an Apple position up for now. Maybe 1/4 as much as you eventually want to own, just getting started today. Same with DDD and FB and some of our other stocks that are down big recently. Don’t plow into them, but you want to tranche into these stocks on weakness as we’ve been doing over and over so profitably for the last few years. Everybody should have some money on the sidelines ready to move into more stocks on more weakness if it comes.
It’s starting to feel like it could get ugly again for the short-term. Path of least resistance is probably lower for now.
Let’s run through some must-reads for today.
More Earnings Warnings Starting To Surface – The Caterpillar warning worries me the most, but the magnitude of the size of their reduction in estimates isn’t horrible. The corporate economy continues to expand apace, even as Main Street’s economy continues to deteriorate, as I’ve long been saying.
Indicator Update: A Bottom in Confidence? – Jeff’s writings are chock full of information and interesting analysis.
Sprint Primed for Takeovers After Stock Jumps – I’ve seen several analyst notes this morning with a similar theme about Sprint about to engage in a M&A move or two. I’d be more of a seller than a buyer of Sprint above $5.
Violence Erupts as Greeks Strike Over Austerity – Just as the Greece/Spain/EU crisis headlines moved off the front pages this week, they flare up again. This time with ugliness. As I’ve said over and over for the last three years now, you want to buy when the markets are panicked about the EU crisis and sell when the mainstream media has moved on from the EU crisis story. Looks like that playbook is still in effect, and as I’ve been saying the last couple weeks, I’ve been a net seller.
Exactly Whose Money Did the London Whale Lose? and Libor Gives Prosecutors Chance to Change Banking Culture – I’m up on some JPM puts that I bought last week, but I’m down on the smaller short common position that I initiated a few weeks ago. I’m getting close to giving up all hope that the Republican/Democrat Regime will ever do anything to enforce the law against any of these Too Big Too Fail banks, especially JPM.
U.S. Distrust in Media Hits New High – I can’t remember the last time I watched any news on television for more than a couple minutes at a time before I got angry at the propaganda that immediately starts spewing out of the speakers.
K12 stories have nationwide impact – Put this one on your potential short idea list. These guys are the classic Revolution Investing short idea in that they’re wholly dependent upon taxpayer money to fund their business model. Not a sustainable business, but the question is when to get into this one. Probably too early to fight the Republican/Democrat love of charter schools/privatization of public goods.
An Electric Carmaker Struggles as Its Production Lags – Another welfare company that’s dependent upon taxpayer largesse to survive. These guys took $500 millon of taxpayer’s money and spent it on their wildly expensive cars that are sold to rich people who then get another $5,000 per car in welfare checks from the government for being rich enough to spend that kind of money on a wildly cool electric car. I plan to get short Tesla sooner rather than later.
