Well it is a rainy Saturday in Atlanta today. God knows we need the rain. Speaking of bad weather did you see the market last week? Nice correction, we hope. (Apple comments are at bottom of post).
Strange to see that the market is acting so "crazy". Company earnings have been very good, GDP was better then expected and cash is still on the sideline. Then there is this one concern of subprime lending and the effects subprime lending will have on the overall market.
As you know I am not a trained economist but I gotta believe that the banks and brokerage firms already baked these "losses" into their business plans years ago. I love how everyone is so surprised that subprime lending is backfiring and people are defaulting on their loans.
This gets me fired up to talk about credit in America. Why was is that our grandparents used to pray each night at dinner that "May we owe no man debt"? What the heck happened to being proud to have no debt and buy the things you can afford? Hang with me I do have a point.....
The way I see it is the banks and brokerage firms have baked these subprime losses right into their business plans. And I got to bet they made more money then they are losing. So everyone is in a panic mode that the subprime issues will kill our market. They will not. Actually I see this a good time to pick up many brokerage and bank stocks. I like GS, GHL,LEH & MS. I think these stocks are a steal right now.
As for Apple, wow a drop of $2.50 in a panic market. It was more troubling to watch Apple (APPL) be up with one hour left in the trading day and then POW, Apple drops $2.50. My thoughts are that people are taking profits. If you got in at $70 like I did it might be tempting to take those profits. I think this is a huge mistake. I see Apple going up another 30 points with ease.
Apple investors stay the fricking course! Look, they did not count ANY iPhone or AT&T subscription earnings on the last call. They plan to sell at least 1 million iPhones buy end of next quarter and that number will be blown away. Let's say more like 2 million plus phones. The iPod will not get eaten alive buy the iPhone for sometime to come. People will still continue to but the iPod as always. What I continue to stress is the iTunes revenue!!! Ya'll this is the secret sauce of Apple. The iTunes number continues to grow like a weed in the summer time. Pay attention to it.
Not to mention we have Apple T.V. taking off and new R&D products about to hit the market. Think Leopard here. Also, did you listen to the conference call this past week? Did you hear how Apple is not divulging their revenue numbers from their iPhone partners like YouTube, Google, etc..... Wanna bet it will be huge? I am betting on the huge side.
Apple back to school is in full force now and I think the marketing is pure genius! Think about it... Capturing the youth of America is outstanding. Which means more Apple adoption. Keep an eye on the Apple adoption rate by the big corporations too. Like Apple says the products just work. Try that statement with Vista..... Stay the course Apple investors..... Shorts are getting killed!
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2 comments:
The problems we saw last week are a lot deeper than just subprime. The credit markets, in particular the high yield credit markets, have slowly been deteriorating over the last few weeks and then fell off a cliff this past week. This is a problem that doesn't correct overnight. Right now, a company couldn't try to raise money through the debt markets even if they tried. The market is essentially closed, and that poses a major problem to the investment banks that you mention. Maybe you should take a look at the front page of the WSJ over the past week or so and read about all the funding for LBOs that isn't happening. When the Blackrocks and KKRs announce an LBO, a bunch of investment banks extend a bridge loan to finance the physical takeover. The terms of these loans are very attractive to the PEs and the banks actually lose a significant amount on them, hoping to make up for the shortfall when they come to the capital markets to issue bonds. But, like I said, these deals aren't coming to the markets and the backlog is growing and growing. So the banks involved in these deals (i.e. Chrysler, Alliance Boots, etc.) are getting hit because of their massive exposure. The market will undoubtedly open up again, but the terms will be dramatically different, with no more PIK toggle notes or covenant-lite terms.
While it is nice that you are always super-bullish, I don't know how much of it is just BS on your part. I follow AAPL pretty closely, and it is pretty well understood and documented that Apple is tight-lipped about AppleTV numbers, yet you claim it is "taking off." It is cool if you have a lot invested in the company and are excited, but it is also against the law to falsly "pump" a stock.
Good response. I still believe that there is a lot of money on the sideline that has to be spent. We will see I guess!
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