Update on Apple Computer Inc.

A few weeks ago there were various concerns about Apple Computer (AAPL).  As has been the recent case, there is a lot of hot money reacting (and maybe over-reacting) to anything perceived as news.  Because of the concept of local market efficiency, the same news may be discounted on several occasions.  A series of analyst reports come out on a stock within a short time, each having an effect.  A series of comments by Fed Governors each gets a separate effect.  At some point, there is an epiphany.

The Apple chart did not look very good to some technicians.  This viewpoint no doubt took the stock down another 10 – 12% from the time of the commentary in early July.  At "A Dash" we like to be contrarian, especially when the fundamentals have been overlooked, so we laid out our case for the stock.

As the chart below shows, the stock did move lower.  The problem is that those who sold are probably still out of the stock unless they bought the gap on July 20th.  Even that move represented a loss over just holding.  I congratulate anyone who is trading and timing this well, but it is extremely difficult.  The fundamental news moving Bank of America to upgrade AAPL today is essentially that computer sales are doing well, the IPod transition effects have been "priced in" by the market, and that there will be new products driving the cycle.  Their price target does not include these new products, like the Apple phone, so you can expect another price target increase as those events draw closer.

This is exactly what we have been saying.

Fundamentals do matter.  There is a natural inclination not to "chase" after missing a buying opportunity.  Technical analysis can help in picking entry and exit points, but this example shows the care that is needed.

[click to enlarge]


The Cognitive Bias of Ed Yardeni Critics

I admire Barry Ritholtz’s enthusiasm for analyzing Street Research — not peer reviewed and often methodologically flawed.  His critcism of Dr. Ed Yardeni’s New York Times comments, however, is both incorrect and more than a little unfair.  I’ll cite specific errors, but first look at Barry’s argument:

Link: The Cognitive Bias of Ed Yardeni.

One of the more astonishing things I’ve come across recently was an utterly disengenuous article in Sunday’s Times: Navigating the Fog in Jobs Data. The article is a discussion with (former Prudential) Strategist Dr. Ed Yardeni. It seems that he has been …

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Dubious Performance

The excellent Birinyi Site has also weighed on the FedEx downgrade.  Our analysis did not name the analyst or firm nor did we go into the record.  Obviously we knew the record and could have cited that as well, but that is not the point.

Check out the Ticker Sense site, and then we’ll give our take.

Link: Dubious Performance.

This morning, FedEx (FDX) was downgraded from Buy to Hold at Bear Stearns. As shown by the chart below, their historical calls on the stock have been less than spectacular (what’s up with those three buy calls and then a…

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