Monday, August 16, 2010

Perception Is Much Stronger Than Reality; In Fact, Perception IS Reality

Another shit day, with AAPL down again. Where's the bad news? There is none. Their retail stores are packed full, they can't keep ANY inventory of iphones and ipads to speak of.

This company will probably earn $20 a share next year; with tremendous cash balances on the books - in fact, they have more CASH than all but about 50 of the S and P 500 have in MARKET VALUE. They have tremendous momentum in its business vs. its peers, yet the market won't pay more than about 12x next year's earnings, not accounting for cash.......

Fundamentals don't matter. Perception matters. Perception is stronger than reality. Perception is reality, and reality is just an illusion if you're buying anything on the basis of fundamentals. Companies with big earnings, strong balance sheets, low or no debt, and incredibly low P/E's are just becoming value traps. No one wants to own them because people seem afraid the story is going to end and the stock is going to tank. It actually seems as if bad news is what will turn some of these stocks higher eventually.

We are clearly still in a "shoot first" environment. On a technical basis, the stock is broken. I have to side with the notion that only computer programs could short companies such as these with impunity or continue to flip shares to the downside. Could I be wrong? Absolutely. However, I don't know many traders or even managers who chase shorts of companies with low debt, high cash, consistent growth and big earnings.......

long AAPL

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