Friday, February 11, 2011


Money Keeps Flowing Into Equities

A pullback will occur but from what level is obviously uncertain.

The lessening of geopolitical concerns coupled with strong corporate earnings helped to keep money flowing into equities.

The disbelievers need a pullback. No, change that. They need a break down. A pullback will occur but from what level is uncertain.

Nasdaq Rebalance and Apple

A rebalancing of the Nasdaq 100 would have little or no effect upon Apple's stock.

What impact, if any, rebalancing the Nasdaq 100 would have upon AAPL. The Nasdaq 100 is a modified market-capital-weighted index. As such, it is a hybrid. Stocks are first allocated according to their market capitalization, however, then a modification is made so that no individual stock's weighting exceeds a predetermined cap. Once that cap is met, the excess weighting is then redistributed to stocks below the cap.

Hence, with Apple being such a large component of the Nasdaq 100, it is likely that it has already met its cap weighting and a rebalancing would have little or no effect upon the stock.

Markets Cheer Mubarak Ouster

Mubarak has stepped down as the president of Egypt. The Egyptian army is assuming power. Markets are rallying.

Thoughts on Agco

* The company had very strong results.

* Guidance was an example of underpromise as the company likes to overdeliver.

* The stock is selling at a PEG ratio of less than 1.00.

In the late 1970s and early 1980s, the Hunt Brothers attempted to corner the world's silver market. Silver prices skyrocketed and later fell when the brothers were forced to liquidate and meet margin calls. Fortunes were lost by the Hunts. Turn those machines back on.

During the Year of the Hurricane, 2005, Brian Hunter of hedge fund Amaranth made billions of dollars by betting on the rise in the price of natural gas. In 2006, Hunter tried to repeat his prior year's success. When his spread trades did not prove to be correct bets, he lost several billion dollars, and Amaranth was shut down.

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