Stocks Are the Place to Be - Google and Apple in Particular

It was a wild first quarter marked by strong downward market pressure and huge volatility. The media talking heads seem to gradually be coming to the general consensus that the market has bottomed. Obviously, there are no guarantees, but I tend to agree we have probably seen the worst, and I am positioning my portfolio accordingly.

I intend to keep my cash positions low and my long positions high. I think stocks are the place to be right now. I don't necessarily expect the market to be up huge everyday, and I don't necessarily think it will be up huge over the next quarter. However, I do think we have probably bottomed, and I expect a general upward trend in stocks over the coming quarters (as opposed to the downward trend in stocks that we have seen over the last two quarters).

I like selective financial stocks ON THE DIPS. Financials have demonstrated HUGE volatility over the last six months. I expect this to continue because of the never-ending stream of doomsayers in the media, and I think it will provide a great opportunity for long term investors to buy in on the dips.

As frequent CNBC guest Dick Bove likes to suggest, the broker banks are trading at once in a generation discounts. He categorized Goldman Sachs' recent prediction of over one trillion dollars in write-downs as an insignificant portion of the total credit market. CNBC host Dylan Ratigan was wondered how long it will be before we start seeing write-ups instead of write-downs. I seriously doubt we'll be seeing write-ups anytime soon, but I do like the financials right now.

I like technology stocks because they are historically strong performers coming out of troughs in the business cycle. I think companies like Apple (AAPL) and Google (GOOG) are becoming very attractive as they both continue to generate very strong revenues and they are both down significantly more than the market over the last six months.

From a risk standpoint, I continue to believe in the importance of diversification. Aside from assembling a diversified group of US stocks, I have also allocated a portion of my investments to global developed markets (mainly Europe via an ETF and multiple stocks with global operations), emerging markets, agricultural commodities (I believe the recent appreciation is a long term trend), metal commodities (gold and aluminum), and energy (heating oil and light crude).

Overall, many investments are looking cheap to me right now based on our current market environment. Let's hope for a reversal in the recent downward market trend, and a great second quarter 2008!

Disclosure: Author owns shares of Apple and Google.

Comments

[JohnPseudonym]

Now is the time for active/experienced traders to own stocks; not mom and pop handing over their money to people needing to earn commissions.

"Obviously, there are no guarantees, but I tend to agree we have probably seen the worst, and I am positioning my portfolio accordingly."

Spoken like a true stock salesman...lol...I don't know what will happen, but give your money to me, I'll get a nice commission and maybe you'll make some money.

There are so many dangers right now that being fully invested is way too risky for the minimum reward potential.

For the average Joe, it's best to get out of the way and let things play out. When all seems lost, that's the time to start moving back in to stocks with a "buy and hold" strategy.

[NO DooDahs]

Hmm, how much do YOU manage? Oh, that's just contributing to a fallacy, that being able to recruit clients is the equivalent of being a good provider of advice. After all, nobody managing $1.5 BILLION has ever blown up, or provided cruddy advice, right?

:-)

Mark has 10 months of posts on Seeking Alpha, and a market blog at www.vestopia.com/Blogs... that goes back about a year.

I suggest you do some "due diligence" by reading his material and judging the quality of the content for yourself, without regards to his pedigree.

[buyitcheap]

I agree with John Pseudonym - this is a trader's market. The rest of us should modify our allocations on the margin perhaps, , if anything sell some US gov securities after this ridiculous run up and stay in cash on the sidelines until clarity emerges.

[theauthor]

1% should manage 99% at a fix 4% rate until all companies get their heads together in a few decades from now in a utopian world-Agreed with Mrs Due Dilligence, we don't all go through specifics to arrive at such poor comments. This is disappointing to let such comments about stocks come back. We are far far very far from being over.. I suppose some of these people have been so hooked on greed (stocks speculations!) that they can't get over the fact that the game is really over for them. Stocks, like companies qualities, have been trashed by comments like these ... without any true operational risks and due dilligence...so indeed companies are really really cheap, but the indices are way too overpriced in comparisons to the true value of the companie's assets... In retrospect, the state of companies (assets values and commingling of databases without cleaning) in most sectors is just as bad as having no infrastructures at all ! Best wishes;

[magman]

The whole value of Seeking Alpha is exposing yourself to contrary viewpoints. Who's to say Mark Hines is not accurate in his prediction ? Not agreeing is no reason to trash him. I don't think we're out of the woods yet, but so what? That's just me. He may well be right.

[goinbroke]

Apple is beginning to remind me of Starbucks. I would keep my stops updated and wait for their earnings report and especially their guidance.

[punk_ash]

This guy has lost his brain, aapl and GOOG are going to do what Cisco did after dot com debacle, it was a great buy at 70, 60, 50, 40 and it ended up under 10, same will happen again

[John Egan]

I'd like to see a lot less trash talk as well...

And on another note..Just to keep everyone honest, I'd like to see Alpha have their authors post their and their company's positions on any comments... **And** I'd really like to see a running total hit/miss rate for the author on every post.

Thx jegan ;-)

[karchad]

Thank goodness, at least one SeekingAlpha person with some common sense. While they're all touting gold and commodities (of course, these are way up), at least one guy has the common sense to buy what's low (stocks), not what's high. Gosh, there's so much negativity out there with such a small stock decline (relatively speaking for a recession), that I'd say we're in for a sizable market increase real soon.

[karchad]

Furthermore, you know what's funny? In 2002, I got on an aol board and said it's time to buy stocks. I was deluged with hate mail accusing me of being a "stock salesman". Some threatened to sue me, some threatened to kill me. Of course the market zoomed up from there.... I see the same exact environment right now. It's time to buy stocks, and buy heavily.

[mark.d.hines]

Wow, I have to admit, I’m a little surprised that this blog entry showed up on Seeking Alpha. This was a very quick blurb I wrote for my private blog at Vestopia, and I didn’t expect the Seeking Alpha people would pick it up. Anyway, a couple points for clarification. 1) My Seeking Alpha Bio is incorrect. While at Northern Trust my team managed approximately $1.5 billion (not $1.5 million as the bio suggests). 2) You can view all of my holdings and trading activity (in real time), at Vestopia.com. 3) There is currently no charge to use Vestopia- it’s totally free (i.e. I’m not trying to sell anything). 4) I love the unabashed comments by the SeekingAlpha readers. This site is truly a great place to exchange ideas. Thanks all for your comments.

[lytle]

I agree with magman and John Egan; Mark Hines is giving his opinion of the market, etc. and everyone has the right to their opinion. If you don't agree with his then let's hear yours but there is little reason to be rude and knock someone else because you don't agree with him.

Most people log onto these blogs to read and perhaps to find interesting news or advice. If you don't like his viewpoints then don't read it.

[Brewer]

I agree, Apple and Google are great investments, and are undervalued by the market in general. Microsoft is in so much trouble, but their stock has stayed very steady. In the past 5 years, Apple and Google have done fantastically well, and I see this as more of a ramp up to things to come than anything else. Microsoft is losing out to these companies more and more each day, after having been in the cat bird's seat for what seemed like forever. I don't think that's going to last at this point, especially when they pull the trigger on a very stupid deal with Yahoo!. Google and Apple will continue to take mind share, their products are already far better and/or less costly. Look at Google docs. It will soon work OFF LINE. This is finally going to provide free competition for MS Office (it's been there for years, but Open Office never had the reach to get to enough users.)

Meanwhile, OS X is rocking Windows to it's foundation. No one wants Vista, and it's an embarrassment compared to OS X 10.5 Tiger, which runs XP or Vista (or both should you need to), and even runs them FASTER than any PC, on hardware that is very cost competitive with even the ugliest, poorly designed 'clones' from Dell, HP etc...

Personally, I don't think most investors have much idea about the technical merits of these companies. And I think many are deluded into thinking that MSFT is going to continue near $30 (where it's been flat-lined already for, what? five years.) Wake up, people, we kind of need computers these days. And, who else has the mobile web even CLOSE to Apple? Answer: no one. iPhone will be BIGGER than iPod (and it IS an iPod, so iPod sales are not down...)

[User 164492]

short aapl-tight stop.short msft after it goes up a couple of more dollars-could come down to 20

[sumdumguy]

Well, I enjoyed reading the article. I personally don't think the market has bottomed yet, but would certainly welcome it since I'm long in a lot of stocks.

But the overall consumer sentiment is still so overwhelmingly negative, that I still think our economy and likewise the US stock market is likely to be in trouble. That consumer sentiment index is particularly worrisome because if John Q Public stops buying, then we will be in a recession even with the upcoming rebate checks.