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  • Apple Is Normal Again: #2 In The SPY ETF And No Longer A Stand-Alone Asset Class [View article]
    Hi mathman6577,

    Thanks for your comment. I like the "tweener" analogy. I don't think Apple will see growth like it did with the iPhone, but that doesn't mean its growth days are over. However, I would not compare it to KO, MCD and JNJ. The tech space, especially consumer devices, is much more volatile than the industries that KO and MCD compete it and lots of big tech companies that seemed invincible are now gone because of new innovation. (It is interesting to compare it to JNJ, but, again, hard to compare across industries.) It may be better to look at the transformations over time at IBM, MSFT, HPQ, DELL, etc.

    NOTE: Long IBM & AAPL
    Mar 17 11:58 AM | Likes Like |Link to Comment
  • Apple Is Normal Again: #2 In The SPY ETF And No Longer A Stand-Alone Asset Class [View article]
    Hi six-oh,

    Thanks for the comment. I agree that it may take some time for AAPL to fall back in favor and I don't expect an immediate rally. But, now the AAPL mania/depression may be over and there are likely to be a lot less "catch-up" investors in the stock that are trying to hug the index. Under such circumstances, some of the things that were not a factor for AAPL in the recent past may start to matter again, such as correlation and valuation. I think that the valuation is more important than correlation, but both could impact the stock. Good luck!
    Mar 17 09:32 AM | Likes Like |Link to Comment
  • VMware Rebounding Off Lower End Of Multi-Year Range On Analyst Day News: 5 Big Picture Take Aways [View article]
    TakeFive - Congratulation on a nice trade!
    Mar 14 04:58 PM | Likes Like |Link to Comment
  • VMware Rebounding Off Lower End Of Multi-Year Range On Analyst Day News: 5 Big Picture Take Aways [View article]
    Update: subsequent to writing this article, I am now long VMW. I may trade any of the stocks discussed in this article at any time.
    Mar 14 10:37 AM | Likes Like |Link to Comment
  • Analyzing Earnings Estimates For The Dow Jones Industrials Average At Its Record High [View article]
    Thanks, Minor.
    Mar 6 11:45 AM | Likes Like |Link to Comment
  • Analyzing Earnings Estimates For The Dow Jones Industrials Average At Its Record High [View article]
    Hi George,

    Thanks for your comments. I agree that Fed intervention will continue for a while. In fact, your comment "as per Uncle Ben" is the key. I think that he will continue with QE until his Fed chairmanship term ends. The question will be will he continue for another term (and continue to be dovish) or will another Fed chairman take over and change the policy. As that juncture approaches there could be jitters in the bond market. An end to QE will likely have an impact on equities, but equities will likely to better than bonds. I want to write more about this in a future article.

    It sounds like you have a long term perspective, which is very helpful. I agree that equities look good from a long term perspective despite the various bumps along the road.
    Mar 6 10:18 AM | 1 Like Like |Link to Comment
  • Analyzing Earnings Estimates For The Dow Jones Industrials Average At Its Record High [View article]
    Hi Scooter-Pop,

    Thanks for your comment. I agree that the unwinding of QE will have a big impact on equities, but the question is when will that happen. I think that the data in this article is most helpful for a mid-term time frame (several months to a year). If the unwinding of QE (end of asset purchases, increase in interest rates) occurs in that time frame, then it will likely trump fundamental analysis and there will be a risk-on, risk-off moves. But, I think that the Fed risk is somewhere in 2014 and earnings momentum (or lack of) will be a catalyst for the market in the next few months.
    Mar 6 08:30 AM | 3 Likes Like |Link to Comment
  • Dow Jones Industrial Average Is Rallying Despite Cuts In Forward EPS Estimates [View article]
    untrusting investor,

    Thanks for your comments. Actually, we would really like to find a way to track changes in company guidance about EPS. CEOs are not necessarily great forecasters, but it could be interesting as a sentiment indicator. However, we don't know of an easy way to track this on a large scale. Therefore we are looking at sell side EPS guidance. In many ways, sell side EPS estimates track EPS guidance from management, so the trends should be the same. We think that the real value in this sort of analysis is to see when the trends change direction as well as divergences with the price action (as discussed above). Right now there have been a lot of EPS estimate cuts and it will be interesting to see when this trend changes directions.
    Sep 3 09:00 PM | 1 Like Like |Link to Comment
  • Dow Jones Industrial Average Is Rallying Despite Cuts In Forward EPS Estimates [View article]
    untrusting investor -

    Thanks for your comment and good question. In our previous article about EPS estimates (see seekingalpha.com/artic... we wrote:

    "One of the reasons we put together this analysis is that we did not react fast enough to the negative sentiment toward 2Q 2012 earnings over the course of the last quarter. We want to follow more closely changes in earnings expectations going forward. We recognize that sell-side equity analyst estimates are unreliable and are often designed to underestimate the actual results to give companies the appearance of beating the numbers. In this analysis we are more interested in the trends than in the specific estimates. We intend to update this information regularly to follow the changes in real time as we look to see if the trend of declining earnings estimates intensifies or reverses."

    The purpose of this analysis was to get a better sense of sentiment in the analyst community and see how that compares to actual price action. A few months ago, EPS estimates were being cut and stock prices were falling, but that has not been the case recently. Obviously, there are many factors that drive stock prices and this is just one of them.

    We are not endorsing the EPS estimates of the analyst community in this article, just looking at changes in these estimates to gauge sentiment.

    After spending some more time looking at EPS estimates recently, we think that on a very short term time frame (like the days or weeks going into earnings), analysts seem to want to understate their estimates for the upcoming Q to make companies look good, but on a longer time frame (like one year out) analysts are probably too optimistic and fail to take into many risks, including changes in the macro environment.

    We do not have historical data about the accuracy of analyst estimates. If possible, we will try to track this going forward.
    Sep 3 06:17 PM | 1 Like Like |Link to Comment
  • Alcoa Beats Reduced Q2 Earnings And Implications For The Broader Market [View article]
    UPDATE: We checked in on aluminum pricing today. As we mentioned in the article above aluminum pricing is an important driver of Alcoa's (AA) earnings. Not much change in aluminum prices since we wrote the article. Check out for the data: http://bit.ly/LZ4Kku
    Jul 30 01:45 PM | Likes Like |Link to Comment
  • Buy Google As P/E Compression May Soon End; 2Q 2012 Earnings Good Enough For Investors [View article]
    bart_sst - Google beat on the bottom line. Non-GAAP EPS of $10.12 should be compared to the expectations of $10.04.
    Jul 24 08:30 AM | Likes Like |Link to Comment
  • Buy Google As P/E Compression May Soon End; 2Q 2012 Earnings Good Enough For Investors [View article]
    Mr Clark - Sorry about the question.
    Jul 23 12:45 AM | Likes Like |Link to Comment
  • Market Update: S&P 500 And Bonds At Cusp Of Bullish Moves, But Which Is Headed Higher? [View article]
    Steven - Thanks for your comments. Regarding Wal-Mart, we have a stop on our positions, which we have been raising at the stock price moved up.
    Jul 22 07:03 PM | 1 Like Like |Link to Comment
  • Market Update: S&P 500 And Bonds At Cusp Of Bullish Moves, But Which Is Headed Higher? [View article]
    Dancing Diva - Thanks for your comments. Good points.
    The potential for QE3 when the market is close to its high has been bothering us. Market highs do not help the Fed make the case for QE3. However, we think that the lack of progress on the unemployment rate is really what the Fed cares about now (assuming inflation stays low). Considering all the action the Fed has taken so far (record low interest rates, QE1, QE2 and Operation Twist), it seems odd that the Fed would give up the fight at this point. So, we think that QE3 could be on the way (though we are not sure it is necessary or will have a big impact).
    But, we think that many commentators may be aggressive about the timing. Operation Twist is scheduled to run through the end of the year, but many are expecting QE3 at the August or September Fed meetings. Could be that they just make comments about QE3 at those meeting and then do action later in the year, if things are still weak. The Fed may also want to appear accommodative considering the Fiscal Cliff is coming.
    Finally, if the market rallies over the next few weeks/months based on the assumption of QE3 there could be a "buy the rumor/sell the news" effect since, as you said, QE3, if it comes, will likely be less effective.
    Jul 22 04:28 PM | 2 Likes Like |Link to Comment
  • Market Update: S&P 500 And Bonds At Cusp Of Bullish Moves, But Which Is Headed Higher? [View article]
    Chad - What do you think is the trigger for the potential rise in bond yields. Do you think that QE3 is not an option? Not sure that we are permabulls. If you look back at our weekly market updates, we had been positioned very conservatively for most of Q2 with a large cash balance, which we wrote about on several occasions. Recently, we have become more bullish. We are willing to test out the bullish thesis at this point, but as we mentioned in the article, we have stops in place in case we are wrong. Thanks for the good feedback.
    Jul 22 03:31 PM | Likes Like |Link to Comment
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