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Goldman Overturns Apple Conviction


Down 25%, Jobs' company still better than competitors.


Quick thoughts for a fast-moving day:

  • Maybe AIG's (AIG) bailout will happen - and maybe it'll be the one which creates a sustainable rally. Recent history of interventions suggests otherwise.

  • Apple (AAPL) was taken off Goldman's (GS) conviction list this morning, with Apple already down 25% YTD. Though well off its highs, Apple still isn't "cheap" for a consumer electronics company. Sony (SNE) trades 11 times; Dell (DELL), at 12 times. Apple's a better company than either, but they're still decent, if imperfect, proxies.

  • Speaking of Goldman, the white-glove gang is clawing its way back after opening at its exact lows of the day. If you put in the print at $116 this AM, congrats! Regrets, I've had a few, but I won't be sorry even if GS takes out the levels I sold it at yesterday. "Acknowledge but don't defer to your own emotion," to paraphrase a Todd-O-ism.

  • Best Buy (BBY) is getting the hammer taken to it; the electronics kingpin's coming up a little light and a little negative on earnings. We said Best Buy would be a consumer and retail "Tell" last week. For those who don't speak "retail-ese," Best Buy didn't say anything good.

  • When will I be more constructive (which is to say, not moving in and out faster than an ADD kid doing the Hokey Pokey) on the financials? When either a) The Fed doesn't have to keep deciding whether or not to bail people out or b) The Fed states, then sticks to, one fixed policy on how they're going to deal with the crisis as a whole, rather than company by company.

  • As the USO ETF for crude hits $75 -- and crude itself approaches $90 -- can we all agree to agree that the price of crude and other commodities was profoundly impacted by trading activity? It's either or that, or the fundamentals of the assorted names and complexes all formed charts which look exactly like every other bubble in history, from homebuilders to the Internet.

    Whatever the case, crude is going lower, and with it go the complaints about "evil speculators." I'd trade all names in the post-peak BRIC boom gently and with the thought that they're in a downtrend which will roughly mirror the path higher.

  • Which brings me to other misplaced screeds coming from Washington, DC. Last night, I was on TV shortly after a Politician of Prominence blamed the entire housing crisis on the current administration. This morning, a Vice-Presidential candidate blamed "manipulative hedge funds" for bank failures.

    As I remember it, the "dream of homes for every American" wasn't pronounced an obviously bad idea by anyone trying to get elected for the last 2 decades. Greed and fear are human emotions emerging from the limbic system. The former requires temperance; the latter requires leadership. We've collectively failed on both fronts, and now is not the time for finger-pointing complaints.

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No positions in stocks mentioned.

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