Canadian Finance and Economics
Whenever I see a headline like this:
Goldman Sachs: Best Time in a Generation to Buy Stocks, Sell Bonds
… I’m guessing the bond market hasn’t reached a high yet. Every trader on the planet is looking at the 40bps rise in 30-year bond yields over the past month and is wondering whether they should pile in short or wait, and I guess Goldman just answered that question.
Apparently Apple is going to announce at 6:00am Pacific time what they are planning on doing with their cash stack.
My best guess is that they’ll give out a regular dividend. It will be around $3-4/quarter.
Whatever the company decides, it will have zero impact on its value, but the market will bid it up like crazy since a dividend means it can also be included on the eligibility list of six billion income mutual funds out there.
That said, everybody and their grandmothers are long on Apple. If you buy the Nasdaq 100 you have a ridiculously large fraction of Apple. The S&P 500 has over 4% of Apple. Apple has been going up parabolically since the beginning of the year, and while it has killed the equity of a lot of short sellers, a parabolic trajectory up cannot be sustained indefinitely.
This type of catalyst kind of reminds me of what happened back in the internet stock days when they announced stock splits. Now the valueless news du jour is announcing dividends.
No positions. I don’t intend on going long or short – the best thing to do about this freight train is get out of the way and look for value elsewhere since Apple is doing a wonderful job of sucking capital from other worthy candidates.
As anticipated, the S&P 500 made its break to the upside, and notably, volatility is at a significant low:
I haven’t had much time to devote brainpower to the markets over the past month, so I will have to leave it at that. It does appear, however, that treasury yields are slowly rising and the uptrend in the market is continuing. For how long?
Notably, an index investor in the S&P 500 will be up about 10-11% year to date.
So the Greek debt crisis gets averted for another year or two until they have more problems, and the markets are back to their local highs, per the chart:
Do we go higher? My guess is yes, but not for long. Just have to be patient.
Nothing that most of the resource stocks are trading at a larger percentage down than their underlying commodities, so it’s clear that there is some sort of supply dump going on. The question is – how much and how far will this rotation go?
Although my portfolio is substantially all cash and this is pleasant for me to see, I think this brief downturn is just that – brief. Still being patient.