Streetwise for Friday, April 7, 2017
As I was driving home from a dinner engagement, thinking about what I was going to write about this week, I happened to notice the following in a marquee outside of a local restaurant: “Be careful about following the masses for sometimes the letter m is silent.”
Those words could not have been any truer in describing that days trading activity on Wall Street. It was a day that saw the Dow Jones industrial average gained nearly 200 points before lunch, only to lose it all and about another 50 points to the downside on top of the 200.
Yet, let me ask you a question, do you think any of companies that make of the Dow did anything radically different during the trading day? Or could it be a lack of rationality on the part of investors.
Lets look at the issue from a more macro perspective. Every time there is a strong market rally the Chicken Little syndrome plays out as every financial Paul Revere shouts, the correction is coming, the correction is coming. The fear of impending doom is simply a promulgation of indefensible assumptions based on questionable data.
Regardless of the veracity of a rising stock market, having a combination of patience and fortitude when you invest remains a necessity. Moreover, financial prophets do not exist. If you utilize the recommendations of prognosticators who appear in print or on television, remember they are not going to keep you abreast of current developments.
One major investment house was given to state that it is delusional to think you can expect to increase your wealth by investing long term. Such comments are often followed by an incorrectly sourced quotation from John Maynard Keynes, ìIn the long run we are all dead.î
Thanks to the First Amendment you can, without recrimination, go off half-cocked blathering prose that is tantamount to carrying a sign saying, ìRepent now, the world is coming to an end, or worse be blatantly wrong in your comments to those who trust your expertise.
This was clear in past comments by Niall Ferguson, the distinguished historian whose brand of conservative punditry colors his rhetoric on historic events. For example, Ferguson once commented that Keynes’ famous long run statement stemmed from the fact that he was gay, had no intention of having children and was thus blinded to the importance of long-run considerations.
Interestingly, Keynes’ statement appears not in his meteoric work, ìThe General Theory of Employment, Interest and Money,î as many mistakenly state but rather in his 1923’s ìTract on Monetary Reform.î Discussing the fallacy of returning to a gold standard, Keynes wrote, ì…the long run is a misleading guide to current affairs. In the long run we are all dead.î
And speaking of dead, I can remember when much of the world had pretty much given Apple up for dead. In 1968, Stan Dolberg of Forrester Research wrote, “Whether they stand alone or are acquired, Apple, as we know it is cooked.” (Article found through David Pogue’s column “The Desktop Critic: Reality Check 2000” in Macworld Magazine, where the quote still resides)
Apple has been pronounced dead 68 times to be exact since 1995, according to the Mac Observer commenting on The Apple Death Knell Counter indicator.
With nauseating frequency journalists, analysts, pundits, business executives and the like, loudly proclaim, “Apple is dead,” “Apple will soon be dead,” or “Apple will be dead if they don’t…,” despite having been proven wrong time and again.
A little over a year ago when I was writing about the future of Apple, I read that the German investment firm Berenberg predicted doom for Apple, setting a price target for its stock at $60. Berenberg believed that Apple’s financial model was too reliant on the iPhone, and has predicted that the company’s shares would plummet more than 50 percent. See what I mean about diviners of Wall Street.
As you read Apple’s financials, and I will analyze them in an upcoming column, keep in mind that the strong dollar is a problem for any company doing business abroad.
Lauren Rudd is a financial writer and columnist. You can write to him at LVERudd@aol.com. Phone calls accepted between 9 AM and 3 PM at (941) 706-3449. For back columns please go to www.RuddReport.com.