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Old 01-24-2013, 06:34 PM   #41
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Apple lost 12% today, I think I heard 53 billion? How does that play into it!?
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Old 01-24-2013, 06:46 PM   #42
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AAPL went down 12.4% today. It is about 10% of Nasdaq, and more than 3% of S&P.

The Nasdaq went down 0.74%, and the S&P was exactly flat. If we take AAPL out of both indices, then the rest of the market went up. This of course was why the Dow outperformed the other indices, because it does not have AAPL.

Since I am also flat like the S&P, yet having no AAPL, I looked and found that my underperformance was caused by drops in some other sectors (such as steel and mining) that had nothing to do with Apple at all. It was just a coincidence.
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Old 01-24-2013, 06:47 PM   #43
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Apple lost 12% today, I think I heard 53 billion? How does that play into it!?
I saw the same headlines.
Statements like this are confusing to me. I don't think $53b vaporized, but instead were moved out of Apple to other investments. Apple has had a good run- and that makes investors nervous. See "Correction Imminent?".
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Old 01-24-2013, 06:54 PM   #44
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Not all of the drop was accounted for by the money movement. Much was truly "lost", but easily "recreated" if people have confidence in Apple again.

It's just like during the housing crisis, where there was very little RE sales activities, yet every home owner is poorer on paper. The value of any asset, even gold, has some ethereal qualities to it. The value of anything is just what people are willing to pay for it. Wealth could be created overnight, and taken away just as easily.
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Old 01-24-2013, 07:05 PM   #45
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Not all of the drop was accounted for by the money movement. Much was truly "lost", but easily "recreated" if people have confidence in Apple again.

It's just like during the housing crisis, where there was very little RE sales activities, yet every home owner is poorer on paper. The value of any asset, even gold, has some ethereal qualities to it. The value of anything is just what people are willing to pay for it. Wealth could be created overnight, and taken away just as easily.
Exactly right. It isn't money per se that makes the market go, it's what Lord Keynes referred to as animal spirits.

Ha
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Old 01-24-2013, 07:19 PM   #46
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I saw the same headlines.
Statements like this are confusing to me. I don't think $53b vaporized, but instead were moved out of Apple to other investments. Apple has had a good run- and that makes investors nervous. See "Correction Imminent?".
Well, pretty much yes it did evaporate. The stock market is not a zero sum game. Value (i.e. money) is created or destroyed there every day.

There are 939 million shares of Apple stock in total. No shares were created or destroyed today.

Yesterday at close those shares were worth $514.00 * 939,000,000 = $482,646,000,000.

Today at close those shares were worth $450.50 * 939,000,000 = $423,019,500,000.

The change was -$59,626,500,000 (if my math is right...)

That roughly $60M really did just evaporate.
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Old 01-24-2013, 07:45 PM   #47
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One can argue that the bearish sentiment on Apple might have caused investors to bid up on other stocks, hence creating new wealth elsewhere to compensate for the loss.

In that way, simply by the collective wish of investors, wealth could be "transferred" from one portion of the market to another, without much physical stock selling/buying taking place.

It's magic, just like the mind-boggling quantum tunneling of electrons that have been verified, and even used to build electronic devices.
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Old 01-24-2013, 07:48 PM   #48
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Old 01-24-2013, 08:18 PM   #49
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I'm optimistic about the market and think the country is better off now coming out of two long wars. The economy is growing, slowly but heading in the right direction. Technology and innovation are driving new products and productivity. The US stock market is still the best place in the world to grow your money. IMHO anyways.
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Old 01-24-2013, 08:23 PM   #50
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I'm optimistic about the market and think the country is better off now coming out of two long wars. The economy is growing, slowly but heading in the right direction. Technology and innovation are driving new products and productivity. The US stock market is still the best place in the world to grow your money. IMHO anyways.
I like what you're saying. I think I'll subscribe to your newsletter if you have one
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Old 01-25-2013, 07:43 AM   #51
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I think W2R has shown great restraint, as I thought we would hear the dreaded whee days ago. At least I may shortly get to redeploy some cash.
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Old 01-25-2013, 08:59 AM   #52
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I think it is more likely we will see 13,000 than 14,000 in the near future. I would not mind being wrong, but there is little empirical data to suggest that things are "much better", so I feel the euphoria recently has little basis in fact. An uptick in new and existing home sales has helped, but as some point the Fed will have to allow interest rates to increase to slow the inflation storm, and that does not bode well for the stock market........
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Old 01-25-2013, 09:31 AM   #53
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The historical, and to a large extent anomalously low interest rate was introduced after the dot.com bubble bursted and 9/11, and was partly responsible for bringing on the housing bubble. The low rate persisted after the housing market and the general economy collapsed in 2008. With the huge sovereign debt many countries, including the US, face, the Central Banks are acting to keep interest rate artificially low. But somehow this historical anomaly is considered the new normal. The world's economy and the stock markets were functioning perfectly well in the 1990's when interest rate was at historical normal range and you can get a 3+% return interest with your money market account.
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Old 01-25-2013, 10:34 AM   #54
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It has been a good run. I reallocated a week ago to more bonds and felt ok about until I read the "get crushed in bonds" thread.
Hard not to find a thread or a TV talking head that won't ruin your day. Of course I'm a full time wuss.......

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Old 01-25-2013, 10:46 AM   #55
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I think the economy is improving, albeit at a slow pace that some people might say it does not justify the stock market rise.

However, assets are priced relative to one another, and equities may rise because people feel they are the lesser of the alternative evils, such as cash, bonds, gold, etc...
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Old 01-25-2013, 11:03 AM   #56
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I think the economy is improving, albeit at a slow pace that some people might say it does not justify the stock market rise.

However, assets are priced relative to one another, and equities may rise because people feel they are the lesser of the alternative evils, such as cash, bonds, gold, etc...
And P/E ratios help sort things out too. Great thing about the market, always overcorrects at both extremes...
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Old 01-25-2013, 11:15 AM   #57
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Yes, looking back, I can see the P/E at either extreme in the past, and kick myself for not having the audacity to go all in or all out. Yes, hindsight is always great.

The P/E is within reasonable range now, so I feel comfortable holding 70% equities at this point.
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Old 01-25-2013, 11:41 AM   #58
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Why S&P 1500 May Signal Stock Rally Has Peaked

The market does not go up in a straight line. I fully anticipate a pullback, but the question is for how much and how long would the correction be?
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Old 01-25-2013, 11:43 AM   #59
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I think it is more likely we will see 13,000 than 14,000 in the near future. I would not mind being wrong, but there is little empirical data to suggest that things are "much better", so I feel the euphoria recently has little basis in fact. An uptick in new and existing home sales has helped, but as some point the Fed will have to allow interest rates to increase to slow the inflation storm, and that does not bode well for the stock market........
Seriously? It's only 125 points away - not much of a gap for the DOW to fill.
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Old 01-25-2013, 11:46 AM   #60
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As I am not an indexer, and hold much equity in sectors and international markets that have been lagging the S&P the last 2 years, I think they are valued stocks and represent a hedge against the S&P pulling back.

Could very well be that I am fooling myself, but an investor has to believe in something.

Even if a guy holds 100% CD, he is still believing in something, and it just happens that I do not share that belief.
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