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The year to live dangerously

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by Peter Switzer

Apple’s disappointing revenue performance has hit the world’s most valuable company for a stock price six. As it is some 13 per cent of the Nasdaq, that index has been clobbered, but the Dow and S&P 500 indexes defiantly were positive for most of the Wall Street sessions.

A big plus for the S&P was the fact that the 1,500-level was taken out, but the run of good economic news also helped to keep this rally going.

In the end though, the S&P 500 pulled the shutter down at 1494.82, up only 0.01 of a point.

Meanwhile the Dow finished 46 points or 0.33 per cent higher to 13,825.33. You have to be careful getting too negative on stocks because of Apple. This has been a great company, and still is, but it has lost its visionary leader, Steve Jobs, just as the likes of Samsung are producing products to take on the Apple iPad and iPhone.

Apple down, Netflix higher

This is business, and rivalry was always going to come. Predictably Apple’s revenue is sliding but the rest of the US company scene is looking pretty good. For example, while Apple’s share price was down around 12 per cent overnight to US$450 or so, Netflix was up a whopping 43.6 per cent to around US$146.86!

Generally company reporting supports the rally continuing and economic data has been positive as well.

Data watch

On the US economy, jobless claims continue to fall and are now at the best levels in just about five years. And leading indicators came in at 0.5 per cent when the experts expected only 0.3 per cent. This is a plus sign for future US economic growth.

Of course, this rally will be tested, especially given the fact that the Dow looks like it could be up five per cent or more for the month — that’s huge. But as 2011 was huge for negative news and 2012 looked like it would go that way until mid-year, 2013 looks like it could be the year for believing in stocks. I see the USA, China, Japan and even Europe bringing more positives to the table than negatives, on a comparable basis, and so do a lot of the traders who are buying stocks big time right now.

The Yanks are starting to buy stocks after hiding in bonds, lucky to be paying one per cent, and so 2013 looks like it will end up being the year of living dangerously but oddly, with safety!

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Friday, January 25, 2013

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