Best of the Week
Most Popular
1.UK House Prices BrExit Crash NOT Likely Despite London Property Market Weakness - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics... - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - Nadeem_Walayat
7.UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - Nadeem_Walayat
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.The Stock Market is Reading it Wrong! - Chris_Vermeulen
10.Breakouts Galore in Gold and Silver - Jordan_Roy_Byrne
Free Silver
Last 7 days
Bitcoin $650 Still in Play - 26th July 16
Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - 26th July 16
The Forex Markets Are Getting Exciting! - 26th July 16
Underpriced Silver Is the “Rip Van Winkle” Metal - 25th July 16
Declines in Multiple Market Indexes - 25th July 16
Retailers Are Doomed as Most Americans Are Too Poor to Shop - 25th July 16
Here’s One Currency That Could Go to Zero - 25th July 16
Stock Market Top is Expanding - 25th July 16
Silver Manipulation – Because They Needed the Eggs - 25th July 16
Silver Market COT Stuns: What's Going On Here? - 24th July 16
Gold Demand Remains Stable During Sector Weakness - 24th July 16
Sernova, Diabetes and Haemophilia - 24th July 16
Russia: Tensions, Turmoil, and Western Hubris - 24th July 16
Soybean Commodity Price to Soar Again - 23rd July 16
SPX Stock Market Uptrend Continues - 23rd July 16
Gold And Silver – Debt Addiction Will Carry Precious Metals Higher, Guaranteed - 23rd July 16
Pokemon Go - How to Play, First Use, Balls, Stops, Catching Pokemon's... Great Excercise! - 23rd July 16
7 Signs That the Gold Market Remains Resilient - 23rd July 16
Basic Income in The Time of Crisis - 23rd July 16
Silver Bull Faces Correction - 22nd July 16
The Serious Warning No One’s Talking About - 22nd July 16
Stock Market Insight from Greed, Volatility, and Put/Call Ratio - 22nd July 16
What Will Happen To the Stock Market When Interest Rates Rise? - 22nd July 16
How to Escape the World’s Biggest Ponzi Scheme - 22nd July 16
Addicted to Debt - We Can’t Borrow from the Future Anymore - 21st July 16
Not Everything Is Bullish for Gold - 21st July 16
Don’t Get Sucked Back Into the Stock Market - The Big Picture Hasn’t Changed - 21st July 16
Silver – Caught Inside - 21st July 16
Forex: "The Markets Are Getting Exciting!" - 20th July 16
China Economic Troubles - Is Kyle Bass Finally Getting His Revenge? - 20th July 16
Why Lithium Will See Another Price Spike This Fall - 20th July 16
The Peak Oil Paradox Revisited - 19th July 16
SPX Challenges the Upper Trendline - 19th July 16
Missing ’28 Pages’ of the 9/11 Report Released into Blitzkrieg of World Events - 19th July 16
Likelihood of Organized Disruption at GOP Convention - 19th July 16
More on the ‘Breadth Thrust’ and Stock Market Internals - 19th July 16
FX Traders: Get a Free Week of Forecasts (Details inside) - 19th July 16
Ups and Downs in Gold and Crude Oil Price - 19th July 16
Keep an Eye on ‘Bitcoin’ as the Next ‘Financial Crisis’ Starts! - 18th July 16
Erdogan Might Have Known about the Coup but Didn’t Prevent It on Purpose - 18th July 16
More Deflation Ahead: Silver, Gold And Their Mining Stocks A Must-Have - 18th July 16
Stock Market Minor Top? - 18th July 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

Will Apple Stock Rebound in 2013?

Companies / Tech Stocks Dec 17, 2012 - 08:43 AM GMT

By: Investment_U

Companies

David Eller writes: On September 10 we warned that Apple (Nasdaq: AAPL) investors may be wise to take profits. We received our share of angry phone calls and emails, but stuck with our opinion. Now that Apple is down 23% from its close on September 10, it’s time to revisit the story. The chart is scary, but the fundamentals are good…


Last week we talked about selling puts to cash in on a waffling market. Some good companies have been trading off despite fundamentals remaining strong – or, in some cases, improving. But there hasn’t been a trend. What we have seen is that the same driver behind special dividends is hurting some companies’ share prices: Tax-gain, as well as tax-loss selling, is impacting the market this month.

Usually in December, companies that have had a tough year are sold off in order to use the tax losses to offset gains. However, this year is different.

Companies that have had a great run are being sold to capture the lower tax rate, as well. In just three weeks, stock holders will need to pay 40% on capital gains rather than 15%. So if you think you may need to sell a stock in your portfolio in the next 13 months, you’re much better off selling today. This is going to hurt a lot of companies.

Why is this affecting Apple? Apple has an over-loved product line with technical forces working against it, bad comps and a management team that’s doing its best to push down the share price.

Everybody wants its products, whether it’s an iPhone, iPad, or MacBook, but there are some things working against it:

1.Management transition – the visionary of the company died. I don’t mean to sound cold, but a product company has transitioned from the hands of a visionary to the hands of a manufacturing expert. It may work out, but the overt leadership is gone.
2.The industry – Apple is a hardware company, and it’s in an environment where other great hardware companies have fallen to margin pressure – HP (NYSE: HPQ), Dell (Nasdaq: DELL), Research in Motion (Nasdaq: RIMM), Nokia (NYSE: NOK). Each of these companies owned a niche, while Apple is creating an ecosystem – but that difference will be realized next year.
3.Tax-gain selling – We’re at a point where investors are looking to take gains before the year’s end in companies that may be seeing increasing competition. Google’s CEO is making public announcements about Android taking a share, while Tim Cook is apologizing for missteps.
4.Tax-loss selling – Anybody who initiated an Apple position after March is under water and can benefit from tax-loss selling despite the multi-year run.

It has been a terrible two months for Apple, but the pressure may be coming to an end because of the “wash sale” rule. In order to take the tax loss, an investor cannot buy back the shares for one month. Since the fourth quarter is Apple’s strongest quarter, if an investor wants to capture the tax loss but still own Apple for this event, he needs to sell more than one month before the announcement.

For Apple, this means selling will stop the week of the December 17. The reporting date for fourth quarter earnings has ranged from January 17 to January 23 over the last five years. If professional investors are taking this into account, one leg of the selling will soon be over and could mark the bottom for the stock.

Tax-loss and tax-gain selling can temporarily disrupt supply and demand in stocks with high valuations, but when investing for the long term, the fundamentals of the company will win out.

Good Investing,

by ,

http://www.investmentu.com

Copyright © 1999 - 2012 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife