Best of the Week
Most Popular
1.Gold Price Target of USD 2,300 - GoldCore
2.Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - Nadeem_Walayat
3.Why British Muslims Are Leaving Elysium Paradise for Syrian Hell - Nadeem_Walayat
4.Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - Nadeem_Walayat
5.Extreme Gold/Silver Shorting - Zeal_LLC
6.European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - Nadeem_Walayat
7.Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - Michael_Noonan
8.Gold and Silver Price Headed for Breakdown - Jordan_Roy_Byrne
9.Greece Crisis OXI - Raul_I_Meijer
10.Flatline Investing and Dead End Debt Schemes - Doug_Wakefield
Last 5 days
Greece Crisis Shows Importance of Gold as Europeans Buy Coins and Bars - 30th June 15
Stock Investors Express Route to Profits in the Healthcare Sector - 30th June 15
Beyond the Greek Impasse - 30th June 15
Gold GDXJ : Impulse Move Pending - 30th June 15
Fed Interest Rate Increase Could Be Best Thing to Happen to Gold - 30th June 15
Marc Faber - Greece is Basically Bankrupt - 30th June 15
Greece - Shoot the Dog and Sell the Farm - 29th June 15
Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy - 29th June 15
The New "Sharing Economy" May Not Be the Profit Bonanza Everyone's Expecting - 29th June 15
Gold and Silver Greece and Short Positions - 29th June 15
Volatility and Sleep-Walking Markets - 29th June 15
Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - 29th June 15
Stock Market More Decline Ahead? - 29th June 15
China Stock Market Crackup - The Final Trap Looms... - 29th June 15
Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - 28th June 15
Investor Stock Play for Two Growing Missile Threats - 28th June 15
Stock Market Uptrend/downtrend Inflection Point - 27th June 15
Greece Crisis OXI - 27th June 15
Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - 27th June 15
It’s Time to Change the Way You Look at Disney Forever - 27th June 15
Flatline Investing and Dead End Debt Schemes - 27th June 15
Stock Market Investors Avoid the "Herd" Like the Plague - 26th June 15
Extreme Gold/Silver Shorting - 26th June 15
USD Daily, Weekly, Monthly & Conclusions - 26th June 15
Gold Price Target of USD 2,300 - 26th June 15
Gold and Silver - Another Successful Option Expiration For the Insiders - 26th June 15
Why Buffett Bet A Billion On Solar Energy - 26th June 15
Fed Taper Talk, And The $10 Bill - 25th June 15
When a Bond Is Not a Bond - 25th June 15
Nature Rebounds - Trends in America Portend a Global Restoration of Nature - 25th June 15
Stocks That Profit... Even When You're Dead Wrong - 25th June 15
When Will US Debt Hit the Wall? - 25th June 15
Ron Paul Warns “They Can’t Print Money Forever” - 25th June 15
In Gold We Trust 2015: Gold Remains In A Secular Bull Market - 25th June 15
European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - 25th June 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

China Stocks - Where are they going?

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

© 2005-2015 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

Biggest Debt Bomb in History