Tuesday, December 16, 2008

Apple (AAPL) Has Turned into the S&P 500?

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As I was reviewing charts this weekend I noticed the S&P 500 and Apple (AAPL) were essentially mimicking each other week after week. I went back to a 3 month chart and did an overlay of one to the other; and the move in unison is remarkable.

(click on chart to enlarge)

This goes back to my comments over the past 3-4 months that it's basically been useless to buy individual stocks since the "herd trading" (student body left, or right) means individual equity selection has become moot. Either everything (in the entire market or entire sectors) is deemed "good" or "bad" and individual metrics seem to mean very little. It's all about allocations - long/short/cash and "timing" said allocations to the mood, news flow of the market.

If this sort of action continues much longer it might cause us to simply punt Apple because it's really become no different than a 1.25x Ultra S&P 500 ETF, except you have much more company specific risk (if any bad news were to be announced, along with the herd's reaction to earnings) We're already down to a 0.1% stake as the stock has failed to regain even its 20 day moving average despite the "health" of the market of late.

Long Apple in fund; no personal position

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