so...AAPL is down 5 points today because of this?
07-26-2007, 08:55 AM
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Originally Posted by C45P312,Jul 26 2007, 06:45 AM
I'll prolly cash out most of it when it breaks $200 or if I see a downward trend of Apple.
longterm wise? im very sure it will hit 200 as well but not sure if its anytime soon
07-26-2007, 09:08 AM
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Originally Posted by jdm_rsx,Jul 26 2007, 12:55 PM
longterm wise? im very sure it will hit 200 as well but not sure if its anytime soon
07-26-2007, 12:00 PM
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Look, if it weren't for the rest of the market running around like a bunch of headless idiots AAPL would be at 158-160 today. Same goes for a number of other companies that had great quarters but were shouted down by idiots who got stuck holding a $500,000 mortgage on a $350,000 house when the music stopped.
The problem is actually quite simple. There are about $100B-$200B worth of bad mortgages floating around bundled by the banks into lots and sold to debt buyers (bond investors). There is a real concern about these mortgages not because they are bad (everyone knows they are bad) but because they are lumped in with a bunch of not so bad and even good mortgages.
These bad mortgages (and they are really just the ones written in 2006) are like an infectious disease. They haven't unravelled all the lots to see which are infected and to what degree. That makes it impossible for bond traders (those who trade debt) to rate and price them. They may have some and they don't know what they are worth, if anything, and they don't themselves know what their risk levels are. This makes them very jumpy and the result is they flee from risky investments like corporate debt aka "junk bonds" and move into secure bonds like treasury notes. T-bills are a known quantity so at least they have some handle on there risk exposure there.
That means that those who depend on debt to make deals happen (companies building large infrastructure projects, private equity and LBO managers) can't get anyone to buy the debt at reasonable rates.
Now, this is how it affects stocks.
M&A deals are priced into stocks when they are announced, not when they are finalized. If a deal unwinds because financing can't be had it means the value added to those stocks and the market in general has to come out. It also signals potential problems with other deals and with the potential for future deals. This re-pricing ripples across the markets. It's not orderly or sensible, it's market driven. The market will ultimately be oversold before it's priced right again.
Companies exposed to debt financing especially those with some real or potential exposure to these bad mortgages have to be completely re-priced. If they can't sell these loans on the market (and they can't right now) then they have to carry them from their own cashflow. There will be write-downs and these will come right off the bottom line. By how much nobody knows because nobody knows who is infected by the bad loans nor by how much. These are primarily the banks and mortgage companies (they have to float these loans themselves until they are bundled and sold into the bond market). Investors sell first and ask questions later. Just like the bond traders, equity traders what to know what they are buying.
Financial companies, banks, make up 20% of the S&P500 index. When they get hit they drive down the index. Technical traders who trade off the index will sell stocks into the falling market. They will sell ETFs which will sell all the stocks in the index and they get hit.
The bottom line is that the mortgage mess is a house of cards, an earthquake which ripples across the landscape with several aftershocks. Not until the mess gets sorted and prices change to reflect real valuation and more importantly, risk, will the bond traders come out of their t-note hole and start to float corporate debt again with acceptable terms. Expect to hear about this for another year at least. These bundles of loans need to sorted and graded properly and housing prices need to stabilize so there aren't any more foreclosures, especially with better grade loans like sub-A and prime. Until then things are going to be rocky and people are going to be afraid.
The good news is that markets tend to factor these things in over time. They will sort out who is exposed and by how much. Things will stabilize and those businesses who are unaffected will get their due. Give is a few weeks before getting your hopes up.
However, there is the potential that something else will crop up in a few months and we may repeat the cycle over. My advice is that when you see the VIX (^VIX on yahoo) over 17 it's a good time to shed your non-core holdings and go at least partially to cash. Take profits. Confusion in the market and some "new" un-before seen problem may spell a wild re-factoring like this week within a short time.
This is a correction, it's not a crash. The market is re-pricing in light of a change in the playing-field. The market sells first, asks questions later (it makes sense, when your risk exposure is unknowable make it knowable first and then get back in).
I don't think it will get worse than today. It will continue to swing for a few days as people find new price levels but I think the biggest swing is over, DOW 13400 is clearly oversold. Keep in mind for the future that the market tells you when its in trouble. A big news story followed by ever increasing volatility is a tell. The market is telling you that it doesn't know how to price the new risk. It will swing up and down searching for a new level everyone can agree on.
Read the news and watch the VIX for tells when this happens in the future. It will happen again. It doesn't mean the market fundamentals are broken which would lead to a "crash" like we saw in 2000. That market was irrational and clearly wasn't supported by real fundamentals but rather hope that what went up yesterday would go up today. We are no where near there, not even close.
The problem is actually quite simple. There are about $100B-$200B worth of bad mortgages floating around bundled by the banks into lots and sold to debt buyers (bond investors). There is a real concern about these mortgages not because they are bad (everyone knows they are bad) but because they are lumped in with a bunch of not so bad and even good mortgages.
These bad mortgages (and they are really just the ones written in 2006) are like an infectious disease. They haven't unravelled all the lots to see which are infected and to what degree. That makes it impossible for bond traders (those who trade debt) to rate and price them. They may have some and they don't know what they are worth, if anything, and they don't themselves know what their risk levels are. This makes them very jumpy and the result is they flee from risky investments like corporate debt aka "junk bonds" and move into secure bonds like treasury notes. T-bills are a known quantity so at least they have some handle on there risk exposure there.
That means that those who depend on debt to make deals happen (companies building large infrastructure projects, private equity and LBO managers) can't get anyone to buy the debt at reasonable rates.
Now, this is how it affects stocks.
M&A deals are priced into stocks when they are announced, not when they are finalized. If a deal unwinds because financing can't be had it means the value added to those stocks and the market in general has to come out. It also signals potential problems with other deals and with the potential for future deals. This re-pricing ripples across the markets. It's not orderly or sensible, it's market driven. The market will ultimately be oversold before it's priced right again.
Companies exposed to debt financing especially those with some real or potential exposure to these bad mortgages have to be completely re-priced. If they can't sell these loans on the market (and they can't right now) then they have to carry them from their own cashflow. There will be write-downs and these will come right off the bottom line. By how much nobody knows because nobody knows who is infected by the bad loans nor by how much. These are primarily the banks and mortgage companies (they have to float these loans themselves until they are bundled and sold into the bond market). Investors sell first and ask questions later. Just like the bond traders, equity traders what to know what they are buying.
Financial companies, banks, make up 20% of the S&P500 index. When they get hit they drive down the index. Technical traders who trade off the index will sell stocks into the falling market. They will sell ETFs which will sell all the stocks in the index and they get hit.
The bottom line is that the mortgage mess is a house of cards, an earthquake which ripples across the landscape with several aftershocks. Not until the mess gets sorted and prices change to reflect real valuation and more importantly, risk, will the bond traders come out of their t-note hole and start to float corporate debt again with acceptable terms. Expect to hear about this for another year at least. These bundles of loans need to sorted and graded properly and housing prices need to stabilize so there aren't any more foreclosures, especially with better grade loans like sub-A and prime. Until then things are going to be rocky and people are going to be afraid.
The good news is that markets tend to factor these things in over time. They will sort out who is exposed and by how much. Things will stabilize and those businesses who are unaffected will get their due. Give is a few weeks before getting your hopes up.
However, there is the potential that something else will crop up in a few months and we may repeat the cycle over. My advice is that when you see the VIX (^VIX on yahoo) over 17 it's a good time to shed your non-core holdings and go at least partially to cash. Take profits. Confusion in the market and some "new" un-before seen problem may spell a wild re-factoring like this week within a short time.
This is a correction, it's not a crash. The market is re-pricing in light of a change in the playing-field. The market sells first, asks questions later (it makes sense, when your risk exposure is unknowable make it knowable first and then get back in).
I don't think it will get worse than today. It will continue to swing for a few days as people find new price levels but I think the biggest swing is over, DOW 13400 is clearly oversold. Keep in mind for the future that the market tells you when its in trouble. A big news story followed by ever increasing volatility is a tell. The market is telling you that it doesn't know how to price the new risk. It will swing up and down searching for a new level everyone can agree on.
Read the news and watch the VIX for tells when this happens in the future. It will happen again. It doesn't mean the market fundamentals are broken which would lead to a "crash" like we saw in 2000. That market was irrational and clearly wasn't supported by real fundamentals but rather hope that what went up yesterday would go up today. We are no where near there, not even close.
07-26-2007, 12:16 PM
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Originally Posted by cthree,Jul 26 2007, 11:38 AM
You sir are a USDA prime pig of the highest order. Take profits!! At least sell 500 or 1000, Jesus.
Pig are fattest just before the slaughter. If this stock goes down 20% due to some meltdown or terrorist attack? You will give back $147,000 and you won't see it coming until it happens.
Greed is bad, oink, oink
Pig are fattest just before the slaughter. If this stock goes down 20% due to some meltdown or terrorist attack? You will give back $147,000 and you won't see it coming until it happens.
Greed is bad, oink, oink
I should revise that date. 97. is when I purchased the stock.
I have taken profits on splits and sold/repurchased some.
I love apples.
I have had every model of iPod. I have an iBook & iPhone. Wife has a 20" iMac.
If Steve Jobs would release a cheap all in one Mac..... yes please.
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