Archives for August 2011

Weekend Reading

With all of the action and volatility in the markets this week there will not be a shortage of information and opionions on the web.  Here are a few things I read this week that I thought were relevant to our readers.

  • If you only read one thing this weekend it should be this note from Brian Wesbury and Bob Stein at First Trust.  The report was written after the 500 point drop in the Dow on Thursday.  They do a nice job of pointing out the best possible explanation for the drop: European debt problems, specifically Italy.  I agree with their conclusion that the recent selloff in the market appears to be more of a technical correction than a fundamental change in direction.  Of course that doesn’t mean that the correction is over.  The market has created some nice buying opportunies for value based investors looking for strong fundamentals.
  • Next, I want to point out that as of last week Apple has more cash than the US Government. As I like to tell clients, we are investors in businesses, not the US Government.  Apple is a great example of a company that has thrived throughout the past recession.  Even though the US economy was in the tank, Apple continued to innovate and grow their business.  Each quarter they were profitable and even more important they have continued to grow their earnings at an incredible pace.  The company has a fortress-like balance sheet.  The stock price has followed the fundamentals of the company.  This is why we believe investors can still make money even during a recession or at a time when all of the headlines are focused on a slow growing economy.

Enjoy the weekend!

Disclosure: Long AAPL.