Morning Market Thoughts
Good morning. We’r’e looking at a slightly weaker open — and I mean “slightly”. Apple (AAPL) disappointed the market last night with weaker than expected iPhone sales, and projected a 1% increase of iPhone sales year over year. That’s pretty low if you ask me (though no one has). Lots of folks are focusing on Apple’s service business, which has impressive growth. This aspect of Apple’s business program includes Apple Music, iTunes, iCloud, the App Store, and Apple Pay…and probably several other products that I’m forgetting. The thing about the service business is that it’s not subject to the whims of the marketplace. If you like music, Apple Music is where you go to get all your stuff for a pittance. From Jay-Z to Journey. From Beyonce to the Beatles. It’s all there, and you can download it onto your iPhone so you don’t have to be on line to enjoy all the wonderful music that’s being put out today by our fabulous artists!! (OK, I’m being sarcastic. Most of the new stuff I hear seems like buying retreaded tires. Looks like a tire. Has a glossy look to it because of the wonder of Armor All…but it just doesn’t last very long before blowing apart).But all things considered, I think this little pullback is going to be met with buying. The stock has run about 25% this year, and we’re just 4 months into it. So you’d think the stock would be down more than 1%. But it’s not. So the stock is still in demand. No one is bailing on it. If you’ve been looking for a buying opportunity, this might be all you get.
A couple of other items that you should keep your eye on are the FOMC, and France. The FOMC is meeting today and tomorrow, and that’s always a fun time as traders wait in eagerly to hear from the Oracles of OhMyGosh about their take on our economic future, and how they plan to help us out. Janet Yellen won’t be speaking tomorrow, so all we’ll be left with is a statement that will be examined by linguistic experts to divine any hidden secrets about what they really think.
Also, France is holding their presidential election on Sunday, but the candidates are holding a debate tonight (this afternoon, for us in the US). Since I don’t speak French, I won’t be trying to watch it live. But I am interested in how the debate is perceived because it could move the markets. Macron represents the status quo, and Le Pen represents change. I have no stake in the election; I just know that the market likes the status quo, so any hint that Le Pen might take the top spot could move the markets. (With the latest polls showing a 60/40 split between Macron/Le Pen, I think it would take a massive shift in voter sentiment to get anything other than the status quo. I think the market will like the results, and that will elicit a big yawn from traders. Potential crisis averted!)
I believe successful trading depends on the balance between patience and action.
If you are too patient, you wind up doing nothing. You miss opportunities because you are waiting for a better one. So are you really being patient…or are you frozen and hesitant?
If you are too eager to take action, then any shiny object looks like a great opportunity that must be seized before it gets away. That doesn’t work either because hyperactive traders typically miss the best opportunities…because the money is being made during the period in between the buying and selling. If you are constantly buying and selling, you minimize the “in-betweens”.
Here’s an example: Alibaba Group (BABA) is up 35% in 2017. Pretty nice move, if you ask me. But it also traded sideways for about a month and half — more than a third of the time. If you sold during the consolidation period, you made about 15%. But you missed out on the other half of the move.
My point is this: Learn to be patient with your stocks. Learn to differentiate between those that are simply not working (i.e., you’re losing money), and those that are not advancing. There is a difference. Every stock needs to take a breather. Give your stocks room to breathe; to rest. If you do that, you’ll find that you’ve got a better balance between patience and action.
And you’ll also make more money, which I always enjoy.
See you in the forum.
–Dan
Market Update