An Apple a day keeps Verizon at bay

I stopped in an Apple store yesterday to see the new iPad but more to observe the customer interest this device. The iPad had more heft than I expected and an avid reader may quickly tire of holding the 1.5 lb iPad for an hour or more at a time. Still there were a ton of people perusing the iPad and Apple has sold a million of them to date and interest does seem to span a broad demographic so sales may be better than expected. Add in Apple's new iPhone 4 which people are burning the phone and internet lines to pre-order and it looks like Apple has two big potential blockbuster products on its hands with the only caveat being poor AT&T (when compared to Verizon) wireless coverage. This is not yet a problem yet for the iPad since the 3G version has not yet been introduced, but will soon be. Being joined at the hip with AT&T puts some serious drag on iPad and iPhone sales but when my retired friends are drooling over their new iPhones and talking about buying an iPad for themselves it will no drag enough to prevent Apple from having a banner year especially when the 3G version of the iPad is introduced tot he market. Apple looks like good buy right now for those who need to diversify into technology stock with good potential growth.

Gold Bubble or Safe Haven?

The flight to safety in Gold is likely to catch up to anyone who is not paying attention. Graham sagely recommended that intelligent investors sell when stocks are expensive and to buy when they are cheap. This goes for gold and any other precious metal. Who doesn't believe that gold is expensive today? If you hold gold too long, there is a good chance that you will not be able to sell it fast enough when the bottom of the market drops out. It is better to sell off some gold now and put the money into other investments to hedge the market. I predict that as the U.S. economy strengthens, gold prices will beunder pressure and will fall under $800 an ounce by the end of 2011.

Tactical Maneuvers for Today's Stock Market

The markets continue to whipsaw back and forth as investors follow their emotions instead of the fundamentals that drive the market. Any hint of a debt problem in Europe, e.g. now Hungary, or a worse than expected job report (private hiring has slowed while the census has temporarily boosted employment) causes and out-sized response by investors which is more on the downside than on the upside and is exacerbated by stop loss orders and the shorts jumping on the bandwagon.

This is a sign that the market is in for a long slog growth-wise and the market will continue to jump up and down, more down than up, in panicked response to the latest scare. There is not enough strength in the U.S. economy to force an overall upward trend in the markets so it is possible that the markets in general and the DJI will continue to oscillate a few hundred points and range between 9600 and 10400 until the Global economy strengthens enough that growth will drive some of the emotion out of the markets.

This could go on until the end of the year and possibly a year or longer and smart investors could benefit by using a small portion of their portfolios to buy on the dips and sell on the peaks with stocks, ETFs, or index funds that they know and have no redemption fees with the given caveat that no one can time the market and I don't advocate that anyone do that unless it is an element of an overall investment strategy and that they use funds that they don't need in the foreseeable future. I also don't advocate taking a short position unless you really understand what you are doing and are not aghast at the moral aspects of kicking a good company when it is down.

Given the likelihood that this market will continue to seesaw back and forth for a long time, one can make a good argument for taking advantage of the oscillations as a tactical maneuver of an overall strategy to bolster the performance of your portfolio with the prospects of a market averaging 2 to 4% growth on the next few years.

Is BP a Good Buy Now?

BP stock has lost over a third of its value as it tries to cap the Gulf oil well and some investors and analysts are claiming that the price makes a good entry point for those looking to get in cheap with the added benefit of a dividend yield near 8%. BP can be hugely profitable, but be extremely cautious if you are looking to buy shares of this company.

The expense to cap oil well and pay for the cleanup and compensate seafood industry workers and others impacted by their inability to fish the Gulf will be enormous, but BP can handle those costs. They can also handle the cost to litigate any civil and criminal lawsuits and pay damages if they are found liable. The greater danger is in the societal and political implications and ultimately the cost impact of being branded an evil-doer as Dubya would say.

Several congressmen have already said that it is incomprehensible that BP continue to pay a dividend until the depth of their liability is known and the gulf tragedy continues. There are calls for Tony Hayward, their CEO, to resign and that BP should be broken up and sold.

BP may in fact be a good buy, but a smart investor will wait until the picture becomes clearer before making a bet on BP.