When I saw this headline yesterday, I had to a laugh for two reasons:Gurus and their guesses make for great headlines. But here’s the part that the headlines (and the gurus) glossed over:
- Apple naysayers (i.e., gurus) will have a field day claiming they were proven right; the stock is in “decline.”
- Investors looking for the “best” investment will tell themselves that Apple’s time has passed.
Think about that for a minute. Apple’s stock didn’t drop because they revealed some horrible news like a ship sank with the next 20 million iPhones on board. Instead, the price drop was attributed to Apple not meeting analysts’ forecasts.Apple is a ginormous corporation that just set company records for revenue, earnings (barely, and that's the worry for some investors), iPhones sold, and iPads sold in a quarter.
And this is the trap that trips up gurus and investors alike. Focusing on a single detail rarely gives you enough information to make a decision. By focusing on the individual trees instead of the forest, we don’t stop to ask the questions that should matter, like:
So the next time you see a headline that touts a guru’s prediction or hints that something great no longer is, do me a favor. Take a look around and see if the headline actually helps you answer a question that matters or just makes you feel more anxious.
- Does owning Apple stock make sense based on my plan?
- If I own Apple stock, do I have a plan that takes the emotion out of owning it?
AutoZone, Inc. (NYSE:AZO) today reported net sales of $1.9 billion for its first quarter (12 weeks) ended November 19, 2011, an increase of 7.4% from the first quarter of fiscal 2011 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 4.6% for the quarter.
As September ended, measures of sentiment registered record breaking fear. (Click Download BerkAdvisory_3rd qtr2011 letter_FINAL for my full letter to clients)
Cash is spilling over everywhere we look. Monetary conditions and stock market valuation are at the most bullish levels. We have maintained since early August that it is time to move out of cash and bonds and into stocks of great companies to the extent that your unique circumstances allow.
It's not too late, but clients that took that advice are up about +10% for October.
Continue reading "BerkAdvisory's ValueAligned Portfolio (VAP) +14% Last 12 Months" »
From Recession and Recovery
Six Fundamental Errors of the Current Orthodoxy
March 5, 2009
Robert Higgs
In fact, “the economy” does not produce an undifferentiated mass we call “output.” Instead, the millions of producers who bring forth “aggregate supply” provide an almost infinite variety of specific goods and services that differ in countless ways. Moreover, an immense amount of what goes on in a market economy consists of dealings among producers who supply no “final” goods and services at all, but instead supply raw materials, components, intermediate products, and services to one another. Because these producers are connected in an intricate pattern of relations, which must assume certain proportions if the entire arrangement is to work effectively, critical consequences turn on what in particular gets produced, when, where, and how.
These extraordinarily complex micro-relationships are what we are really referring to when we speak of “the economy.” It is definitely not a single, simple process for producing a uniform, aggregate glop. Moreover, when we speak of “economic action,” we are referring to the choices that millions of diverse participants make in selecting one course of action and setting aside a possible alternative. Without choice, constrained by scarcity, no true economic action takes place. Thus, vulgar Keynesianism, which purports to be an economic model or at least a coherent framework of economic analysis, actually excludes the very possibility of genuine economic action, substituting for it a simple, mechanical conception, the intellectual equivalent of a baby toy.Robert Higgs
