– Stock Market Companion – Current Holdings –

Nr.	Co.	Ticker	Action	Entry Date	Current Gain (Loss)
1	Ford Motor Co.	F	Holding	10/5/2011	+15%
2	Alcoa, Inc.	AA	Holding	10/24/2011	+3%
3	US Steel, Inc.	X	Purchased Today	10/28/2011	+1%

Today also, the Chicago Purchasing Managers Index came out a bit weak at 58.4 vs. estimates of 58.90.  But this had likely little influence on the market compared to the huge impact to the market of the Bank of Japan’s intervention, uncertainty in Europe, and general profit taking.

– Story-Stock Investing –

 

Today we experienced a very strong reversal south in commodity related stocks like Alcoa, and U.S. Steel.  Copper futures and the shares of Freeport McMoran fared no differently.

Much of today’s action in commodity related stocks is related to the steep advance in the U.S. dollar as Japan’s Central Bank purchased huge quantities of the dollar on the open market, in order to weaken the Japanese yen.

We also sent out this SMC Intra-Day Update on Apple, Inc. shares as they showed good relative strength throughout the day –

Dear Subscriber-Friend,

All Stock Market Companion subscribers know that we like Apple, Inc.  We like almost everything about their products and services and how they have relentlessly focused on the customer experience and quality.  They have re-defined the computing experience (more than once), the portable music playing experience, AND now the mobile phone and smart-phone experience.

My life changed in 1998, when I learned that Mr. Steve Jobs had returned to Apple, Inc. and that he was launching a new, innovative computer called the iMac.  I studied the specifics of their upcoming iMac and how they were going to market it in a new way through big box stores at the time, like Sears (remember them?), and I was impressed.

At the time, I had been granted a temporary leave of absence from my business development position in Europe where I had been working for over 10 years and was now working on various projects for a worldwide Christian youth discipleship organization. I was living in a campus dorm room with 6 other men studying and learning about how to help people (for example – help small villages get clean water and other basic necessities+).  One of my jobs during the day was working in the computer lab, helping students use the internet to communicate with family, friends and supporters back home.  Late at night I diligently ran my stock studies and scans to stay abreast with the market and use it to provide necessary funding for my life away from my corporate industry work.

In the computer lab, we had grey, ugly computer boxes and screens with wires going everywhere.  There was real room for improvement and I learned of the iMac that was coming!

Steve Jobs had designed the upcoming iMac as a colorful computer, with the computer hardware integrated with the colorful screen, and very few external wires.  Many of you I am sure remember it. Click here for step back in time for a picture and the specs of that important milestone in the history of personal computer development.

I was convinced that the iMac was going to be a success and I quietly invested essentially every penny I had in Apple Computer, Inc. (it’s now simply Apple, Inc.) stock, WHEN the stock broke out of a lateral consolidation AND the background market was favorable.  I put a stop in place below my entry to protect myself, just in case I was wrong.  In a little over a year, I tripled my money and sold near the top at around $129/share at the time. I knew that the stock was needing a breather, but I had no idea that it would sell-off and then completely disintegrate down into the teens over the next several years.  I kept my profits and with them was able to thank my employer for the years that I had been able to work for them.  I was now able to stay with the missions organization and the next year met an American worman who had been working for years in India, who would later become my wife (after 6 weeks of courtship… a funny story that I will share some time.)

On the advice of a mentor of mine who was a former U.S. cabinet level leader, just before I was heading to a 3rd world country on a project, I even invested my money briefly (a little over a week) with a broker, who – although he came highly recommended – simply did the opposite with my money then I was accustomed to.  He dumped it all into the market, irrespective of market timing and with no idea of a what the “story” was behind any of the stocks that he had purchased.  When he couldn’t answer my questions with any logic that I could trust, I fired him, put all the money in cash and then left the country.  I learned then an important lesson – No one was as interested in the safety and growth of my financial resources as I was.

Before I digress any more, let me stick with the Apple story.

Now you know how Apple, Inc. changed my life.

Here’s an important idea:  Just because my investments in Apple have been very favorable, and I very much like their products, it doesn’t mean that I blindly simply invest in the stock.  Like all stock investments, there is a time and a place for it.  Apple products will be subject to the same product development and life cycle dynamics of other high quality companies.

Today marks a possibly notable, positive change in character in the stock compared to last week’s lackluster activity, when it seemed like all other stocks were going UP like gangbusters.

We know this about Apple, Inc. :

• Even the though the stock is priced at $406/share, the stock is selling at a price / earnings ratio in the mid-teens, even though the company is growing at a rate above 50%/year.  From this standpoint, the stock is cheap.
• The stock will NOT perform if there is a growing concern that others are “catching-up” with Apple, and that it is losing its competitive edge and no longer gaining significant market share.
• The stock will remain in “park” or will drop in value if there is any whiff of reality behind the concern that component shortages in Thailand will cause immediate quarterly earnings to drop due to a failure to meet orders.
• The Apple leadership has changed.  We were hoping for a kind of “victory lap” for the shares following the untimely and very disappointing news of Steve Jobs’ passing.  Everything was in place for an emotional burst higher in the shares, but all of a sudden the company didn’t meet quarterly earnings expectations for the first time in a long time.  That earnings report took the emotion out of the stock that was there to take it to another level higher.
• This Christmas is going to be all about the iPad and other Apple equipment.  The iPhone 4S is impressive.
• While the market was selling off rather strongly this morning, Apple shares were moving higher on nice volume.  A move above $408 to $410 will probably get us back on board at Stock Market Companion.
• If there is a rally in Apple shares to come, we want to own the shares at the right time.
• This Thailand flooding is significant, but no one knows yet its impact.  Apple CEO Tim Cooke said that he too was concerned.
• Samsung and others are not sleeping.  They are strong competitors.

Each investor is on their own.  We are simply commenting on our own actions in the market place.  Please see our disclaimer below.

Your – Stock Market Companion

– Benchmarks “At a Glance” –

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