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Zach Bass (a.k.a Ernie Varitimos) is Chief Bloviator of Investor in the Wilderness. He has 30 years experience as a Tech Maven, Investor and Consultant. Zach has been using Macs since their introduction in 1984, and investing in the markets just as long. His mission is to help guide all level of investors through the Apple Ecosphere and make sense of the markets. Zach's take on Apple, the markets, and life pursuits, will keep your mind tuned.

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Is Apple a Buy Here Poll

October 1st, 2008 • Related • Filed Under

The question you have to ask your self is, do you believe that Monday (September 29) marked capitulation, the market bottom? What should make me think we hit bottom? A soaring VIX, 1/3 of all issues plotting new lows, RSI’s at historic levels, yadda, yadda, yadda. But what about the thing that got us here, you know, the sub-prime mortgage crisis? That’s been solved, right?

You know, on the other hand just I want to throw technicals out the window, because we’re such slaves to the news, and whether congress will deliver a bailout plan. We’re told that the world will end as we know it if we don’t get a bailout. Geez. Congress took the day off for the Jewish holiday Rosh Hashanah, and the world didn’t end. Thank God! Maybe they should take ten more days off for reflection, and come back for Yom Kippur, the day of atonement. As far as I can tell, the longer they’re away from legislating, the better off we all are.

There’s something about this bailout plan that is not sitting right with me. I think it’s the supreme authority given to the Treasury Secretary. Here it is:

Emergency Economic Stabilization Act of 2008, Section 2, Purposes: Provides authority to the Treasury Secretary to restore liquidity and stability to the US financial system and to ensure the economic well-being of Americans.”

I thought to myself, Oh my, that’s seems like a pretty big responsibility to give the TS, “ensure the economic well-being of Americans.” Hey, I don’t need the TS to ensure my economic or any other kind of well-being! I’ve got the Constitution that already guarantees me certain inalienable rights. Why is the TS getting such omnipotent power? Is this office going to be a 4th branch of government? Perhaps the law makers on Capitol Hill should re-read these words:

“We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.”

Reasons for Today’s Gain
Sorry, got a bit off track there. Let’s get back to whether or not AAPL is a buy here. We had a great day today. It’s not often you advance 8 percent. But let’s consider the possible reasons for the gain. First off, we were violently oversold, levels rarely seen. And secondly, Goldman Sachs reiterates a Buy rating on Apple. That came out of left field, especially after the two downgrades yesterday. The markets were on a tear, as the Bulls must have been feeling pretty good about themselves after getting so tattered the day before. Oh yeah, don’t forget it’s the end of the month, gotta shore up those books.

The Bull-Bear Standoff
You’ve gotta know that the Bulls are hanging on to the hope that a bailout bill is coming, and the Bears, they’re covering up a portion of their shorts just to play it safe. The Bears would rather enter new short positions ONLY after the news of an imminent bill is out there.

The Bulls are going to feel pretty darn good about their chances going forward after today’s action. I’m sure many feel that the bottom has been put in, and that the Bears are done. The Bulls and Bears are playing cat and mouse (can you use such a mixed metaphor?). Each thinks they are outsmarting the other. One thinks they’re allowing the other’s hopes to get up, when a time comes that they least expect it and BAM!

So I see a stalemate here. We might get a short rally, or we might just as likely fall into an economic Hades. My feeling is that we haven’t seen capitulation yet. And if that’s true, then we’re in for some real hand wringing.

The Poll
So, anyway, let’s get to the poll. You have to decide. We’re on the brink of either more pain or a capitulation rally. What do you do?

Is Apple a Buy Here?

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Viewing 5 Comments

Lalit 3 months ago 1 point
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People always panic and sell towards the bottom. Could Apple go down more sure why not , but no one can ever call a bottom. For an investor this is an opportunity to own a stock with a pristine balance that is out of favor due to our economic environment.

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Zach Bass 3 months ago 1 point
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I agree. So for the long term investor perhaps the best strategy is to dollar cost average in. But in this environment we know that moves in the market are fast and hard. In one day AAPL can range 10 points or more. So I would suggest buying at regular intervals, say once a week, twice a months, whatever. And select a particular time of the day. I think either sometime in the first or last hour of trading. That's when most of the smart money trades.

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1 /people/zach_bass/ /people/zach_bass/following/ http://www.zacharybass.com zachbass

wishbone 3 months ago 1 point
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Who really cares, I am a long term investor and will buy at $100, $80, and $60 looking for a three year payoff. To me this is an unbelievable buy opportunity.

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WallStreetToughGuy.com 3 months ago 1 point
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IMO, best way to play AAPL on long side is to short puts - the implied volatility is outrageous on way out of the money puts. Same with stocks like RIMM.

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http://www.wallstreettoughguy.com

Thom 3 months ago 1 point
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I just don't see the need to do ANY action right now. So much is still in the air, so many unanswered questions, too much info to still drop. I understand if one is working for a hedge fund, brokerage, etc..and they have to do SOMETHING everyday but for those of us civilians dear lord, hang tight. We have a long way to go down. AA's recent shitty earnings, BAC's dillution and there is plenty more to go. Hang tight, buy GLD on down days and Winterize your lawn.

I keep track all day on certain equities and indexes and dollar levels but otherwise I'm a house-husband and student. Unless there is a financial gun to your head I say smoke a bowl and watch the Flintstones.

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