Apple and Amazon add nearly $2T in Market Cap in Four Months
Apple and Amazon are great businesses no doubt.
The move in Apple of 30% down and 114% up is beyond ridiculous. A two standard deviation move followed by a five standard deviation move. And since Apple is so heavily concentrated in the S&P 500, the indexes are miraculously back at ALL Time Highs.
However, the scale and magnitude of the moves off the bottom are historic and absurd. A side effect of the massive stimulus program supporting the stock market. (Including novice investors rushing into the market. More here).
Apple has seen its P/E explode while growth is relatively slow. What a dangerous combination.
The case could be made for “stabilizing” the stock market. For supporting small businesses. For targeted aid. What we’ve seen is flooding of liquid public companies.
In July, the Fed bought up more bonds from blue-chip companies including Microsoft and Coca-Cola, while it added junk debt and made loans to a ski resort and casino in the Pocono Mountains. (CNBC)
Why is the Fed buying Apple bonds?
How do you rationalize that?
What is the purpose of that? Apple is such a blood thirsty company that they’re demanding rent reductions for their stores. From commercial real estate companies that really are hurting.
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Negative Interest Rate Policy: The Fed is flirting with Negative Interest Rate policy, a radical failed experiment everywhere it has been tried.
Japan’s stock market is flat for the last 30 years. Their economy is irrelevant. Their government owns their economy via ETF purchases. Most international mutual funds and indexes do not even include Japan. It is irrelevant.
For now, Powell is pushing back on the idea.
But his track record of bowing to the wishes of the President is pretty weak.
Stock Market to GDP:
Stock market capitalization now exceeds GDP which is one of many warning signs for this market. It happens to be one of Warren Buffett’s favorite stock market gauges.
The “Buffett indicator” divides the combined market capitalization of publicly traded US companies by quarterly GDP. Right now it’s at 170%, which are levels we havent seen since 1999 and 2008.
The Stock Market is never easy
Its designed to Fool Most of the People Most of the Time
-Jesse Livermore
Well said