D&D Note (8-20-2012)
More and more there has become one so called General in stocks that drives the direction of markets, and that is the world’s largest company Apple (AAPL). The company makes up a large percentage of weight in both the S&P 500 and the Nasdaq. Today stocks wanted to turn over but Apple almost single handily kept the indexes to rather UNCH levels. The company closed once again at an all time high ending the day at $665.15 a share up 2.63% with volume of 21,816,316.
It begins to beg the question should investors carve out a larger percentage of their own portfolio to increase their stake in Apple. Something more like; Stocks / Bonds / and Apple. Its a rule of thumb that you should never have over 20% of your portfolio in any one position. But in recent years money managers have made an exception in some cases for Gold. Is Apple now the new Gold?
Perhaps a better way to look at it would be holding 15% Apple at all time in your portfolio and then leveraging up to 20-25% at certain times and utilize that additional 5-10% to take gains. Currently Apple makes up 16.25% of D&D Investments portfolio and will look to add on weakness.
Central Bank action is looking less and less likely globally. China seems unwilling to further cut the RRR. Here in America Core CPI growth coupled with M2 Money Supply growth hints that the FED won’t further QE because another round would certainly cause inflation.
Really its down to the ECB and Mario Draghi. While they may not have to pull out the bazooka, they do need to do some sort of stimulus.
This is a market addicted to liquidity sugar. Without more sugar the markets will reverse, it is simply the new norm that we live in that was created by the Central Banks.
Today the DOW (INDU) lost -3.48 points at -0.03%. The Nasdaq (COMP) dropped -0.38 points at -0.01%. And the S&P 500 (SPX) came in UNCH loosing -0.06 points at -0.00%.
Oil lost 43 cents to close at $95.57 a barrel.
Gold edged up $1.20 to close at $1,620.90 an ounce.
The 10-Year Note was UNCH with yield staying at 1.82%.
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