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ADV Part 2

 

 

 

Investor Resources Inc, Investment Advisory Service, Port Orchard, WA

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2012Apr16 If an Apple falls...

"Our goal is to make the best devices in the world, not to be the biggest."    ~ Steve Jobs

Apple:

Even Apple couldn't go straight up forever.

 

The stock is down for a fifth straight day, sending traders and analysts scrambling to find reasons behind the move. Some cited rumors that the company was preparing to launch a cheaper iPad; others went to their charts to highlight "technical" reasons for the decline. Yet many simply say Apple was due for a fall.

 

Apple shares recently fell 3% at $587.35. The stock has lost about 9% of its value since hitting its most recent all-time high of $644 last week.

 

The recent move comes amid Apple's meteoric rise in recent months. The stock is still up 45% this year. Last week Apple's market value surpassed $600 billion, further cementing its status as the world's most valuable company. The move came just six weeks after Apple crossed the $500 billion market-cap barrier.

 

Analysts cite many reasons for Apple's selloff over the last week. Dave Lutz, an analyst at Stifel Nicolaus, says there's some chatter that Apple could roll out an iPad Mini at $200. He said the new product could "cannibalize sales."

 

Apple also began selling the third-generation iPad last month, as the company aims to widen its lead in the fast-growing tablet market. The device was the first major product launch for Apple since the latest iPhone went on sale in October.

 

"Short Apple at your peril," says Michael Shea, managing partner at Direct Access Partners. "This company has continued to find ways to innovate and bring products to the market that nobody else does."

 

Real Estate:

 

Interesting comments here by Robert Shiller on the myth of the last few decades that housing is now an investment asset:

 

Robert Shiller: There's no guarantee that home prices are going to go up. I think we've gotten into an illusion about that. We got into an illusion and it created this spectacular bubble. We have to reflect now that we had a kind of crazy mind-set in the last couple of decades, and we have to get back to thinking like people used to think. Housing is a depreciating asset, goes out of style; it's going to end up in the wrong place. People will want to live somewhere else, so it's not any automatic capital gain.

 

Mutual Fund Fees:

 

A cautionary tale from Rick Munarriz of Daily Finance.

 

"Shortly after my son was born, I plunked down $500 to open an Education IRA through Stein Roe Young Investor. It seemed like a smart move at the time. The fund not only bought kid-centric companies, but it also provided quarterly mailings of investing education material for children."

 

"The fund was a hot performer initially. My original $500 was closing in on $700 in value, before a few things outside the fund happened: The market corrected sharply after the dot-com bubble popped. Unique medical circumstances with my son made saving for college less of a priority. Education IRAs were transformed into Coverdell Education Savings Accounts, improving some of the contribution metrics, but also restricting some high-earning households from participation."

 

"However, a few unfortunate things also happened to the fund itself. The knack fund families have for closing certain small or underperforming funds -- and the very nature of sector consolidation -- makes it hard to buy into a mutual fund and know it will still be around in a few years."

 

"That's exactly the fate that befell my son's mutual fund: Stein Roe was acquired by Columbia Management, which in turn was acquired by Ameriprise Financial (AMP) two years ago. The Young Investor fund veered from its original focus, and eventually closed down by merging with Columbia Strategic Investor."

 

"Columbia Strategic Investor is hitting me with $20 a year in annual maintenance fees and another $20 a year because the IRA balance is below its $1,000 minimum. Thanks to fees and the fund's general performance, that original $500 investment in Stein Roe Young Investor is worth $367.37 in Columbia Strategic Investor as of the end of last year."

 

"It may be too late for this particular investment, but I now know what I should have done. Here are a few tips so you can avoid my mistake."