The Best Stock Market Buy Signal In 51 Years
by Alexander Green, Chairman, Investment U
Investment Director, The Oxford Club
Monday, January 5, 2009: Issue #910
Media pundits keep reminding us how tough 2009 will be economically. Nevertheless, I predict this will be a good year for the stock market.
How can this be?
The stock market is a leading indicator. It generally falls before consumers and investors realize just how bad the economy is.
It also recovers long before economic activity picks up. Perversely, that means stocks often plummet during good economic times and rally during recessions… or worse.
In the January issue of The Oxford Club Communiqué, for example, I note that:
Stock Market Buy Signal - Full Article
From the Editors at Investment U December 19, 2008
A Question of Leadership at Apple (NYSE: AAPL)
Based off the last news reports, without Steve Jobs, the multi-billion-dollar enterprise that is Apple (NYSE: AAPL) would simply cease to exist. Every new report of his health is followed in the market, and Apple’s stock price takes corresponding hikes and plunges.
But Apple isn’t the only corporation with similar founder/leader issues.
Berkshire Hathaway (NYSE: BRK.A), and Dell, (NYSE: DELL), for example, both have stocks tied to the brand name of their founders - Warren Buffett and Michael Dell.
And when investors worry about the health of these figureheads, they send the stock price plummeting. But does this mean that the fundamentals of these companies are also in danger?
Far from it.
Microsoft (NYSE: MSFT) hasn’t collapsed since Bill Gates stepped down. Martha Stewart’s Martha Stewart Living Omnimedia (NYSE: MSO) hasn’t gone under because of her legal troubles. And Sam Walton’s Wal-Mart (NYSE: WMT) is up 324% since his death in 1992.
Too many investors still believe that if something happens to their stock’s leader, the company will fail. But, in fact, operations will continue, dividends will be paid, profits will be made and the stock will correct itself.
A smart investor will use these irrational plunges to buy these companies when emotion, not logic, spins out of control.
Companies mentioned in this article: AAPL, BRK.A, DELL, MSFT, MSO and WMT.
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