Archive for November, 2014

It’s my strong belief that oil’s extreme rise in 2007-2008 triggered The Great Recession (by triggering the subprime meltdown)…

     … but that oil’s extreme decline in 2008-2009 ultimately revived the economy (by putting more money in people’s pockets to save & spend).

(For more on oil and the economy, either search my blog for “oil”… or click here for something I wrote in 2009.)

Over the last few years oil scarily started rising again… back above the $100 level… which has acted as a tipping point in the past.

It did so gradually, though, i.e., didn’t misbehave… i.e., didn’t spike and didn’t cause the price of everything to crushingly spike (like it did in the period leading up to The Great Recession).  The world — including the world economy — is OK with gradual things.

But oil has been in retreat since June.

On Friday — with OPEC deciding not to cut production — oil plummeted…

… and by the end of the day was down more than 10%… to $66 a barrel, something we haven’t seen since (coincidentally) 2009.

And, expectations are that it will keep declining.

Which should be great news… unless of course you’re reading the news headlines, which is pretty much painting the decline as a disaster.

While it is tough news for the energy sector, it’s AWESOME news for 100% of everything else… because lower oil ultimately translates into (I’ll say it again) more money in people’s pockets to save & spend.

Why would the press do this?  I’m tempted to say “attention getting” (i.e., sensationalism), which I believe is partially true, but I suspect it’s also a nice contrast with the other positive news of the day… and there’s certainly news this year to be thankful on this Thanksgiving weekend.

Maybe more to the point:  Why wouldn’t OPEC cut supply, which would increase demand and therefore increase price?

Best guess is they are trying to drive oil prices down… which will make it harder to justify all the great investment going into energy alternatives… not just clean alternatives like solar and wind, but also increasing domestic oil supplies, too.

No doubt, OPEC is playing hardball with everyone in the energy business…

… which, thankfully, helps everyone else on the planet.

P.S.  Now we just have to make sure Europe doesn’t implode, Ebola doesn’t dig in, the U.S. debt ceiling doesn’t collapse, etc., etc.!

On May 30th of this year… when AAPL was at $633 ($90.42 split adjusted), I wrote the following:

Heard It Here First: Apple To $833… Err, I Mean $119

Technically, AAPL hit an interday high of $119.75 today, about six months after I penned that estimate.

I can’t remember what the average analyst estimate was at the time… but I believe it was somewhere around $700 or so (about $100 split adjusted).

When I made my estimate, though, I believe no one on The Street was higher than me… which is why I wrote the headline as I did.

More to the point:  Apple had already had a significant climb… from just below $400 (~$55) in June of 2013… to just above 500 (~$71) in January of 2014… to $633 (~$90) as of the end of May.

That’s a stunning climb for a company the size of Apple.  Most believed — rationally — that AAPL’s climbing was over.

What a difference a few quarters make.

APPL is now being driven by the very things we discussed back in May:  Underappreciated financials and a phenomenal pipeline of products.

I’m not ready to do a victory lap quite yet… but given today’s $119 interday price coincided with Apple becoming the very first company in history to have a market capitalization of $700 billion… I thought it was appropriate to at least mention.

Where does AAPL go from here?

Seems like professional analysts have been falling all over themselves in the last few months — and then again in the last week — to raise AAPL’s target.  Highest I’ve seen is Cantor Fitzgerald’s $143 target… unless, of course, you include Carl Icahn’s $203 figure. <smile>

With oil prices declining (which bodes well for all things Stock Market), I see the excitement over the continued insanely crazy demand for the iPhone 6 (and the earnings that will drive) taking us into the $120’s and possibly to $133

…which pathetically will still only reward phenomenal revenue and earning growth, the largest cash hoard in all of business-dom, and the strongest brand on the planet… with average valuation multiples.

This target is not as courageous as my last one… since it’s not such a big step from here.

What will allow us to take a bigger step?

iOS TV!  Where or where are you??