Turbocharging a Position in Apple

November 19, 2010

Apple Inc. (AAPL) is hardly a well kept secret – it is one of the most widely followed and admired companies in the world. And for good reason. Consumers can’t get enough of Apple’s products and revenues and profits maintain breakneck growth year after year. But for some reason, Apple’s stock market value reflects a company whose growth will hit a wall in the next couple of years. It may come as a surprise to some, but Apple’s earnings have risen even faster than its stock price. For a nice graphical presentation, see this article. Read the rest of this entry »

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Lessons not learned – The Federal Reserve inflates asset prices to stimulate the economy

November 8, 2010

Last week, Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner seem to have made a wager: who could erode his credibility more quickly. I am calling it a tie. However, it is more serious in Bernanke’s case, as his words and actions have significant consequences.

Usually a press release from the Fed is considered sufficient to explain its actions. But following the Fed’s announcement on Wednesday of the widely anticipated QE2, the second round of quantitative easing — a massive plan to buy government bonds — Bernanke wrote an article in the Washington Post. After patting the Fed on the back for its “strong and creative measures to help stabilize the financial system and the economy,” Bernanke goes on to explain the thinking behind QE2.  Read the rest of this entry »