Wednesday, May 29, 2013

Apple's Stealth Marketing Move - Will It Work?

The recent outbreak of supposition surrounding the Apple (AAPL) iWatch, if it exists at all, is quite humorous, with people who have no idea about anything concerning the alleged product, offering up elaborate scenarios based upon the flimsiest of rumors.
There can be no doubt that many of the Apple fans, desperate for anything to boost the company - and almost certainly have been hammered by the plummeting stock price - are attempting to create out-of-proportion buzz over a shadow product we may never see.
Even when describing it, some say "Apple's work on the iWatch appears to be substantial." How can it 'appear' to be substantial. Either it is substantial or it isn't substantial. It's a meaningless phrase apparently used to weasel out of committing to the iWatch one way or the other.
That way a huge article and attempt to market the product for free by an Apple fan-boy is offered as some type of reality, when it's largely science fiction at this time.
I'm not saying there won't be a iWatch some day from Apple, just that at this time it's all a bunch of orchestrated hype by the marketing department of the tech giant.
For example, Bloomberg, the New York Times and the Wall Street Journal all reported "independently" within a period of a week, that Apple was in fact developing an iWatch which will include a curved glass that would be able to be comfortably worn.
That was just a marketing leak from Apple to give people something to write about and spread the rumor.
What Type of Noise?
What will determine whether or not this will be a marketing initiative which will work, will depend upon which part of the iWatch story is engaged in by fans and the media.
Any positive noise for a company in traditional and non-traditional media is good, but the effectiveness of the noise is all that matters over the long haul, and we will have to wait to see how that works for Apple. Reading a lot of what people are writing, it's about 50/50 to me as to whether this will have some believable depth to the story, and is compelling enough to have some legs to it.
The story really took off when Bloomberg reported that over 100 employees at the company were working on the iWatch.
Here's one of the things Bloomberg said about the gadget:
"Features under consideration include letting users make calls, see the identity of incoming callers and check map coordinates, said one of the people, who asked not to be identified because the plans aren't public. It would also house a pedometer for counting steps and sensors for monitoring health-related data, such as heart rates..."
After reading this you can see why there is uncertainty as to whether or not this would be a winner for Apple, assuming the features listed in the quote above are part of the iWatch.
What I mean by that is the very first thing mentioned: "letting users make calls." That's about as irrelevant as you could get. Who cares about another gadget that you could call someone with? And what's exciting and new about seeing the identity of an incoming caller or checking out some map coordinates? And the pedometer and monitoring of health data? Gee, haven't we seen all that before?
The point is it is sounds so much like yesterday's products, rather than something that is really a game-changer of some sort. If the sound bite continues on like that, it will very quickly be removed from the public eye. It's simply boring. There's no other way to describe it.
Negative Versus Positive Marketing
One thing media outlets are doing is using some of the past responses to Apple product announcements and/or leaks and tie it into the negative response being received about the product.
In other words, because some of Apple's past products have been underestimated, that means the iWatch is underestimated in their eyes. That's not true of course concerning all past products, as there have been more than one product offered by Apple, including when Steve Jobs was at the helm, that failed miserably. So using past responses as a reason to make the iWatch look like a sure hit is far too premature and wrongheaded.
As a matter of fact, that's one of the weaker arguments I've heard as to why the iWatch will be a big hit by its proponents.
To think that Apple can overcome all negative sentiment concerning a product is a foolish one from an investing perspective. It hasn't done it in the past, and won't be done in the future either.
Is There an iWatch Market?
A lot of illogical people are already making it appear as if an Apple iWatch already has a built-in revenue-generator of billions. Suddenly, because Apple throws out some trial balloon marketing bomb, a wearable iWatch is indispensable. The reason why? Well, Apple apparently has said so, that's why.
Let's look at watches for a second as to their usage.
We'll forget about the telling of time, as that of course would never be why a person would buy a tech gadget; it's an ancillary part of the whole.
So what would be the use of an iWatch, if, as based upon my commentary above, some of the assumed features are extremely irrelevant and already available in other devices, including Apple's.
There is no doubt it would largely be used as a status symbol. Other than that, there's very little at this time has been offered as a reason to where it. Even if it is eventually able to communicate with other devices, so what? All you have to do is pull a gadget out of a pocket or purse to access what you want.
Now if my assessment is correct, that an iWatch is going to be acquired for the "cool" factor alone, there are some problems with it.
The first is, a watch would be considered a part of fashion ... by males and females. That means it will be very limited, as the majority of people desire continual changes in accessories when making fashion statements. That suggests there could be some quick and impressive sales of the iWatch, but once the new wears off, the limitations will be immediately understood. That isn't good for the long term success of the product.
That is important to consider about any potential market for a product, as no marketing effort will work if there isn't a market to begin with, no matter how effectively a campaign is employed. Apple may be trying to create a market for the iWatch with its marketing efforts here.
What is This Marketing Effort All About
Apple probably isn't even close to having an iWatch ready for the market, contrary to some who are trying to push the idea there will be a release before the Christmas season of 2013.
To me, the fact that Apple set all this in motion reinforces that idea. If they were truly ready, the company wouldn't have released the information in the way it did.
The underlying theme was that there is a group of people working on an iWatch. Why would they focus on that if they were only several months from releasing it? It doesn't make sense, and it doesn't go with the content that is being covered concerning the iWatch.
Another major reason I believe this is it appears Apple is using this to get a wide array of responses to see if there really is a market for the gadget. That, and to find out what it is people may want in the gadget in order to give it a good chance at success.
I think this is probably one of the most important reasons for Apple pushing the iWatch out at this time.
The Major Reason for the iWatch Marketing Campaign
Just about everybody knows Apple is getting hammered from its lack of a pipeline, and its also getting crushed in Asia.
This marketing campaign is based upon keeping shareholders and potential investors believing the company has interesting things in the near future which will have an impact on the share price. It doesn't look like there is any other reason on the marketing side for the leaking of information.
Apple is losing the interest of the majority of those that aren't hardcore fans of the company, and if it doesn't present itself as an innovator with products being worked on, the value of the company will continue to plummet because of a perceived bleak future.
Getting media coverage on the iWatch is an attempt to retain interest, and to buy the company time.
Over and over again in this article I've mentioned that this is a marketing campaign. And it is. This is how Apple and others attempt to give the appearance of a grassroots and organic interest in the product; just releasing enough information for traditional and non-traditional sources to make it go viral.
Whether or not there really is an iWatch in the works is irrelevant to this campaign. It's far more important that investors believe there are products in the pipeline than if a gadget is introduced that probably wouldn't add a lot to the bottom line. But even if it did, there is little to suggest anything else is coming in the near future.
No marketing campaign will work if all that is offered is a carrot to carry shareholders and investors from a mountaintop to the next deep valley. Every time that is done a company will lose a little more of the support of its base. This could very easily happen in this case of the iWatch, especially if it isn't going to go to market until the latter part of 2014, which some are asserting. That assumes it'll go to market at all.
As for this campaign and the viral aspects, it has been partially successful. The problem is the people writing about it offer little in the way that really captures the imagination and makes this a must-have product. So the coverage it has received, while not extraordinary, has been mixed, and that makes this stealth marketing effort a weak one for Apple.
The only value to investors or shareholders is if it goes viral far beyond where it has so far. The narrative about the iWatch also must change to one that is captivating and interesting. That has yet to happen.
Eventually Apple will release some new product, and the response, because of pent-up frustration and increasingly low expectations, could give Apple's share price a good boost. But it must line up future expectations with reality, or it'll continue to suffer share loss.

Vale's Coal Challenges Will Continue

At a time when Vale (VALE) needs all the good news it can get, its coal unit continues to suffer setbacks, with the latest being its announcement it is cutting its coal export target for 2013 from its Mozambique coal mineby about 30 percent.
This follows in the footsteps of a 2nd disruption at its Sena rail line operations, where on May 12 some potters blocked the line in an effort to extract further compensation for abandoning their homes in order for the mine to be developed. That has been resolved and shipments resumed, but it probably had more of a public relations effect on the company than warranted because of current weak market sentiment.

Tuesday, May 28, 2013

Fed Not Ready to Stop Spending

Let me say right from the start that one of the most important things for investors to know at this time is that the Federal Reserve is not likely to stop its stimulus program in the near future, as some reports are theorizing.
The only caveat to this reality is if an unforeseen event or calamity takes place that would change the policies of the American central bank. One of those events would be a huge change in the jobs numbers, whereby the unemployment rate plunged to levels approaching the stated goal of 6.5 percent. There is nothing to suggest that will happen any time soon. Another would be rising inflation, which would betray the inevitable effects of the loose money policies the Fed is engaged in. Either of those two scenarios would bring a rapid response from the Federal Reserve.

What Will Make Nielsen Move

In response to growing dissatisfaction from major networks ABC (DIS), CBS (CBS), Fox (NWSA) and NBC (CMCSA), as well as smaller content providers, Nielsen Holdings NV (NLSN) has started to track Internet audiences, which use a variety of devices to consume media.
When considering the unenviable task, almost immediately challenges are encountered, as Facebook Inc. (FB) and Google (GOOG) use metrics which don't work for television. That means YouTube and Facebook won't be able to be counted by Nielsen at this time. The new streaming initiative from (AMZN) is another factor in the mix.

Devon Energy Starting to Make a Move

One of the better plays in the energy sector at this time appears to be Devon Energy (DVN), which several days ago, dropped to levels not seen since a brief moment in 2011. Other than that, it hasn't traded that low since 2009. It has made a nice move since the latter part of April, but when measured against a 5-year performance, it is still relatively cheap. If measured against a six-month chart, it looks more volatile and unpredictable. The reason why is because it, in fact, has been.

continue reading ...

Warren Buffett on Opportunities in Europe

Most of us know Warren Buffett has the uncanny ability to see value where others don't, and over the last year, he recently said in an interview with CNBC, that he has been buying equities in Europe.
Before we get into that, another element that is extremely important in the success of Warren Buffett is the way he successfully recognizes the low range of a good entry point. I'm not talking about market timing here, but his understanding of the season of time companies are at bargain rates. In his view, Europe has been in that season of time, and many stocks there remain cheap.

How Google Stole Apple's Thunder

Google (GOOG) is about to unveil new subscription music services, as it signed licensing deals with Universal Music Group and Sony (SNE) Music Entertainment to use on its Google Play and YouTube platforms, according to The tech giant now has three licensing deals in place, the other being with Warner Music Group.
This deal brings Google a vast array of high-profile artists, with Universal Music Group and Sony Music Entertainment being the two largest record companies.

China and its Focus on Boosting Consumer Demand

China is a complex country to analyze, not only because the economic data released from the country is not considered reliable, but also because it is going through some major changes at this time, which have significant implications for investors around the world.
The major adjustment by China for its economy is its decision to rebalance it by focusing on consumer demand to drive growth in the country, rather than to be reliant on exports and investments as it has been in the past.

Coffee, Rust, ETFs and Where the Price is Headed

An increase in coffee or roya leaf rust in Central America has generated concerns on how it could have an effect on coffee production in the region, as well as the resultant coffee prices that may accompany any possible shortages.
It must be understood that the coffee rust problem is in relationship to Arabica coffee plants and not robusta coffee. Arabica coffee is what is usually offered in coffee stores. Robusta coffee is normally associated with instant coffee, although "premium robusta" can be found in specialty espresso blends at retail outlets. In this article, the primary focus will be on arabica coffee.

Rio Tinto and Turquoise as Oyu Tolgoi Shipments About to Begin

The rough and tumble conditions associated with the gigantic Oyu Tolgoi mine in Mongolia are about to pay off for Turquoise Hill Resources (TRQ) and Rio Tinto (RIO) as approval to ship copper from the mine may be as close as two weeks away.
We are still looking for some approvals in relation to exactly how we transport and ship the material ... that we expect to receive in the next couple of weeks.
I think we have moved well down the path in terms of resolving issues the government had tabled with us, enabling us really to move forward with the project.
Commercial production was previously expected to launch near the latter part of June, but Walsh says that copper may be able to be shipped by that time.

Saturday, May 11, 2013

Yuan to Continue Upward Move

In what can only be called a dramatic change of direction, the upward move of the Chinese yuan has caught a lot of investors off guard, as their attention, in the currency market has mostly been on the Japanese yen, once it implemented a policy to drive down its value.

Meanwhile, the yuan has moved strongly in the opposite direction, strengthening against the U.S. dollar in a meaningful way since the beginning of 2013.

More on strength of yuan

Tuesday, May 7, 2013

Discipline in Preparing for the Dips

Listening to the media coverage of the annual Berkshire Hathaway (BRK.A) meeting or party, it reminded me of a huge part of a successful investment strategy, which is a key to really making good money in the market. It's not the accurate dissection of data of a specific company, although that is important; neither is it the identification of a firm that has a solid, competitive moat in place that guarantees long-term growth. That is also vital to investment success, but it's all secondary to what we're going to talk about in this article.

Continue reading on how to prepare for investment deals of a lifetime

Hidden Secret of Uranium Success Going Forward

It is imperative when looking at specific sectors like uranium, which can move in and out of favor quickly because of temporary setbacks, to take a deep breath and contemplate whether or not negative conditions are temporary or truly detrimental to an industry over the long term.

That's the case with nuclear power and uranium, which have suffered bad press from the unfortunate accident in Fukushima, putting the sector in a temporary tailspin.

See this explosive revelation of Uranium's "Dirty Little Secret."

Silver's Performance in a Weak Economy

Silver in general is standing at a very interesting position, as it's poised to break out in the short term, while at the same time a weakening economy will play havoc with the precious metal over time.

We'll look at some myths surrounding silver in this article, as well as some of the realities inherent in silver as an investment option.

See how silver will perform during economic weakness.

Natural Gas and State Renewal Energy Requirements

At least 16 states are looking to reduce the amount of power generated from solar and wind because of the high costs of the renewable energy and the abundance of natural gas in the United States. A number of energy companies with significant exposure to natural gas could be huge winners if this is what unfolds.

See at Seeking Alpha why this could dramatically effect share price of companies with large natural gas exposure.

HudBay Minerals Will Prove Shorts Wrong

HudBay Minerals Inc. (HBM) appears to be at a very good entry point, as for no justifiable reason, shorts have been pouring it on HudBay, even though it is well-financed and recently communicated it has more measured, indicated, and inferred mineral reserves at its Constancia mine than originally believed.

Continue reading on Seeking Alpha

Turquoise Hill Resources Ready to Rumble

On November 17, 2008, the share price of Turquoise Hill Resources (TRQ), then known as Ivanhoe Mines, plummeted to $1.72 a share, dropping from the $11.12 share price it had reached on August 25 of the same year. Not too long afterwards, as news of the resources at its Oyu Tolgoi mine in Mongolia became known, the share price gained momentum, soaring to a high of $28.55 on February 28, 2011.

continue reading on Seeking Alpha to see what should drive the share price of the miner up.

The American Economy Is Recovering, It Really, Really Is - Wink Wink

It's incredible to me to see the financial media portray the American economy as one that is in a sustainable recovery. Data and facts are selectively reported and manipulated to present the strongest economy possible without media being considered nonsensical.
I don't mean by that there isn't any reporting of the negative economic facts, as the mainstream media wouldn't even be taken half seriously if they weren't. Yet in the majority of cases there are omissions concerning the analysis of the data. For example, with the recent unemployment numbers, where what was highlighted was the drop in the number of unemployed, but not why that was a disaster rather than a positive outcome.
The over emphasis of one element of the economic data, while minimizing another, is the game being played in the financial media now, one all investors must recognize in order to protect their capital.
Politics, Media and the Economy
What must be acknowledged and understood is the media in general have migrated their political way of reporting into the financial realm. That means because there are certain things networks, reporters and writers believe, they allow that to dictate how they present the news and data, and how it is written, to bolster their own political outlook and beliefs.
I don't care, but I'll get a few of you riled up here: this is especially true with liberals. The point isn't politics though in this article, and whether you're a liberal or not, it must be understood that politics has mixed in thoroughly with the economic and financial, and it's difficult to extricate them when looking for actionable data and news from media outlets.
For example, if you have liberal political leanings, it isn't the purpose of this article to point to the political side of it, but to help you to understand when media you would agree with when talking politics transfer their focus to economics and business, you have to be careful not to drink in the reporting in a way you would when engaging with a political campaign. Most people recognize all the hoopla and exaggerations of politicians and their aides, but it's not as identifiable when the writing or reporting migrates to business. This is especially true concerning the condition of the American and global economy, which reflects directly on a President and the party in power.
No matter what your political persuasion, be careful of financial reporting, especially in relationship to the economy. You also have to careful in regard to certain sectors that are political magnets, such as energy.
Agreeing with the world view of a writer, reporter or news outlet is completely different than looking objectively at the hard data.
Quick Example
Just to give you an idea how financial data can be reported as better than expected, here's how the recent data concerning the devastating drop in durable good orders was presented.
The decline in orders is the latest in a string of reports that suggest the manufacturing sector cooled off a bit toward the end of the first quarter - along with the broader economy.
As is often the case, a large swing in monthly orders for large and expensive commercial aircraft exaggerated the headline number on durable goods.
Notice how the huge 5.7 percent drop in durable goods was presented as this: "the manufacturing sector cooled off a bit." Below that the drop in monthly orders in commercial aircraft "exaggerates" the numbers associated with durable goods. This is irresponsible reporting at best, yet most people don't even see the subtle way the data is skewed to look far less ominous than it is.
Throughout the article most data are minimized, until finally near the end the revelation durable goods orders are revealed to be significantly downwardly revised for February, being lowered for a gain of 5.6 percent to a lower gain of 4.3 percent. That is a big difference, yet it's reported with no commentary and a noticeably absent shrug.
Unemployment Numbers and the Economy
Now let's look at the latest unemployment numbers. The U.S. Bureau of Labor Statistics reported the economy added 165,000 jobs in the prior month, while the unemployment rate fall 0.1 percent to 7.5 percent. That means the U.S. economy is chugging along nicely right? Wrong.
• barely keeps up with population;
• features mostly temp workers;
• leaves out prime-age males and all young workers;
• and keeps labor participation rate at a low level from 1979.
The temp workers are the most interesting to me. [It's a direct result of Obamacare,] whereby companies are protecting themselves by starting to hire temporary or part-time workers.
Consequently, a number of workers then go out and get a second job, giving the appearance there is more participation in the workplace than there really is, as well as more hiring being done than is the reality, as far as new workers entering the work force goes.
All of this must be properly identified and assessed by investors looking for data that give them as realistic as a look at what is really happening.
When all is said and done concerning jobs numbers, they are still all estimates, even when there are revisions to original data.
Besides all that, a big portion of the lower unemployment numbers come from those simply leaving the job market altogether; they're no longer looking for a job. At this point in time lower unemployment data are an irrelevant metric for investors and the health of the economy. That will remain that way until meaningful, full-time jobs are created.
Durable Goods Orders
The importance of durable goods data are they reflect how far beyond core staples Americans are acquiring. Lower durable goods orders mean they consumers are spending primarily based upon needs and not wants. It's not a sign of economic growth by any stretch of the imagination.
It also implies the lack of willingness of people to commit to long-term purchases of more expensive items. These include furniture, appliances, and heavy machinery, among many other products.
Two segments in durable goods orders that improved were orders for communications equipment and computers. Autos and auto parts saw a slight increase in orders, but that was only 0.2 percent, the lowest orders so far in 2013.
While not the pervue of this article, the boost in tech-related orders confirms my outlook for the big tech companies, which is they are about to soar.
Overall though, the drop in durable goods orders points to a cautious outlook, one that doesn't strengthen the idea we're in any type of real and sustainable recovery.
Orders for durable goods fell 5.7 percent.
Company Earnings
Another key factor in assessing the real condition of the American economy is what the earnings results really represent for publicly traded companies. While earnings are being touted in many cases during this earnings season, the reality is the majority of those earnings are from cutting costs rather than growth.
Companies are cutting to maintain an appearance of health, while they wait and hope for the economy to experience real growth.
If the economy doesn't pick up this will be exposed, as there isn't that much more companies can do to lower costs, as many have cut as close to the bone as they can.
Other than the occasional exception, the earnings of companies aren't something that can be relied upon, other than pointing to management doing what it can in a very weak economy to generate earnings.
The Federal Reserve has the Pedal to the Metal
If the economy were really doing that well, there would of course be no need for the Federal Reserve to continue to create money out of thin air. The fact that it has no intention of stopping stimulus measures points to the reality that the economy can't stand on its own, and when you look at the results of the stimulus, can't grow either.
What's disconcerting there is the Fed and Ben Bernanke continue to do the same thing with no positive results. What they need to do is take a step back and look deeper into the causes of no real growth after the creation of trillions of dollars.
One of the more obvious problems is banks aren't spending the created money, they're hoarding it while also using it to shore up their balance sheets. It's not reaching consumers or others wanting access to the capital.
All the money provides cover and the illusion of recovery, but if trillions do little or nothing to help, how can the creation of more money bring about different results?
Just picture banks and the government digging a pair of holes together using shovels. They both dig a hole, and then each throws the dirt they shoveled into the hole the other dug. That's the basic story of banks and the Fed at this time. It's simply done over and over again with the end result always the same. Maybe that's those shovel-ready jobs the administration has been talking about.
Money Velocity
One metric few investors consider or know about is that of money velocity. What this represents is the pace at which money is spent. This is one of the numerous things Keynesian money creation has no control over. Only those borrowing and spending have power to determine this, and it's totally related to the choices of those with capital at their disposal.
As inflation has dropped over the last 3 decades, so also has the velocity as which people spend money. This is a major factor in real economic growth, one that stimulus supporters don't want the average person to know about or consider. Those of us wanting to understand the health of the economy need to know this.
Lower Interest Rates
From all of this you may think I'm about to go into bearish mode for equities, but I'm not. The reason is there is another key element in the economic and investing picture, and that is low interest rates.
What that has done has pressured many investors out of what would have been considered safe cash investments, and moved them into equities. That's why there has been such a strong move in blue chip stocks with a good dividend record over the last year or so. Unless money is allowed to sit and do nothing in an extremely low-interest account or investment, it must be put to use somewhere. Over the last 12 months that has been blue chip stocks.
Those include Proctor & Gamble (PG), Kraft Foods Inc. (KRFT), 3M Company (MMM) and Merck & Co. (MRK), among many others.
Performances of the stocks over the last year are shown below.
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Proctor & Gamble
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The reason for showing these is to confirm people have been investing in blue chip stocks over the last year or so in lieu of placing money in banks, CDs, money market funds, and other non-producing financial instruments.
Obviously not everyone is doing this, but a large portion are, which has been the major impetus behind the climb in blue chips during a weak economy. It appears that blue chip period is starting to wane, with a new focus on big tech stocks emerging as the investment of choice.
All of this is to say it's the consequence of low interest rates, which have forced a lot of money into equities that wouldn't have otherwise been there.
During the next couple of years we'll probably see money travel about to different sectors of the market until those particular sectors exhaust themselves. At that time capital will find a new home. Also during this time it looks like each step will include a little more risk tolerance, which is why the recent upward tick in large tech stocks appears to be the next place investors will park their money.
Some big tech stocks moving up since the middle of April include Apple (AAPL),, inc (CRM), Microsoft (MSFT) and IBM (IBM). I would look for low forward price-to-earnings ratios and good entry points. Since it looks like this sector is about to take off, entry points look good right now.
No matter how much money the Federal Reserve or other central banks print, it's only if the money is spent which will determine the economic effect. That means the Fed really has limited power, and only the low interest rates have resulted in investors pouring money into equities, creating the illusion of prosperity and confidence.
The truth is consumer confidence is anemic, and that is evidenced by the hard data of the drop in durable good orders, which points to the fact consumers are also hoarding their money, using it for necessities of life rather than higher-priced items.
This article wasn't meant to be an exhaustive look at the American economy, but enough to show there are forces at work to make it look stronger than it really is. That includes media reports, skewed government data, a lack of understanding of effects of the Federal Reserve, and how low interest rates are driving the investment of capital.
What kind of recovery doesn't create jobs, has one of the slowest rates of growth in modern history, includes falling incomes, and includes little small business creation?
The reason for all of this is the Federal Reserve refused to allow the economy to take its natural course and cleanse itself out, which would have resulted in a more healthy economy going forward. Instead Bernanke and others got a messianic complex and decided we just shouldn't be allowed to experience the normal process of some temporary economic pain. That has produced where we are today, and the practices continue on. It's not going to end well when it all collapses.
What will happen in the short term (next couple of years) is what's relevant to investors. Money always finds a place to work, and the low interest rate environment, which will continue on for some time, is pushing people to put their money in investment vehicles they normally wouldn't have.
We need to watch the trends as they unfold, with the blue chip stock trend starting to wind down and the large tech stock trend starting to unfold. Once the tech stock trend slows down, money will look for another place to land. That probably won't be for another year or so, assuming the tech trend lasts as long as the blue chip trend did.
That's not to say some blue chips won't continue to climb, as some appear to be. But a number of them have reversed direction over the last couple of weeks right at the time the large tech stocks have started to rise. That suggest the money has been taken out of a lot of blue chips and reallocated to big tech. The trend has started, and I don't think this current cycle of investing is going to stop for some time. Money is simply going to migrate from sector to sector as risk tolerance increases. I think that gives a hint as to where money will go after the tech trend is over.
If this is the scenario, why be concerned about the American economy then? The reason is it is still being propped up by smoke and mirrors, and has very little foundational strength behind it. We must understand that even as we continue to stay in the market.
It also means the scenario can change very quickly when a central bank is printing money like it is today. We are in uncharted territory, and when most data point to fearful consumers and weak job numbers, we need to admit the economy is like a big house we built using a deck of cards. An unexpected wind could easily blow it all down.
When reading news stories and reports, we have to, more than ever, read and digest the terminology used and hard data reported. The hard data needs to be what we pay attention to, not the words used to manipulate that data in our minds. We shouldn't look for false comforters, but those presenting the best facts available so we can make informed decisions, whether the data are scary, negative or positive. In times like these we need reality more than ever.
The American economy is extremely fragile, and still years away from any meaningful, sustainable recovery. That must be part of our mindset when we make any investment decision during this season of time.