D’oh!

A perfect example of why investors should not bottom guess!

After the close, Apple gave weaker than expected guidance for the coming year, and the stock gets pummeled, down $15 to 140. That means off the $200+ high, Apple is now off 30%.

The Dow futures are swinging around wildly — down 410 — 263
— 52 as I type this. Its still early, and I expect these to
bounce around quite a bit until they settle in.

No worries — the Fed can cut another 75 bips again tomorrow…

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What's been said:

Discussions found on the web:
  1. Suge Knight commented on Jan 22

    Fed should cut 50bps tomorrow due to Apple’s outlook and 50bps the next day due to EBAY’s weak outlook. I’m so glad we’re out of the woods, the subprime issue is behind us now.

    Suge

  2. Jonathan commented on Jan 22

    Can’t they just do a 10% cut and pay us the difference?

  3. Owner Earnings commented on Jan 22

    At least 50 basis point come next tuesday? Any takes for 75?

  4. SINGER commented on Jan 22

    it’s still up from $6 in 2003!!!!

  5. BG commented on Jan 22

    Let’s just go ahead and get it out of the way and cut all rates to 0% and be done with it. Can you believe anyone would even mention the word Goldilocks after a day like we have had. What an idiot!

  6. bugly commented on Jan 22

    Full Point next week- and I thought the Plung Protection Team was just a bunch of B.S.

  7. Suge Knight commented on Jan 22

    Bernanke is saving the 100bps cut for next week. He has plenty of ammo until we hit ZERO. Will it be possible to implement ‘negative cuts’ after that?

    Suge

  8. Chief Tomahawk commented on Jan 22

    Right on time!!!!!

    Here comes Ben Stein to tell everyone invest for the long term…

  9. Ross commented on Jan 22

    Do not forget about after hours trading. I know it is thin but I got off a bunch of QID at nice prices on the Apple hair ball.

    I love inefficient an volitile markets. Sometimes you can make your whole year in a few days. Better lucky than smart.

    Excellent post on CR about CMBX spreads. Having sold a piece of commercial RE in early 06 on a 3.5% cap, this may well be the next shoe to drop.

  10. Jon H commented on Jan 22

    What kind of projections were people seriously expecting? Hel-loo-ooo?!?!

  11. blam commented on Jan 22

    IMO, the markets have been dominated by out of control speculation by the IB, hedge funds, and pension funds. These panic rate cuts would be okay except that all easing and/or liquidity is sucked by the speculators and put to “work” in the futures or equity markets, with leverage.

    The CB’s are going to have to smash the hedge funds and speculators flat beyond recognition to get this under control. The problem is they are taking us all down with them.

    I don’t believe it’s over.

  12. KirkH commented on Jan 22

    Apple is running into the good enough factor. Some of us just want a MP3 player. Apple is trying to sell me 4 Terrabyte portable Movie players that also happen to play MP3s.

    If I had some more home equity money maybe I’d bite. Moore’s law is a cruel mistress.

  13. tedzbear commented on Jan 22

    Just a personal observation from Studio City, CA. Seems like all the stores along Ventura Blvd. have sale signs with markdowns of 40-60% off. I liked some of the stuff in Pier One Imports but I didn’t buy anything.
    Anyone else have this observation?

  14. knowno commented on Jan 22

    Everyone should take a look at Fusion IQs stance on AAPL.

    A sell signal was issued in early January at 184.

    Awesome tool Barry, I’m definitely keeping my subscription.

  15. Jay commented on Jan 22

    tedzbear: in southern/central Connecticut, lots of new (2006-07) strip malls with vacancies (notably, two new Citibank branches sitting next to empty stores). Belly up: Tweeters (mid- to high-end electronics), Quiznos sandwiches, Bombay Company. Three music/video stores gone (Strawberry’s/Coconunts/Fye). Elimination of most if not all cell phone stores. Traffic at Home Depot and Lowe’s absolutely dead silent during the midday–all the contractors/subcontractors/tradesmen gone, as well as the home decorator queen bees. Very quiet at Circuit City. Saw five forlorn Nissan car salesmen in cheap black suits–tall, barrel-chested salesguy types, wordlessly watching the wind blow snowflakes down. On the upside, we have a new liquor store!

  16. Mike M commented on Jan 22

    “No worries — the Fed can cut another 75 bips again tomorrow…”

    My thoughts exactly. We’re covered for another five or six days or so.

  17. Vermont Trader.. commented on Jan 22

    BR – I am a little confused…

    If you believe that we are not going to back to the stone age and the US won’t collapse and burn then at some point stocks will be a buy.

    If the economic data didn’t show the reccession was coming then how do you have faith that it will signal the recovery? If corporate leaders and Larry Kudlow didn’t see it coming how will they know when its over?

    Do you wait for the 50 day to cross the 200? Could be a suckers rally.

    Being short the market isn’t a long term strategy. You aren’t going to short the SP500 and hold the position for 20 years till you retire. You might short individual stocks but not the market as a whole.

    SO how do you know when to go long without trying to guess the bottom at some point?

    ~~~

    BR: But the “economic data DID show recession”:

    -The inverted Yield Curve
    -The robust and sticky inflation
    -The slowing retail sales
    -The punk job creation
    -The negative LEIs
    -The significant decrease in new home sales
    -The large drop in auto sales.
    etc.

    It was all out there — you just had to tease thru the data to find it . . .

  18. Donny commented on Jan 22

    tebzbear

    It’s funny you say that. I don’t want to sound like an alarmist, but I think something is wrong … terribly wrong.

    Example:

    My wife and I were in Vegas over the weekend, and she drug me to that huge mall on the strip. I was somewhat taken aback by the lack of bodies, in fact I brought it up to my wife 3 times. The only store that was packed was Apple Store.

    I live in Orange County, CA, and I visibly noticed less traffic in the stores during the holidays.

  19. Winston Munn commented on Jan 22

    The new phone book is here! The new phone book is here!!!

  20. Suge Knight commented on Jan 22

    Let’s just imagine Bernanke cutting 50bps tomorrow morning, how do you honestly think the market would react? I’m not being ‘unrealistic’ here, another cut is coming in less than 10 days.

  21. Keith Shepard commented on Jan 22

    Yay! Die Apple stock, D-I-E!!

    /is short.

  22. Ross commented on Jan 22

    Vermont Trader, even simpilar, take the stated gdp growth and take away the REAL rate of inflation and VOILA………. We have been in a recession since last summer.

  23. FormerlyknownasJS commented on Jan 22

    “No worries — the Fed can cut another 75 bips again tomorrow…”

    Lol, too true. Sadly, by trying to interfere in market psychology and perfectly ordinary market repricing, the Fed has set itself up to deliver or disappoint anytime stocks go down. What an incredibly bad move on the Fed’s part. They can only pull off that move 4 or 5 times, then it will be click, click, click…hmm out of ammo. The sloppiness of the monetary move boggles, and to think I was worried about the ramifications of monoline impairment and counterparty risk when I should have really been worried about a bungling Fed. Unbelievable.

  24. Winston Munn commented on Jan 22

    Donny wrote, “It’s funny you say that. I don’t want to sound like an alarmist, but I think something is wrong … terribly wrong.”

    I’ve posted this before, back in August when I wrote that the big threat to the economy was a credit crunch.

    From the Idaho Observer:

    Quote: “Chairman of the Federal Reserve Board, Marriner Eccles testified before the House Banking and Currency Committee September 30, 1941. He was asked by Congressman Patman, ‘Mr. Eccles, how did you get the money to buy those two billions of government securities?’ Eccles replied, ‘We created it.’

    Patman asked, ‘out of what?’ Eccles answered, ‘out of the right to issue credit-money.’ Patman then asked, ‘And there is nothing behind it, is there, except our government’s credit?’ Eccles responded, ‘That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.’ End quote.

    Let me point out that last line again – If there were no debts in our money system, there wouldn’t be any money.

    When debt contracts, money contracts. We are in a credit crunch and near credit crisis.

    What does the Fed fear? Deflation.

    That is what the fed is fighting – it is much larger and much more frightening to them than simply the stock markets or moral hazard.

    The Fed is trying to prevent a collapse of the U.S. economy into a deflationary recession.

    You are right. Something is terrible wrong. And that is we are 100% reliant upon debt expansion to sustain growth.

    No debt; no money.

  25. Vermont Trader.. commented on Jan 22

    You were right on about the economy. I appreciate your point of view a lot. I spent all of last year trying to keep my shorts on. Wasn’t always fun.

    I guess my point is that it was a pretty rocky road between the day I turned bearish and the day that the market seemed to agree. I’m still paranoid.

  26. rickrude commented on Jan 22

    Let’s just go ahead and get it out of the way and cut all rates to 0% and be done with it. Can you believe anyone would even mention the word Goldilocks after a day like we have had. What an idiot!

    Posted by: BG | Jan 22, 2008 7:23:26 PM
    ??????????????????????????????????????????

    not really an idiot, he can still just print
    USDs, straight monetization without regard for any interest rates. Let the markets determine a fair interest rate..
    while Bernanke prints more.

  27. John commented on Jan 22

    What it really is Winston, boomers want their kids out of the house before the crash and half our wealth is gone.
    (Or, maybe not. Just a thought.)

    I wonder if another bubble is even possible.

  28. Stuart commented on Jan 22

    AAPL is a great company, I love the products but is the poster child for consumer discretionaries… That is a sector you do NOT want to be in for 2008. Their warning after hours confirmed that.

  29. Winston Munn commented on Jan 22

    Stewart,

    Are you saying that avoiding discretionaries is the better part of valor?

  30. Aaron commented on Jan 22

    AAPL’s earnings will likely cause the tech sector and the overall Nasdaq to underperform the Dow and S&P tomorrow. It will be interesting to see if we see a huge divergence in the Dow vs the Nasdaq or if the Nasdaq will drag the Dow down.

  31. wunsacon commented on Jan 22

    >> Are you saying that avoiding discretionaries is the better part of valor?

    Hahaha! Reminds me of your question about a week ago: “So, is it better to be CINA than heard?” ;-)

  32. Tom B commented on Jan 22

    “AAPL is a great company, I love the products but is the poster child for consumer discretionaries”

    The economy is depressing me! I think I’ll go out and buy a new iPod.

    Seriously: profits up; Mac sales way up; iPhone sales on track to exceed 2008 goals; iPods, flattish in the US. This justifies a $15 drop?

  33. Auto Mechanic Guy commented on Jan 22

    The Big Japanese Rally seems to be fading a bit.

    Do you think Poole’s wife likes him being called out as the dissenter all the time? She’s all like, “Really Bill, what will the neighbors think? Just agree with Ben the next time he calls.”

  34. Chuck Ponzi commented on Jan 23

    Barry,

    No offense. Love the blog, read it ever 30 minutes.

    However, sarcasm is unbecoming. It comes across dry and lifeless. Good blogs resemble good reporters, and I’d hate to lose you to the sarcasm monster.

    Chuck Ponzi

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