myfinancialmarket.com

You may have read about how now is the time to be buying stocks or mutual funds as the Market is nearing it’s lows. This would fall into “The early bird gets the worm” category. The thought is those who are moving cash into equities will be greatly rewarded in future years. This may be the case, yet I can’t help but wonder if the Market has further to go on the downside as we are just beginning to enter into what looks like to many, the potential for a true World Recession. Investors like Warren Buffett can afford to be buying now, as if he loses millions, well he has plenty more to fall back on.

Then there is the investement philosopy that goes along the lines of “The second mouse gets the cheese.”  This mouse avoids the mouse that was trapped trying to get the cheese and is justly rewarded. It is this category that I personally fall in. Sure I have plenty of cash now after months of periodically selling, but I am unwilling to be fully committed on the long side of the Market. Actually I am committed with buys in ETF’s that short the market, DOG (shorts the DOW) and SBB (shorts SP600 small cap stocks). This is part of my trading portfolio and I wouldn’t recommend these to anyone who is not a technical trader. I never thought I would short the market, but times have changed.

For long side stock trading I demand that a stock be within 8% of it’s 90 day high. You may ask why on this, and the answer is that if a stock sells of significantly, there are always those who missed the opportunity to sell and are waiting for a chance to sell after a significant move of gaining, lets say 10% or 20% off the bottom, thus the second mouse approach I take waits for this first sell off as starters.

If a stock later becomes within 8% of its 90 day high and I buy it there, my sell point is 15% off the 90 day high, thus a potential loss of 7%.  I do the same with the ETF’s that I buy. This is a little difficult with general Mutual Funds however, as most funds have minimum hold times without penalties, some 30 days, some 90 days, and some 180 days for example.  This approach is to minimize risk, not necessarily to maximize gain.

Keep an eye on the Markets, they are very close to recent bottoms, a break below may happen, yet a few percent may not be too bad, although a violation of recent lows could mean further downward movements.

Don

Billionaire and super investor Warren Buffett is suggesting now to be greedy on equities. As he points out when others are in a state of panic, he buys and when investors are getting too greedy, he sells. He talks about the lows of the DOW and points out that during the Depression, the Dow hit its low of 41, on July 8, 1932 and this was long before the actual economic recovery that followed.  Warren further points out that he can’t predict the short-term movements of the stock market thus he also doesn’t have the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. He feels what is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. I like his quote of “So if you wait for the robins, spring will be over.”

I’m sure he is correct for the long term, yet I just wonder how low the market will take us before it recovers. What he didn’t write in comparing the current Dow to that of the 1920’s and 1930’s, is that the peak of the Dow prior to the depression occurred in August of 1929 at a value of about 380. Given our current drop in the Dow of about 33%, that would be equivalent to a Dow of 253, a value passed easily on the downside in October of 1929. Buying stocks then would have been way to soon and an investor would have seen the Dow drop another 83% before it bottomed. I suspect we do not have this ahead of us, yet the question arises, does history repeat?  Is now too soon to buy? Certainly Warren can absorb further market declines better than the rest of us, but should we follow him now?  This is the question you should ask yourself. For now I have still kept a group of 20 Mutual Funds in my portfolio, yet am thinking that since I’m returning to my old ways of trading more often for next year, that at some point I’ll move them into cash. This would automatic start (not all at once) if the DOW breaks it’s current lows, or if there is a rally of sorts to sell into. Keep also in mind that many investors sell this time of year to capture losses for tax reporting purposes. With all the recent selling, perhaps this has already happened, yet there could be more to come.

Don

Technical Stock Traders who look at charts of stock market indexes or individual stocks like to look at recent Highs or Lows to judge where the next Market moves maytake them. In an Up Market, a technical trader would draw straight line along the bottom trenches of daily or weekly market results for a stock or Market Index. This approach is a little subjective in that the trend line doesn’t always line up perfectly. A sell signal would be when recent market data crosses below that line. For example, looking at the weekly chart of the DJ30 a line could be drawn that starts with the index lows of June 2006, March 2007, and August 2007 as the Dow was moving upward. The Dow then broke below this trend line sometime in November 2007 — certainly in hindsight a good time to sell. Each major low is considered a support level. If market action holds above this low this is healthy for subsequent moving back upward. This is referred to as “Testing the Lows.”  If you would take a look at the Google chart below and Click on a 5-day period (in the Zoom selections), you will observe that the DOW had recent lows of about 8000 on an intraday basis, although closing at about 8451. To a technician of the Markets, if the next moves in the Market can hold above this value, this is good news for long term holders. Even if the DOW breaks below the low a few percentage points that also may be okay — as long as the Market rally’s from these lows.

http://finance.google.com/finance?cid=983582&client=news

Many investors may have gone Long (Buying stocks or funds, that is) after the Market’s strong showing on Monday.  The problem is that the longer term trend is still on the down side as you can see be again using a trend line of the major highs since last November. Sure, the Market is at fire sale prices, yet these prices may even go lower, as we observed on Oct 15th, with a DOW closing of 8577.

What does this all mean for the average investor in 401K’s?  First of all, the current trend line on a weekly basis is still downward. If over the next several days or weeks the Dow holds above 8000, this is a start to the bottoming out process.  Then to break the current downward trend line, the Dow would have to break above somewhere around 10500. To further give an indicator of moving back to a Bull Market the Dow would need to move above August 2007 Highs of mid 11000’s.

Given the continuing down trend in the Market, it is definitely hard to suggest to anyone to be buying, let alone holding onto the funds or stocks they now own. I can only write about what I have done over this last year and that is to move slowly into cash positions, keeping in mind that if a major Market rally took place I would still have positions in the Market. I have a 401K account which I continue to contribute to as well. Also, for years I resisted shorting positions, however I have to be realistic and own small positions in DOG, an ETF which shorts the DJ30, and RWM, an ETF which shorts the Russell 2000. I will hold these until they either drop 15% from their 90 day high or if they under performover a month’s time period on a relative strength basis their relative Indexes. You, as an investor, should decide for yourself if investing in funds that short the Market fit into your own investment objectives.

In the meantime, lets hope the Test of the Market Lows holds,

Don

I suspect it is likely that investors of retirement age will recognize this Bob Dylan protest song of the mid ’60’s, yet these words seem appropriate yet over 40 years later as we are seeing a Market Meltdown like I haven’t seen in my investment time in the stock market (21 years), yet likely this is also an experience you are suffering from, unless you trade on the downside of the Market by shorting stocks or buying ETF’s which short various segments of the Market.

Since this Blog is about my financial markets, I will write a little about my investment years. Going back in time just a few months prior to Black Monday in October of 1987 when the Dow Jones Industrial Average fell over 22%, I became a technical trader, actually developing a trading method for Fidelity Mutual Funds prior to October of that year. I did this with a momentum (think of this as a price acceleration of daily ending prices approach.) For many years I traded Fidelity Funds using this approach. I even allowed for holding periods that Fidelity imposes which varies from 30 days on upwards. it was successful even through the downturns of 2000-2002. The method would follow what is moving best. If Foreign Stocks are hot, I would hold a mutual fund which bought these stocks. When gold is hot you buy gold, when bonds are hot, you buy bond funds. In subsequent years, I became less interested in doing daily downloads of Mutual Fund data and wished to find at least a weekly only or monthly only trading scheme. This would minimize my active involvement in the Stock Market as life does offer so many other pleasures than watching the minute by minute, hour by hour, or day by day movements in the Market.

During the last Bear Market of 2000-2002 I found myself moving out of the overall Market (call it “Fold em”), yet in the investment club I belonged too, I could hear the members suggesting they would like to have a longer term (than 30 days) approach to investing. So I took a look at this and came up with a once-a-month trading scheme.  What I did was to back test algorithms, using the same Fidelity Mutual Fund data base, yet instead of short term trading utilize a monthly trade whereby I would sell a bottom ranked fund from a group of 10 funds being held and buy a top ranked fund. This is referred to as Market Rotation - a technique utilized by one of the best long term investment newsletters, No Load FundX.  I modified my trading formula to fit the monthly time period and started trading Fidelity mutual funds monthly. This is still likely a good long term technique, yet because of the short term swings of the 2008 stock market this method has not been positive so far in 2008.

Although the monthly approach on a back testing basis would have lost a bit in 2002, the overall 1996-2007 results were quite impressive. In 2007 alone, the monthly trade method achieved over 25% gain. This year however, I see declines of about 30% — the method was no longer working. One lesson I have learned about trading the Markets is that there are indeed time periods when a trading system will not work and 2008 is one of them for monthly trades

A second change I made was to expand beyond Fidelity Funds only and to hold a basket of non-Fidelity Funds for at least one year. The one year hold was partly a result of fees that would be imposed for short term trading of non-Fidelity Funds and also to match the approach taken by the investment club I belong to where they would pick at the beginning of each year a group of 10 mutual funds to hold for one year. This allowed me to become familiar with what other investment club members were holding for their mutual funds, and to also allow me to recommend various non-Fidelity funds to others I know. This approach also introduced me to many good funds including conservative funds such as PRPFX. I liked this, although being at heart a technical trader I was always nervous about what I considered a long term commitment.

The one year hold method I chose was to hold 6 mutual funds (Non Fidelity). I utilized an evaluation approach that required high price momentum over the previous 3 years.  The 6 funds would be diverse in style so as not to be too correlated. For example, one fund may be a Large Capitalization Growth fund, whereas another may be a Small Capitalization Value fund. The risk was small, the investment was minimal. Given a few good Market years since 2002, a person soon forgets those years when the NASDAQ lost about 50% following the bursting of the dot-com stock bubble of the late 1990’s. (as a side note, we now are experiencing a bursting of the real estate bubble)

Continuing on this path of one-year holdings of funds,  I looked at holding 20 Mutual Funds which offered greater diversification into the other segments of the Market (once again how quickly we forget what a Bear Market can do to our portfolio). Twenty funds were selected so as not to hold more than 5% of assets in each fund. So in addition to the usual selections of Large Cap to Small Cap, Growth to Value to Blend, I added in holdings of 3 International mutual funds including the segment of Emerging Markets. To further diversify and to reduce overall risk, 3 Bond funds were included. More diversity was achieved by adding in a Real Estate fund along with a Convertible Securities fund. To complete the list the conservative fund mentioned above, PRPFX, Permanent Portfolio was included. This fund invests in Swiss Francs but also has a good portion in gold. The thought for what I called the Lazy 20 was that with a wide diversification, I would always have one of the segments doing well. Today when I look at the performance for the Lazy 20, I see this thought didn’t live up to its expectations as the group is down about 32% for the year as I write this.  Real Estate is actually the worst performer in this group with a decline of 58% for EGLRX (as of Oct. 6th) and the best is a bond fund, BTTNX, with a positive gain of over 5% for the year. To be on the disclosure side of things, my total holdings in the Lazy group is about 15% of my total portfolio, as I’m still not basically a buy and hold type of investor. Also my holdings in the Lazy 20 are not currently evenly balanced as I’m overweighted in Bond funds as well as PRPFX.

So the question really is where do I go next? For sure I will re-evaluate which funds to hold in the Lazy 20 group as well as to relative percentage of holdings. For the future I’m leaning to more trading of ETF’s (Exchange Traded Funds) which include shorting-of-the-market type of funds. This way I effectively can create my own Hedge Fund ( A fund that can either go long on the Market, or short the Market). I will also continue trading individual stocks, which as an investment style, has done the best for me this year with a year to date positive result.  More on these in future writings.

Don

Morning of October 3rd, 2008

As I write this morning, the Market is moving upward, yet yesterday the Dow was down over 3%. Since I look at stock charts on a daily basis, the so called good news is that it did not fall below Monday’s low. On the note of viewing stock charts, I sure like how Google provides stock charts with News about the chart. You might start with this one for the DJIA:

http://finance.google.com/finance?cid=983582&client=news

Years ago I had the intention of playing in the Options market and had developed a daily trading system, even opening up an options account with a Options Broker.  Although the results for the few months that I traded options were positive, I stopped options trading for a couple of reasons. The first is the volatility, watching quite large moves in my portfolio I had allocated for options. The second is the time it took to enter in the daily information in the model. The third is that at the same time a Mutual Fund trading model was performing well enough, and it didn’t require constant daily inputs into a model. Of course with the ability today to download stock and fund values, the effort now is easier.

The point here is that with the huge swings in the Market these days, it is tempting to once again go the options (or futures) route. In a way though, you can do a little of this by trading select Exchange Traded Funds, or ETF’s as they are called. ProShares and Rydex both have ETF’s that move at 2X to the Market, either going with the Market or against it. Before I continue here, a short disclosure is warranted, as given that this group of ETF’s move faster than the Markets, you may lose quite a lot on trading these. Continuing on though, ProShares as a series of ETF’s with Ultra or UltraShort attached to them. Check out symbols SSO or SDS, for example which go approximately twice that of the SP500. Rydex has a similar set, RSU and RSW.

What I have been leading up to is that I decided to trade RSU, a 2X of the SP500 ETF. Yesterday as the Market was tanking I bought a small amount of RSU and today I will sell it.  A word to the wise is to use limit orders as Market orders on these may not give you the best price. Again a disclosure is that this is what I do for only a small amount of my portfolio and I accept the fact that I may lose on trading RSU or other ETF’s, so be cautious if you decide to follow this approach. My overall point here though was to introduce you to ETF’s that can move faster than the Market and represents another way for investors (or should I say Traders) to play the Markets.

Don

Watching the roller coaster ride of the Stock Market over the last several weeks, it has been hard to provide suggestions on where to proceed with investment dollars (although a day trader could have made out quite well given the volatility). Just when the Market would move up a bit, it would then tank, and vice versa. Today is different. I thought I would post some thoughts for investors.

Today the Stock Market reacted to the failure of the House of Representatives to pass a bill that many thought would help bail us out of the sub-prime mortgage mess and its subsequent fallout of many financial institutions. Our own personal bank, Wachovia, today merged with CityGroup (stock symbol “C”). Wachovia’s stock had plummeted 82% before this takeover — certainly a good lesson on not to put all your investment eggs into that proverbial basket of one company’s stock.

I am writing today, once again reminded of the 1987 crash of the stock market, yet it is hard to believe the Dow Jones Industrial average plummeted 777 points, a new record drop.  For several months some market analysts, looking at the history of the Stock Market,  have been writing about how a Bear Market will climax with a very sharp sell off — for sure we had this event today. The question though is whether this is the bottom or not?  Following the Crash in October of 1987 — yes, this would have been a great time to get back into the Market. Is today that day?  As Yogi Berra once stated, “It ain’t over til it’s over”

I have been speaking to young investors today and I reminded them that their best asset is they are young enough to recover over the next 20 plus years. Their best asset is their future career years. For most below the age of 40, this will work in their favor to recapture those 401K and IRA dollars they have seen drop in value 25% or more. By investing on a continuing basis in your 401K, this comes out of every paycheck. which in a Bear Market actually buys more shares of stocks or Mutual Funds over the long haul and you will likely recover. What you will want to do though is to examine just how diversified your portfolio is and for sure just how much risk you wish to expose yourself in order to be able to sleep at night without a lot of financial worry. Like I did almost 20 years ago, you may wish to become what is called a technical trader which is a person who uses Technical Analysis to buy and sell stocks or Funds of stocks, usually on a short term basis.  You may also chose to be a Couch Potato and simply invest in a basket of Exchange Traded Funds (ETF’s) or Mutual Funds. I did both and although being a technical trader takes more time, I still have  positive gains on a rotating stock trading portfolio of a small group of small capitalization stocks. Unlike the past 10 or more years of great results, trading of mutual funds and ETF’s have produced negative results in 2008. Or maybe you will just want to sit down with a Financial Advisor to set your financial goals and have that person suggest where to place your investments. Keep in mind, that finding a truly good one may be the hard part.

A real concern I have is for those who are closest or actually in their retirement years, partially living on yearly withdrawals from their retirement accounts, along with Social Security and with perhaps a pension. I believe I have mentioned before that financial analysts usually recommend to withdraw no more than 4-5% or your portfolio on a yearly basis (adjusted yearly for inflation). This year, for those retiree’s who are heavily invested in the Market, this means up to 5 years of retirement withdrawals have disappeared. By following this rule, the next several years will even provide them with less dollars based on the 4-5% withdrawal rule. This group, who may include those who are hoping to finance college educations for children or grandchildren, have less time to make up the losses incurred so far this year. Quite often the retirement folks have their dollars in CD’s or money market mutual funds. I owned one CD which was from a bank that went bankrupt and taken over by another, yet I was lucky that yet another bank took them over. In any case, a several week wait was necessary in order the recover this money. It would be wise for this group to also analyze their market exposure and if they have not already done so, examine their relative holdings between CD’s, bonds, stocks, amd mutual funds. Remember there is risk even in CD’s if you hold more than what the FDIC will insure.

I hope to write more soon,

Don

When I started investing seriously, the time was Spring of 1987. Little did I realize what was to happen in October of that year. I had just started developing a Mutual Fund trading model based upon momentum of prices and had made a few purchases during the Summer of 1987 with some funds from an inheritance.

On October 19th of 1987, that small investment dropped even more than the 22% of the Dow as quite often stocks or mutual funds that have outperformed the overall stock market will sink faster than the market averages in a major sell off.

Today, September 15th, 2008 the Dow lost over 4%, not as much in a day as that of October, 1987, yet since October of last year, it has also lost over 22% of its value. It just has taken a lot longer this time around.

As it turns out, that October in ‘87 was a great buying opportunity, and you have to ask yourself the question “Is now also another great opportunity?” The simple answer is we do not really know yet, only history can tell you if this is the case. Yet in the long term scheme of things, using dollar cost averaging for your investments (like a monthly 401K or IRA contribution), you will be buying shares that are on sale - maybe not the best price yet, but certainly for long term investors at a discount.

At some point you should be examining your long term holdings for keeping or trading. I do this on a yearly basis typically for mutual funds that I decided would be a 1-yr hold.  (but admit, there are a few exceptions). What I like to do is compare the funds I own with their peers. So if I own a mutual fund that invests in Large Capitalization Growth stocks, that fund should have done better than most of its fellow funds in this category. This process does get complex as perhaps the fund you hold did well above market averages for the last several years, and is now paying the price of success. In a Bear Market, this fund is likely going to sell off as investors wish to lock in those gains achieved over the last few years.  On the other hand a good fund manager has unloaded stocks in his portfolio and thus will minimize the funds losses — this is value added by the fund manager. This is what you should be looking for at the end of 2008 for your investments if you hold mutual funds. The funds of choice are those that did well during the Bull Market years, and not too bad duirng this Bear Market time.

Don

Many investors in 2008 have either:

1. Held Cash in 2008, ready to invest, but have not.

2. Sold the Market Short, made good money, and want to know what’s next.

3. Have beaten the Market so far this year with your savey investments without shorting

4. Have been close to Stock Market Averages

5. Have lost some value so far this year with your Buy and Hold investment style.

6. Have investments doing worse than the overall Stock Market.

6. Held your investments in CD’s

Okay first of all, Blogs are kind of new to me as far as accepting comments and I have now reviewed and accepted non-spam comments to this Blog (Do you see these?) as opinions of readers are important to those who have taken the time to respond to my postings. It is okay for any views from what I see, as if we had perfect vision, we would all be multi-millioneres, right? (Remember — “Skin The Cat” We learn from the postings of multiple sources, and we make our own path into the investment world from these learnings.

One question I am asked is “What do you think the market will do next year?” (let along next hour, day, month, etc.) I can only say there is a lot of both subjective and objective opionions on this. There are those who use technical analysis (stock or mutual fund chart patterns) to provide market forecasts (sometimes down to the minute), and then there are those who look at economic trends (Stock price to earnings historical values) to suggest this is a buying or selling opportunity.  My answer is “I really do not know, I can only suggest to you to make investment decisions based on your own research including analysis inputs from successful investors. The more time you spend on investments, I believe the better off you will be. Will FUND XYZ go up, Will Stock ABC go down?”  As always the answers, from my perspective is the same “I really do not know?”  But what I do is look at probabilities based on past performance. in other words, if Mutual Fund JKL has done well over a recent time period (from 90 days to 3 years in my case), would I buy it or should I sell it?)  For the 90 day analysis, I trade Mutual Funds once per month on this basis. For a 3-year analysis, I would trade at the end of any given year. Both approaches have beaten the overall Market on a long term basis when back tested (be cautious on this note, as back testing can be what I call “curve fiting”, with the once per month result being best, as expected since it can react to Market changes in a more timely way). (As a side note, a real good trader can do much better, yet when you look at Hedge Fund results, you wonder just how many great traders are out there). Personally, I have found trading stocks on a short term basis providing the best performance, with stock selections being based upon the previous economic data from the past couple of weeks coupled with technical indicators, especially price momentum. For Mutual Funds, monthly trading has done the best for me (keeping in mind the rules of short term trading fees of mutual funds, as many funds punish you if you trade within a required time frame.)

Not all investors wish to look at stock charts, earnings reports, recent market performance,  moving averages, volume data, etc. since to go this route requires time they wish to spend in  ”Life”, whether it be hiking in the Alps or your neighborhood, crusing on the Medeterrian or picknicking on a nearby lake, or just enjoying an eveining dinner with candle lights. They do, however, wish to see their investments grow given their choices of time they wish to spend on such. — sounds simple, but as we all know investing is never quite simple.

To answer the question of this particular Blog posting, it is best to look at how the Market moves. The Stock Market is a predictor of not today as this is what everyone already knows, but the vision is for many months from now. What Fund Managers try to do, is say “okay, this market sector is not doing well now, but 6 months from now it will be a top performer.” Take a look a Financial stocks and funds. Those bank stocks that have lost a bundle this year, yet are starting to move back as the market analysis types are thinking that Banks will finanally recover as the mortgage mess subsides.  Will they continue an uptrend?  What about inflantioneffects?  Both good questions. From what I observe, the Market is looking at Small Capitalization Stocks right now. This has been an outperforming on a long term basis. These are companies that are likely new, growing in sales, yet not large enough that the overall market has recognized them as performers of the future. I would not have said that a couple of years ago, but recent overperformance of this group suggests otherwise.

Olay, it has been suggested I keep the Blog postings short and I will sign off here. Just a comment though is that likely my next postings needs what is called a Disclosure Statement - you know the small print that says you may lose money with any investment. I am still working on a proper statement to such.

Happy Investing,

Don

Mark Twain used this in A Connecticut Yankee in King Arthur’s Court in 1889: “she was wise, subtle, and knew more than one way to skin a cat”, that is, what was meant is that there is more than one way to get what she wanted.

What this means in modern investment styles is that there are many unique ways to gain in the Stock Market - and what we will do is to find our own approach as to how we wish to invest. Some of us will invest our money one time  in a stock, mutual fund, bond, or CD and just hold on to that investment in what is called a “Buy and Hold” investment.  We do this for various reasons — most likely we do not wish to spend a lot of time in figuring out investments being a major reason why. Other of us will be more aggressive and invest in what is called derivative investments - options and futures, and monitor these daily, if not hourly, or by the minute.  The daily down load I do from TC2000 ( http://www.tc2000.com/) has at the end of a day a market summary from a technical point of view with a commentary from Don Worden, who has more Market experience than many of us have lived. He also accepts inputs from readers about their trading approaches. He may not even agree with some who submit their approaches, yet he publishes these from readers and welcomes them to the  Roundtable of Knights Who Think for Themselves as he is looking for submissions from those who are independent investors. Worden provides them Knighthood within the TC2000 community.I am lucky to be referred to as Sir Detail Stickler. He once referred to an early trading approach I wrote about involving selling a stock after either a 5% gain or 5% loss as this is ”Another way to skin a cat” - meaning ( by my interpretation) that this approach will make profits, yet perhaps there are other ways that may work better as well. Although I have since moved on from the 5% approach, what comes to mind is that each of us will find an investment style we are comfortable with, even passionate about. This is what is important — pick your style, yet be open to move on if you no longer connect with it. The message here is to invest in a style that fits your own personality, not someone else’s.

Don

Now you may ask, what does this puzzling title mean?  Thanks to this site being a personal blog, this provides some freedom to diverse, so here it goes. Several years ago, one of the great mutual fund managers of our time, Peter Lynch, of Fidelity Magellan Fund fame, grew his mutual fund to one of the largest of its time.  He has written a few books on his approach, “One Up on Wall Street,” being one of them. If you wish to study the Markets, this is a good read, along with “Beating the Street.” See Amazon’s site to buy either

http://www.amazon.com/Beating-Street-Peter-Lynch/dp/0671891634

What reminded me of Peter Lynch today was a financial comment on the business news about Apple, in that it was said that “Steve Jobs knows how to make money without trying” Why was this mentioned in the financial press?  It is because apparently Apple is earning about  $1M per day, on top of what ever they get from iPhones and MACs — and gues what, it is from the Applications that people are buying that go with the iPhone.  What Peter had wrote many years ago is to make the best money on Wall Street is to look around you as to what you and others are buying, and then buy the stock — “Buy what you Buy.”  I had thought with the few $4.99 applications I have bought for my iPhone, that this would be just a small addition in Apple’s earnings. Yet, how did I even realize that so many iPhone users were doing the same?  I had already added AAPL to my portfolio of stocks to hold for a TBD time as iPhones have been selling so well. Yet this was not the only criteria.  Just walking into a Palo Alto Apple store and seeing all the activity is enough to suggest they are on a roll (A friend in Michigan says the same). So I bought. Will I hold AAPL for ever?  Likely not, as competition is likely to come forward and if Apple does not continue with visionary products I will sell.  Should you buy AAPL?  If this company fits into your well diversified portfolio, not dominating, and if you feel like I do, then it may make sense for a small percentage of your investments. Just keep in mind that owning individual stocks can be a roller coaster ride, and I am sure AAPL will be one of them. To be fair, this is not necessarily a recommendation and AAPL is only an example here just to provide some learing on using your own buying tendicies to pick a stock.

Don

ps - GPS based movie theatres near you and another iPhone application for finding local restaurants have been my favorites. Hope to play Solitaire on my next flight as well.