• Investing & Markets

Market Digest – Week Ending 9/21

September 21, 2012 | Craig Birk, CFP®

Stocks were little changed, taking a breather after last week’s Fed driven enthusiasm. Economic data was generally weak, pronounced by soft results from FedEx and Norfolk Southern. The exception was ongoing strength in the rejuvenated housing market. Treasuries recouped some of last week’s losses as looming Fed purchases drove mortgage rates to record lows.

Weekly Returns:

S&P 500: 1,460 (-0.4%)

MSCI EAFE: (-1.1%)

US 10 Year Treasury Yield: 1.75% (-0.11%)

Gold: $1,773 (+0.11%)

USD/EUR: $1.298 (-1.0%)

Major Events:                                                                                                                                                        

  • Monday – Apple sold more than 2 million iPhone 5s in the first day of pre-orders, more than double the previous record.
  • Monday – The Empire State Manufacturing Survey indicated conditions for New York manufacturers worsened more than expected.
  • Tuesday – FedEx cut its global growth forecast for 2012 and 2013, citing deteriorating conditions in China.
  • Wednesday – August sales of previously owned homes rose 7.8% from the prior month and single family home starts increased by 5.5%, both ahead of expectations.
  • Wednesday – The Bank of Japan announced an aggressive expansion of its monetary-easing program, increasing its asset purchase program to one trillion dollars.
  • Friday – Spain’s Economy Minister held talks with a commission about a series of structural reforms, fueling speculation positive budget reform will be enacted.

Our Take:

Buy on the rumor, sell on the news.

The iPhone 5 officially went on sale today, once again with unparalleled success. The device is expected to sell over ten million units this weekend. Almost as if planned, Apple’s stock price crossed the $700 per share mark in conjunction with the launch.

Apple is an amazing company with amazing products. It is also a noticeably large part of a lot of individual’s retirement portfolios. Most people we talk to who own shares won’t even entertain the idea of selling. We don’t have a forecast for the stock, and it can just as easily hit $1,000 as it can $400. But for those who are uncomfortably overweight, it feels like a reasonable time to take some profits – especially with the long term capital gains rate potentially increasing next year.

For perspective, based on current margins, Apple would need to sell more than one iPhone to every person on the planet to generate its current market capitalization. Seems like a stretch. Then again, at least a few of us here at Personal Capital will be adding ourselves to the list this weekend.

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