What goes Down will go back up

For any of our readers who viewed this blog yesterday you will see that we advised you to buy APPLE early this morning. Sometimes with the glut of raw data in our arena, and in a time when 24 hour financial news is available at the push of a remote control, sometimes it all come down to good old fashion common sense. In this case that is what happened.

Apple's stock frequently experiences high volatility, however that is not odd for the technology sector. When Steve Jobs announced that they would cut the price of the wildly popular, iPhone, the markets reacted unfavorably. How quickly we forget, Apple announced today that it has sold 1,000,000 iPhones, more than one month ahead of analyst predictions. Based on that news the bulls came out to run through Silicon Valley.

All signs indicate that Apple will continue to rise, the prices have fallen and customer demand is creeping upward, in spite of hard financial times for many. This is a stock that you can get in for the short term, but it will pay off in the long term as well.

Sir Issac Newton

The goal is to buy low - so buy apple. This week the stock will bounce back from its downturn last week, when it cut the price of the iPhone. There is no reason to think it will stay down, so buy now! Right Now! This is a short/medium term investment.

Buy Sony, Samsung, and Mitsubishi, while they have all dropped, they too will bounce back.

Week in Review

Friday DJ plunge
The Dow tumbles more than 240 points after the Labor Department reports the weakest jobs data in four years. Investors also weigh comments from former Fed chief Alan Greenspan about volatility in the stock market.

Country Wide cute more jobs
Reacting to a meltdown in the subprime housing market, the largest U.S. home-mortgage lender is expected to announce plans to reduce its work force over the next several months by about 20 percent. This is in the wake of the Bank of America bailout. What's next?

Home prices have fallen in 1/3 of the metropolitan areas in America over the past three months. How are values where you live? If you are trying to sell now, you may want to be very careful the time is bad. On one street in Cuyahoga County, OH there are 9 houses for sale.

The mortgage "bubble", while it has not you extended into the Prime markets, it has made its way into the creative market. Even high value homes are loosing their value and people are loosing their homes. What happened was that years ago, a man with a 680 credit score could either take a standard mortgage on a 3 bedroom, $250,000 home or he could take a "creative" mortgage and move into a 5 bedroom 1/2 million dollar home. In short prices are falling, and falling fast.

Fed to cut rate?
NEW YORK (AP) - The arrival of September was supposed to bring more clarity to the economic impact of the current credit crisis. Instead, each new bit of data coming out seems to be creating more confusion.

The first labor market contraction in four years, as revealed Friday in a weaker-than-expected jobs report, shows that the housing and mortgage collapse is putting some strain on the economy. And the continued dislocation in commercial paper markets, where companies raise cash to fund their operations, should be taken as a warning sign - in flashing red - that more bad news may be coming.

Yet plenty of good economic news still stands out. Strong August sales results from retailers and manufacturers suggest the painful credit crunch's effect on the broader U.S. economy has been limited so far.

Anyone hoping that Federal Reserve policymakers will reduce the overnight bank borrowing rate when they meet on Sept. 18, should not ignore the positive signs the economy is giving.

HSBC is at it again

Banking behemoth HSBC Holdings announced on Monday that it has agreed to purchased a majority stake, 51.02%, in Korean Exchange Bank. What this does is effectively increase HSBC's footprint in a new and emerging market, the Korean Peninsula.

"HSBC's presence in Korea is very small, compared with Citibank and Standard Chartered. So I think they needed some acquisition to have a meaningful presence in that market, and KEB is a good platform," said Paul Lee, a banking analyst with Tai Fook Research in Hong Kong.

"It reinforces the strategy to expand in the Asian markets through acquisition, if necessary," said Lee. "Korean Exchange Bank will be worth more under HSBC than with Lone Star due to banking synergies."

If you are looking for a value stock in an emerging market, KEB will be a good. While HSBC has wide exposure to the mortgage markets in the USA, it also is so well diversified that profits are not an issue. Therefore, they will increase KEB's efficiency and share price. Also keep in mind that China is expected to raise interest rates before the end of the year. How will this rise affect Korea is yet to be seen.

HSBC is aggressive, do not expect this to be the last you hear from them before the end of the year. I expect to see them take over other smaller banks in other emerging markets such as Central America and Eastern Europe. When the Beast is hungry he will eat.

iPod Touch

As anticipated Steve Jobs has done it again. This time he has made the iPod obsolete. When Apple released the iPhone 3 months ago, stores were mobbed! That hype has paved the way for the new iPod Touch. Apple currently sells almost 10 million iPods (in its numerous variations) every quarter. With the Holidays around the corner, expect those numbers to surge again. The P/E ratio of Apple makes it an attractive long term investment and very stable. There will always be a certain amount of volatility, but if you are looking for a "safe" gamble, bet on Apple.

There are a number of sites that will offer much more technical information as well as ipod Touch diagrams. You may want to check out some of the iPods upgrades so you can become with that your kids will wants for Christmas.

Today's Picks

VMWare Inc (VMW): Virtual is the new real, or so it seems. A quick chart and y
Apple (APPL): The new iPOD release was flawlessly timed, school has just started for the youth of America, and no teenage wants to be left behind. Expect to see sales surge - again - in the coming months. You have birthdays and holidays rapidly approaching.
Oracle (ORCL): Here they go again buying another company. I am not sure if they are good for competition or they stiffle it. But they bought a UK (Ireland) internet company for an undisclosed amount of money this week. Expect internations number to surge
Tullow Oil: There is more oil in Africa then everyone thought

American Elitism

Sometimes good ol American arrogance affects us all. Isn’t it odd that most Americans can only name 2-4 stock exchanges? Now we seem to think that our mortgage crisis, which will lead to an eventual recession, will affect the rest of the world’s markets. While CDO (collateralized debt obligations) defaults are at a high point, there are so many sectors to our economy that remain unaffected. Example: when Ford (F) was downgraded by S&P from AA to below “investment grade” , did the US car market plunge? Did prices drop? The “Market” is kind of like the Earth; no matter what we throw at it, the greater good always seems to win out. After an ice age, come the Grand Canyon and Great Lakes. CDO, CDO2, and other mortgage backed securities. That said, in the spirit if “buy low, sell high,” if you have some extra money look at things like Freddie Mac, Fannie Mae, and Wells Fargo. These are all companies that will see short-term dips, but each has what we at Landes refer to as FSP or financial staying power. Basically, over the long haul, these companies will bounce back into the black and see continued growth.
For the more immediate returns you will need to look places like: Tech, Pharma, and Blue Chips. There are some good values in small caps, but you have to look. One other place to look is at short term luxury goods and services, like restaurants. This short-week will see a lot of moving and shaking. I expect to see a lot of volatility, but all-in-all we will be up for the week. My suggestions are: NVIDIA (NVDA), Ultra Petroleum (UPL), and BP.I hate to say this but perennial disasters lead (one month later) to oil spikes. Oh yeah, BP will be pumping in Oman by 2011.