Article by Investment U
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In focus this week: Apple may be the only safe place in technology, a portfolio that was set up in 1935 that’s still kicking butt, and the SITFA.
AAPL to $1000?
Apple (Nasdaq: AAPL) is on a tear again. A recent Barron’s article described it as a safe haven in an otherwise tech landscape rife with fear.
Estimates for the tech industry have been cut by just about everyone because of economic fears, a weak pc market and weak IT spending by corporations.
Apple, on the other hand, is in complete control according to Barron’s. A 50% profit margin and the ability to hold its prices put it in another class in the tech sector.
Apple has the world’s attention and everyone, it seems, is waiting for the next gizmo.
The key here is expectation, not delivery. Tiernan Ray of Barron’s says this one will be running again as soon as this September in anticipation of the new iPhone model.
The rest of the industry can’t put a dent in AAPL and since it broke above $600 again. It looks like we’ll have all kinds of predictions of a $1,000 AAPL again.
I’m not sure $1,000 is realistic, but when the hype starts rolling on this one, and the momentum builds, there seems to be no end to the run. But there always is.
A 1935 Portfolio That’s Still Cooking
In 1935, a portfolio of 30 stocks was set up with the idea of not doing anything, or at least as little as possible to it. The theme then and now is “no manager, no problem.”
The best part, over the last 10 years this little doozy has outperformed the market by 56%, and compared to other large cap funds by an even greater percentage.
In fact several of its holdings tripled in price in just the last 10 years; Praxair (NYSE: PX), Union Pacific (NYSE: UNP) and Burlington Northern (NYSE: BNI).
ING Corporate Leaders Trust has $750 million in 22 stocks that reads like a who’s who of Wall Street: Union Pacific, DuPont (NYSE: DD) and their largest holding, Exxon (NYSE: XOM).
The founders wanted blue-chip dividend payers that could thrive for decades. They look for brands and sustainable competitive advantages. It seems to be working very well.
But the ride hasn’t always been a smooth one. It lagged badly during the tech boom of the 90s and recently held EK until it went below $1.00. So, while it may look like the perfect play for the “buy and go to sleep crowd,” it too has given its shareholders lots of reason to cut and run.
This fund was originally set up as a UIT, unit investment trust, which as a tool for equities fell from grace long ago. I can’t remember the last time I read anything about an equity UIT.
These long-term, big performers always look so simple until you take a closer look at what you had to put up with to get the great returns.
What looks so simple on the surface never is. Is it?
And the SITFA
Here’s a good one.
A recent WSJ article described the reported inflation rate in China as unreliable because the Communist government in place there manipulates prices to control the markets.
The Communists manipulate the markets? What? Here in the United States, we just exclude energy and food from our inflation numbers. That’s not manipulation? You’re kidding, right?
How about our unemployment numbers? We just exclude those who have given up looking for work and the unemployment rate goes down. It’s really about 15%, not 8%.
Manipulation? The Chinese could take lessons from Washington on this one.
What a joke! Talk about the Emperor’s new clothes.
See you all next week.
Article by Investment U
