A cult always ends in either sadness or ridicule. Sometimes, they implode -- think about the Jonestown tragedy in 1978. Sometimes, cults just lose their attraction -- think about the 1837 classic book by Hans Christian Anderson called The Emperor's New Clothes.
Most money managers insist they never invest in "cult-stocks." At the same time, they will pay 70 times the earnings-per-share (EPS) to buy a share of a cult and then sell it for only 10 times EPS. That is the case of Apple (AAPL). Yes, Apple stock has made a lot of money for a lot of people. That's because it became a cult stock, with a mystical leader named Steve Jobs.
I can offer an educated opinion on which companies will experience increased sales and EPS, but I have no idea which stocks will become a cult-stock.
Yesterday, Apple reported its first quarter's financial results, which would have been fine, until compared to earlier quarters. Oh, no, the emperor is naked! Apple is just another company!?!? Then, another bombastic billionaire pronounced Apple's disappointing financial results were the fault of China and that he was selling all his Apple stock. Not content to shut-up at that point, he then added that a "day of reckoning" is approaching for the stock market. The Dow promptly dropped 200 points.
For the first time in years, Apple is beginning to look attractive to me, as the "true believers" get flushed away from the stock.
But, is the stock market facing a "day of reckoning?" Absolutely! It is called the business cycle. A recession is coming, but not today and not in the near future.
Most money managers insist they never invest in "cult-stocks." At the same time, they will pay 70 times the earnings-per-share (EPS) to buy a share of a cult and then sell it for only 10 times EPS. That is the case of Apple (AAPL). Yes, Apple stock has made a lot of money for a lot of people. That's because it became a cult stock, with a mystical leader named Steve Jobs.
I can offer an educated opinion on which companies will experience increased sales and EPS, but I have no idea which stocks will become a cult-stock.
Yesterday, Apple reported its first quarter's financial results, which would have been fine, until compared to earlier quarters. Oh, no, the emperor is naked! Apple is just another company!?!? Then, another bombastic billionaire pronounced Apple's disappointing financial results were the fault of China and that he was selling all his Apple stock. Not content to shut-up at that point, he then added that a "day of reckoning" is approaching for the stock market. The Dow promptly dropped 200 points.
For the first time in years, Apple is beginning to look attractive to me, as the "true believers" get flushed away from the stock.
But, is the stock market facing a "day of reckoning?" Absolutely! It is called the business cycle. A recession is coming, but not today and not in the near future.
