WSJ: Investors buying Apple on the dip helped fuel Monday's comeback

From "Stocks Tumble in Wake of Turbulence on Wall Street" posted Tuesday morning by the Wall Street Journal:

U.S. stocks fell, putting markets on course for another day of bumpy trading, as investors awaited the Federal Reserve’s policy meeting and parsed a docket of earnings...

The moves follow a jarring intraday reversal Monday, when major indexes clawed back losses to post a big comeback. The Dow reversed losses of more than 1000 points for the first time in history. After falling more than 4% in intraday trading, the Nasdaq recorded its biggest reversal since 2008...

This week, investors will be parsing results from tech heavyweights like Microsoft, Apple and Tesla. These been among the companies weighing on the S&P 500 the most this year, according to Goldman Sachs.

Individual investors appeared to be buying the dip in stocks like Tesla, Apple, Nvidia and Microsoft on Monday, according to Nicholas Colas, co-founder of DataTrek Research. That potentially helped the market record its historic comeback. (emphasis mine)

My take: "Helped" is a pretty weak. "Potentially helped" is weaker still.

14 Comments

  1. Michael Goldfeder said:
    From what I can tell the more savvy investors, especially those who post on Apple 3.0, were able to take advantage of these much lower prices after individuals who aren’t as well girded for these type of swings capitulated and immediately started selling en mass.

    I read this on the Bloomberg crawl last night after the European Open and it basically says it all:

    “In a spasm of panicked selling early Monday, retail investors offloaded a net $1.36 Billion worth of stock by noon. Most of it in the first hour according to data from JP Morgan’s strategist; Peng Chang.”

    Savvy investors can really benefit from the knowledge and experience by becoming an Apple 3.0 subscriber and taking advantage of the “pools of knowledge” who post on the platform, post on Slack, and ask insightful questions on zoom calls. (Members only for the later two)

    2
    January 25, 2022
  2. Robert Paul Leitao said:
    Some days the share price moves higher. Some days the share price moves lower. Some days the market is closed.
    Apple’s share price tends to move higher more days than it moves lower. Almost always Apple’s annual revenue and earnings are higher. Over the past ten years the split-adjusted share count has moved significantly lower. This means almost always earnings per share will trend higher. Because the share price is currently lower and over time it tends to move much higher, it appears to be a time to buy the shares. Call it a dip if you’d like.

    3
    January 25, 2022
    • Adam Stein said:
      Robert, you wrote: “Apple’s share price tends to move higher more days than it moves lower. ”

      I was curious about this statement, not sure if it was correct. Does AAPL actually have more green days than red days? I found a database of share price data and analyzed the last 10 years, and it turns out…

      You’re correct! But just by a little more than a coin flip. In the last 10 years, AAPL was up 51.9% of its trading days and down on 48.1% of them.

      Thought you might like to know. Obviously the magnitude of the up vs the down is what matters.

      3
      January 25, 2022
      • Robert Paul Leitao said:
        Adam: If that were an election margin the outcome would be considered convincing. It’s a margin of 3.8% and factored over any span of time such as 10 years it delivers quite a performance difference. Yes. Magnitude of the moves higher versus the magnitude of the moves lower is also a big factor. Thank you for doing the research!

        2
        January 26, 2022
    • Bill Haymaker said:
      “Sometimes you win, sometimes you lose, sometimes it rains.”

      Bull Durham

      0
      January 25, 2022
      • Robert Paul Leitao said:
        Bill: I like that movie! Baseball, being the only major sport in which time is not an active factor, offers us a different approach to achieving success. Lots of practical lessons to be learned from “America’s pastime.” I do see baseball as a “game of inches.” For example, the difference between a .250 hitter and a .300 hitter working his way to the Hall of Fame works out, on average, to about one additional base hit a week. Practice matters and dedication helps. The difference may not be noticed so much per game, but the difference is huge over a season and definitely over a career in terms of impact on outcomes. I take the same approach to investing. I may not hit a lot of grand slams, but the studied “extra base hits” over years make a real difference. It’s a reason I do have a preference now for dividend paying equites. Of course the other big lesson is you can’t control all the elements – especially things like rain (or short-term market sentiment!).

        0
        January 26, 2022
  3. Michael Goldfeder said:
    I’m of the opinion that Apple can constantly repurchase shares through their buyback program given that it’s a defined ongoing program. Hopefully they’re buyers during this recent drop.

    1
    January 25, 2022
    • Robert Paul Leitao said:
      Michael: Because Apple’s share repurchase program is well-defined, consistently executed and in keeping with SEC Rule 10b-18, I’m not aware of any additional restrictions or extended limitations on share repurchases. Hopefully the company is and will be active in repurchasing shares at this time.

      2
      January 25, 2022
      • Michael Goldfeder said:
        The benefit of buybacks during these “dips” is certainly quite an ongoing benefit for investors who have along term perspective for Apple’s business prospects. I’m thinking earnings and FCF will once again be very impressive on Thursday.

        1
        January 25, 2022
  4. Bart Yee said:
    It wouldn’t surprise me in the least if Apple added a $5-10B accelerated share repurchase program (ASR) starting Feb. 1, 2022 to address this pullback re-buying opportunity. This is in addition to the ~$60B they had left in their current repurchase program through end September 2021. Given the reasonable assumption Apple spent $18-24B on share repurchases in Dec. quarter, and at least $6-9B in January, out of the $60B, they will have roughly $32B left for February, March and into the April quarter.

    I would anticipate Apple’s Board authorizing a new share repurchase program before or near the shareholders meeting to the tune of $300-350B to cover the next 3-4 years duration.

    0
    January 26, 2022

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