Sometimes the market just is not doing what you expect or what you want it to be doing. In fact, rare is the case when the market does exactly what you want it to do. After all, if it were that easy, we’d all be rich now!
This week I have been able to “shnitzel” off some of my profits from my core positions. With Apple(AAPL) and Conexant(CNXT) moving up on positive earnings and growth news I decided to take some profits while the iron was hot. I freed up about half of my portfolio value in dollar terms to look for other trades.
Here’s how the last few trades went. First I bought a sizeable position in Wells Fargo (WFC) when the stock tumbled for really no good reason other than all the financials were experiencing trouble. Selling WFC into the strength it had on the bounce from $23 to $30 in just a few short days netted me a tidy profit.
I then took that money and put it into AAPL, again buying the stock on a big dip with the understanding that it really had been oversold and by looking at the earnings you can predict somewhat the movement of the stock over the next few days or even weeks.
With the exception of WFC, I have a core position in APPL that I like to use as a benchmark or radar as to how it is trading. 6 months ago, that position was $163 with a target price of $200. Since then the stock has had a roller coaster ride as initial sales of the iPhone couldn’t meet demand and investors worried about what that could mean for Apple’s profits. Then along came the App Store. It’s estimated the App Store brings in $1,000,000.00 a day, of which Apple retains 30%. That means every day Apple is earning $300,000.00
This is certainly going to boost the revenue predictions for the 3rd quarter and likely raise guidance for the 4th quarter leading to a spike in the stock price over the next few months.
Traditionally, now is a good time to be invested in Apple as well, because the end of the summer marks not only “Back to School” season but the ramp up to the holidays. Expect the 3G iPhone to continue to be a hot seller this holiday season as well as the continued success of the iTunes App Store.
Wells Fargo continues a steady price around $30.
I’ll be keeping my cash position for the time being until I see another opportunity, at which time I will of course talk about it here.
I work for Wells Fargo and have stock in both WFC and AAPL.
