Week 16 Performance.....Live and Die by Eating Apple

Not only did we experience back to back down weeks for the first time this year, we saw our worst declines this week for all of 2012, down 3.7%.  The main culprit Apple $AAPL. Apple was on it's own roller coaster ride this week starting off at around $610 per share dropping down to around $575 on Tuesday only to rebound back up to the $620's Wednesday and then back down to the low $570's by Friday.  What is surprising about these gyrations is that a stock as big as Apple (market cap wise) doesn't usually get the violent swings that we saw this week.


One of the downfalls of having a concentrated portfolio such as the one that we are currently maintaining at DWCM is that swings in just one portfolio name can have a major impact on the portfolio has a whole.  With Apple making up 13.4% it is by far our largest position and with our cash balance at 46.7%, Apple can really move our portfolio performance.  We have cut back on our Apple exposure by about 6% from a few weeks ago when I saw it prudent to take profits.


Apple is an outstanding company with great prospects and solid fundamentals but just like any stock you can't expect it to head straight up forever without stopping.  With that said Apple reports earnings after the close on Tuesday.  There are already rumors that iPhone sales are down so it could be a bumpy ride again for Apple this week.


I've noticed that we are having bigger swings in the markets on a day to day basis, more 100 point day moves in the DJIA both up and down like we saw last year.  As we pointed out a few weeks ago maybe the markets are getting restless as there is no clear indication that the FED will be rolling out any new QE (quantitative easing) program to give the street their drug of choice, more easy money.  As we slip closer to May you will ultimately begin to hear the trading strategy "sell in May, go away" ring throughout the investment community.  This trade has proven to be quite profitable the past few years so we will see if we get any undue selling pressure heading into the next few weeks centered around this theory.


I'm going to be looking to lock in some additional profits on some of our more successful positions this year  in order to raise our cash position for any pullback that may be coming or the uncertainty that I believe is on the horizon.  The deeper we get into earnings season the more telling the markets could become.  We are already seeing that stocks are not being rewarded for making or even beating their numbers but are being judged on what they forecast ahead.  Those that continue to guide down or issue warnings have seen their stock prices fall.


There was a technical issue with Investopedia.com this weekend where our fund is held so I am not able to show our weekly performance detail.  However I have enclosed our performance metrics vs. the major market indices.

Despite having a difficult week we are still having an outstanding year.  As mentioned above this could be another bumpy ride this week as more companies report earnings especially Apple on Tuesday after the closing bell.  This is where it pays to know what you own and more importantly why you own it.

The Week Ahead
There is quite a bit more economic data out this week vs. last.  Front and center is data around housing with new starts and exiting sales released.  Monday should be fairly interesting with retail sales coming out before the market opens which could give direction as to how the day and week could go.  Although now that we have European worries back on the table you never know what could happen.

• Mon -  Retail Sales,  Empire State Mfg Survey,  Business Inventories,  Housing Market Index
• Tue -  Housing Starts,  Redbook,  Industrial Production
• Wed -  EIA Petroleum Status Report
• Thu -  Jobless Claims,  Bloomberg Consumer Comfort Index,  Existing Home Sales,  Philadelphia Fed Survey
• Fri - N/A

Have a great week!