NASDAQ

We wrote here recently that as Apple shares go, so goes the U.S. stock market. How has the stock fared?  Last week there was quite a bit of excitement when the broad-tossers who manipulate the stock for a living short-squeezed the bejeezus out of it after the close, leveraging a strong earnings report that could have surprised only Wall Street’s clueless analysts. Moments after the news hit the tape, AAPL gapped up 9% in a blink, recouping two-thirds of the losses it had suffered the previous two weeks, when it plummeted $90 from an all-time high at $644.  From a technical standpoint, what was interesting about the  decline is that it reversed from within 29 cents of a “Hidden Pivot” correction target we’d disseminated to subscribers a few days earlier. For if the stock had exceeded that number by more than a couple of dollars, it would have held bearish implications for the short-to-intermediate-term. However, because the pivot survived, there was no way to judge the mettle of bulls until Apple rallied out of the hole. This it did, in spectacular fashion, with last week’s gargantuan short squeeze. The goosing instantly added $50 of value to each share of the world’s most valuable company. Nothing like a little volatility to keep the crowds coming back for more, right?  Putting aside the comical spectacle of a $600 billion whale flopping around wildly in NASDAQ’s bathtub, the rally put Apple shares in play once again as a bull-market bellwether. That said, we have our doubts that new all-time highs will be achieved any time soon. Notice in the chart how last week’s gap-up rally, powerful as it was, narrowly failed to surpass peak #1.  If buyers had more guts, shouldn’t they have taken on that last, niggling resistance before settling back triumphantly?

[We wrote the following column for the Sunday San Francisco Examiner a month before the dot-com bubble burst in March 2000. Overnight zillionaires were a dime a dozen back then because countless investors couldn’t wait to pay practically anything for the shares of unproven companies. Nowadays, billion-dollar scores on Wall Street are much rarer, but as the lucrative IPOs last year for LinkedIn and a few other purveyors of Vaporware II demonstrated, enough greed and stupidity still remain to make canny stock-promoters rich. RA] It's said we are separated from the rich, the powerful and the famous by a chain of no more than six friends of friends. This means that if you are looking for a job in the White House, or a way to meet Winona Ryder, it should take no more than half-a-dozen phone calls to get in the door. But I'm beginning to wonder whether it would take even that many calls, on average, to reach a friend of a friend with eight-figure net worth. There seem to be so many of them around these days. More than lottery jackpot winners, as far as I can tell. Although I personally know a dozen guys who have reaped spectacular riches from stocks in the last few years, I've only known one big-time lottery winner in my life — "Bunky" W., who wrestled heavyweight for Atlantic City High School in 1967. Bunky hit the New Jersey lottery for $1 million, which made him a celebrity at our thirtieth reunion, held at Trump's Casino in the summer of 1997. But these days, with Wall Street's IPO boom sprouting megamillionaires like dandelions in May, a story like Bunky's would barely raise an eyebrow at the next reunion. Arthur’s would, though. He is a childhood friend and among the brightest students

[We used to think Nobelist Paul Krugman was the Looniest Economist in America, but Rutgers professor James Livingston recently emerged as a solid contender with an absolutely dumbfounding op-ed piece in the New York Times that said, essentially, that America’s wealth has come mainly from Government spending and consumption, not from savings and investment.  In the essay below, we give our friend Edward Furst, a member of Young Americans for Liberty, a rebuttal opportunity. RA] We all know that the New York Times isn’t exactly a bastion of free-market thinking. But a recent op-ed by Rutgers Professor James Livingston, a guy who makes Paul Krugman look like Milton Friedman, went beyond the pale of economic sanity.  His basic contention is that economic growth comes, not from private investment, but from “consumer debt and government spending.”  Livingston points to the increase in per capita GDP over the last century despite the relative atrophy of private investment as a percentage of GDP, the growth in government spending, and the general increase in consumer debt. Here we encounter the age-old conundrum of historians unschooled in economic thought (Dr. Livingston has a bachelor’s degree in British and American literature, a masters degree in Russian history, and a doctorate in American History). In a rebuttal to this op-ed, George Mason University Ph.D. economics professor Don Boudreaux aptly noted that “Because each dollar successfully invested raises GDP by multiple dollars, net-investment’s decline as a share of rising GDP… is evidence of the impressive success of private investment…”  But even this analysis seems to take for granted the efficacy of Gross Domestic Product as a viable metric of economic performance. Building Keynes Monument Imagine for a moment that the Federal Government had embarked on a “stimulus” program to erect a giant obelisk commemorating the life’s work of

Where would you invest $76 billion if you had it?  That’s the size of Apple’s cash hoard at the moment, and it would appear that they have no better idea of what to do with all that money than you or I.  Apple isn’t the only company with this “problem,” if you could call having a mountain of spare cash in the bank a problem. According to Standard & Poor’s data reported by the Wall Street Journal the other day, the 500 largest U.S. companies alone currently hold cash or cash equivalents that totaled $963 billion at the end of the first quarter, up from $837 billion a year ago.  Tech companies in particular are glutted with cash they apparently cannot use. Microsoft’s got $60.9 billion sitting around; Google, $39.1 billion; and Cisco, $43.4 billion. What’s a company to do? Traditionally, high-tech companies have shunned paying dividends because shareholders expect the companies to use the cash more aggressively for growth. But the likes of Apple and Google have been growing plenty fast without dipping into their so-called war chests. Come to think of it, maybe they should start a war with China, Europe or Brazil.  Hasn’t war always been good for business? As for the excuse that they need to hold cash in case a great acquisition opportunity comes along, Apple, Google and numerous other NASDAQ world-beaters could borrow all they want for next to nothing, at any time.  And so they have been. We reported on the surge in corporate borrowing a while back, mystified as to why a corporate sector with nearly $2 trillion to spare was nevertheless borrowing hand-over-fist. The ostensible reason is that the money can be borrowed for nearly nothing – and so, why not?  Indeed.  Even so, we can’t help thinking that a wave