Is Apple overpriced? Is Apple ultra cheap?
Every analyst and his uncle are weighing in. I read many of them yesterday. Too many. Some think it will hit $1,000. Some think it will hit $300. Most give boredom a whole new meaning.
Personally I believe it will go higher, for the reasons I wrote yesterday, namely Apple’s increasing appeal to Corporate America (and the fact that its P/E is still only 15.4.)
I wanted to detail everyone’s arguments. But stock picking is 75% enthusiasm and 25% analysis. The analysts’ “arguments” and “logic” aren’t basically interesting. They’re trying to predict upcoming sales for one of the hottest products in the history of the world — namely the iPad. Good luck. I remember when the computer trade press, the general business press adn the very same financial analysts thought there was no market for an Apple tablet. After all, every tablet introduced before Apple — by HP, Lenovo, Dell, etc. — had failed miserably.
The Greek bondholders did better than many of them expected. They’ll only lose 46% of their money. Anyone dumb enough to buy bonds in Greece should have lost all their money.
Now the deal is done, Greece will get bailout monies and the world will live happily ever after. And the Euro is saved. At least for a few days. Here’s what the Wall Street Journal wrote today:
Can you imagine the wrangling that went into this? From today’s Wall Street Journal:
Just over 80% of Greece’s private-sector creditors agreed to turn in their bonds for new ones with less than half the face value, touching off a massive debt swap that marks a seminal moment in Europe’s long-frustrated efforts to rescue its most financially vulnerable nation.
The Greek government announced the results of its proposed restructuring early Friday morning. It said 83% of bondholders had voluntarily submitted to the deal. The government said it would invoke so-called collective-action clauses that will impose the exchange on the vast bulk of reluctant creditors, bringing participation up to 96%.
The announcement that the restructuring will go ahead precipitates the largest-ever sovereign-debt default and the first for a Western European country in half a century.
Greece had proposed €206 billion ($273 billion) in bonds for the exchange. Just over €100 billion will be sliced from the amount Greece owes.
Stock markets in the U.S. and Europe rose Thursday as more creditors signed up to the exchange. While a consummated debt swap has been on the horizon for more than a week, the diminished uncertainty of a messy surprise lifted risky assets. The Italian 10-year bond, a critical barometer of euro-zone sentiment, was sharply stronger early Thursday. Markets in Asia were higher Friday, with Tokyo’s Nikkei closing up 1.7% after breaking 10000 intraday for the first time since August. On Friday in the U.S., data on nonfarm payrolls, the jobless rate and trade deficit will be released.
The outcome of the debt exchange had been becoming increasingly clear over the past several days, but it remains a milestone for the European Union’s beleaguered common currency, and for the debt crisis that began in Greece more than two years ago and has threatened the project ever since.
It is also a critical milestone for Greece, which will get some relief from its debt, and, crucially, secure more aid from Europe. But the bedraggled country is still reeling from government austerity and years of recession. Few think its economic future, at least in the near term, is any brighter.
Greece’s staggering debt burden—now more than 160% of its yearly economic output—had by spring 2010 driven away the private financial markets that had been financing the country’s borrowing binge. The EU stepped in with rescue loans and put Greece on a fiscal diet. Still the debt mountain grew.
European leaders insisted for more than a year that Greece wouldn’t be allowed to fail and would pay back its creditors; then, last year, it became apparent that the costs of keeping it afloat were too much for the rest of the euro zone to bear.
A first proposal for a debt restructuring, in July, asked private creditors to forsake on average 10% of the face value of their holdings.
As Greece’s finances deteriorated, that plan evaporated.
The restructuring now set to be executed will see Greece chop 53.5% from the face value of around €200 billion in bonds held by private creditors. Greece’s other major creditors include its fellow euro-zone nations, which have lent €53 billion, the International Monetary Fund, which lent €20 billion, and the European Central Bank and national central banks, which bought more than €50 billion of its bonds. None of those borrowings are affected by the restructuring.
Of the €206 billion in total securities in private hands, €177 billion are government bonds issued under the laws of Greece, about €10 billion are bonds issued by state-owned companies and guaranteed by Greece and €18 billion are government bonds issued under the laws of foreign jurisdictions, where Greece’s reach is more limited.
Greece’s laws—changed in February—permit the country to bind all Greek-law holders to the exchange with the consent of two-thirds. That threshold was easily cleared, and Greece said all €177 billion will be forced into the exchange.
Of the foreign-law bonds, 69% agreed to the exchange, as did the bulk of the state-owned-company bonds. Greece said it would give resistant bondholders two weeks to change their minds, but it implied it would play tough.
There are thus around €9 billion of bonds belonging to creditors who may challenge the exchange through courts or arbitration panels. Greece has said repeatedly it doesn’t have the money to pay holdouts, and they face a difficult fight.
Several steps will follow in the coming days.
Formally, Greece must consult with its euro-zone rescuers before invoking the collective-action clauses to bind all Greek-law creditors; a teleconference of euro-zone finance ministers is scheduled for 2 p.m. Brussels time on Friday.
The decision to use force means conditions will have been met to trigger credit-default swaps, insurance-like contracts that pay off when a creditor suffers losses.
A panel convened by the International Swaps and Derivatives Association, an industry group, is responsible for deciding when the swaps are triggered. The group said early Friday that the panel would meet at 1 p.m. London time.
On Monday, the new Greek bonds will be issued for trading. Bondholders who submit to the swap—or are forced to do so—will get a package of securities including cash or high-quality short-term bonds issued by the euro-zone rescue fund valued at 15% of the face value of whatever they exchange, plus a series of Greek bonds maturing over the next 11 to 30 years valued at 31.5%. Those bonds have already begun trading in a hypothetical “gray market,” said people familiar with the matter.
The new 30-year bond was quoted between 15 and 17 cents, and an 11-year bond at between 20 and 22 cents. Those levels indicate that investors think Greece will still be unlikely to meet all its obligations after the restructuring.
Harry Newton who loves the America that favored immigration and education. Where I’m staying — the Coachella Valley — is a beehive of the hardest working group of people I’ve ever seen, namely Mexican landscaping, construction and gardening folks. I marveled at them yesterday 30 feet way up in cherry pickers armed with chain saws trimming trees. I marvel at them early morning cutting the grass on the fairways and the house lawns. I marvel at them cleaning hotel walkways from blown and fallen debris. They tell me their children are at school pursuing the American dream.
Sometime you wonder about our leaders. Mr Santorum believes college destroys Christian faith (it doesn’t). He called colleges “indoctrination mills.” And Mr Romney, answering a high school senior worried about college costs, replied, “Don’t just go to one that has the highest price. Go to one that has a little lower price where you can get a good education. And, hopefully, you’ll find that. And don’t expect the government to forgive the debt that you take on.” Boy, talk about destroying the kid’s ambition. Mr. Romney himself went to Harvard.
I’m an immigrant. I also went to Harvard. Over my career, I’ve paid the Federal Government around $80 million in taxes. I’m guessing someone in Washington is happy they let me in. I certainly am.
Harry you are certainly a very knowledgeable fellow unfortunately you have never demonstrated the capacity to produce a scintilla of wisdom. Anyone who swallowed the Obama bullshit of “Hope and Change” hook-line-and-sinker the way you did is nothing but a fool. You are incapable of understanding the situation in the Middle East even though you profess to by referencing among other things Eisenhower's “Military industrial complex.” Liberals may not understand this but just because you drive by West Point on the way to your country house does not make you a military expert. You are fascinated by watching Mexicans doing physical labor, I wonder why.
Maybe it's time you take a short drive up to Connecticut and take the Saturday tour of Sikorsky Aircraft or maybe Pratt and Whitney. You may just get a different perspective on the military industrial complex and I promise you without a doubt you will get a different perspective on exactly what had work really is……The engineers who produce these military necessities bust their ass 7 days a week and have real educations that required total dedication to obtain……By the way I don't believe your readers need to hear your Jon Stewart filtered version of Mr. Romney or Mr. Santorum……..we already know who we're not voting for.
I always wonder why “RonaldReagan” reads this blog.
Ronald, do you ever stop to think about how rigid, intolerant and opinionated you really are? You come across like a complete ass…
Your comments on “Mexican workers” are patently racist. You're basically saying “Them Mexicans sure do a good job with those weed blowers! What hard workers they are!”
Disgusting, and completely inappropriate.
It's true, though.
Harry, I've been reading your blog for over 3 years and I thoroughly enjoy the humor, the telling articles you find, your enlightened perspective on business and investing but the one thing I have to say that I don't like is you trying to portray that you're not well off when you PAID $80 MILLION in taxes. There is no question this is obviously a hobby and very enjoyable for you in retirement! With that said, you do provide great insight and make us smarter investors by making us more aware…
Sandler, how could ever get the impression that Harry is not well off? And he earned it and deserved it too by bringing extra value to the market place. But can't understand how a self made and successful person can now favor and look for the government/politicians to help others. All public policy helps some and hurts others.
I'm not denying that I'm not well-off, nor do I deny being obsessed about protecting what I have.I am also obsessed by learning this investment business and, in the process, sharing my knowledge with others. Frankly, I enjoy writing this column, though right now, I have to get up every morning at 4:00 AM to write it. I'm in California enjoying the nice weather in the Coachella Valley.
I do not understand the logic that Harry is extremely well off. In my Google search I can not find one thing about him being well off except him referencing it on this blog. Why does his name not appear among the Weathiest Americans? Or even “Wealthiest New Yorkers”? How about “Wealthiest Aussie ex pats”? Nope, not that I can find. Other than the syncophants on here – who may be friends of his, it seems – there is nothing that I can find in my search (ON Bing at 6 p.m. Eastern Time Tuesday night) that says he's extremely weathy. He's not even on the list of “Wealthiest People Named Harry Newton.”
As someone who comes from, as they say “old money” I think Hary is not as wealthy as you may think, Sandler.
The measure of wealth? How about, “If I had his/her money, I would not need mine.”
Harry, in any case I enjoy your blog, your insights, investment ideas, humor and you.
Keep up your enjoyable work.
College in America has become so expensive in large part because the government makes so much money available to attend. In addition, a whole sector of worthless colleges and universities have sprung up to take advantage of this government largess. In addition, the costs spiral out of control in large part because the recent revisions to the bankruptcy code make it impossible to discharge student loan debt in bankruptcy — it will stay with you forever. This is a lot like the drug dealer who gives out the first few hits for free. Its a tough time to be entering college.
Could buying bonds in America also be dumb?
No, but they don't pay very much.
Richard, that was my thought exactly when I read Harry's statement.
Harry, I think Greece is setting up for independence. Pull out of the Euro currency, go bankrupt use a national currency and get back on their feet. Iceland is recovering. If they stay in the Euro currency they will be “Euro Slaves” for generations. You can read the German comments both ways, I think the Germans would prefer the Greeks cut the cord, otherwise the Master has to feed the “hired” help.
Perhaps. But I think this is being played out day by the day. There seems to be no leaders with a clear, strong vision.
Harry, I like and admire your column, but not your half assed comments on the situation in California.
There are 300,000,000 + people south of our borders, most of whom want to come here. The schools, hospitals, and home owners in CA are bankrupted by the flood of illegal immigrants. Let's face it, you are a New York liberal carpet bagger with more than a portion of maudlin sentimentality.
Immigration is great for America but it must be done in an orderly and legal way. As a immigrant, you
were not brought into America by a coyote. Many liberals (and some rich farmers) enjoy the cheap labor making their vacations in the sun possible, but screw the taxpayers who have to pay the huge social costs.
I believe, as you do, that immigration should be done in an orderly and legal way. At present, it's a mess, and seriously needs fixing. Foreigners with a Ph. D. from our universities can't get a visa to stay here. Yet there are 11 or 12 million undocumented illegal immigrants who stay but don't pay taxes, etc. It's a mess. It needs fixing. I came here legally. I wonder if I could today.
11 or 12 million undocumented illegal imigrants do pay social security and medicare plus employer matching funds. Paying under the table is not used very often because of potential liability of accidents.
Thankfully these hard workers are finding work — and keeping Wells Fargo tellers and back-office staff employed: http://payments.banking-busine…
Wait a sec … if the money is just leaving instead of being spent where it is earned, then … oh:http://www.zerohedge.com/news/…
This doesn't end well, does it?
Here funds for social security and other programs are directly deducted from your earnings, in Mexico no. The money that is being sent back to Mexico is be used to support parents and the poor. The worker is in a hard spot having to pay taxes here and having to pay taxes there doesn't leave much left
C'mon Richard, illegals account for a huge gray market of cash payments which never show up for social security or taxes. What alternative planet do you live on? Drive by the parking lot of a Home Depot some time.
I suspect that the cash payment market has grown exponentially in the last several years — not only for illegals, but for locals, some receiving welfare, some not. But all finding that they get to keep a lot more money in their pocket if they don't pay income taxes..
For independent contractors yes, but in business no. Labor is a expense. I don't want to pay self employment, medicare, and income tax on the cost of labor. If I paid cash I would be transfering the tax burden from the employee to me. It's not worth the risk and it doesn't pencil out.
I own a fruit ranch in the United States which is worked
by mexican laborers. Thirty percent of our fruit is exported, much of it to Asia. I just left Home Depot it was full of mexicans shopping, if fact the employees were mexican. And then I went to McDonalds to get a burger and all of the employees were mexican. Wow good thing somebody's working or I probably wouldn't get fed.