The markets were down again today on European concerns, but they did manage to pare very large intraday losses and make a run for positive territory on some indices late in the trading day. One of the interesting things that seemed to fuel the run was a surge in Apple stock, which is now almost 15% of the Nasdaq 100. The stock ended the day up almost three percent, and at a new 52 week high, closing at $411.63. Puzzled at why Apple was moving up on this mostly glum Monday, I checked our Bloomberg to see if something earnings- or guidance-specific had hit. That wasn’t the case, but there were some notes about Steve Jobs delivering a future speech, and the possibility of the company joining the cloud computing revolution, which may justify the move. Sean also mentioned that the chatter he was hearing and reading was that Apple was being bought as the new safe haven.
Gold has gone parabolic, and treasuries are arguably priced for a recession/deflation. Corporate earnings have been healthy and U.S. balance sheets have a lot of cash. But a large cap tech stock as a safe haven? Goodness gracious, I believe Mr. Market has been watching too much Cramer lately.
Right now tech stocks are staging a pretty good rally, and that is a developing technical positive that needs to be balanced against the many negatives in the backdrop. That being said, I think any investors considering buying Apple stock as a safe haven ought to think not twice, but maybe three, four and five times about what they’re doing. Attractive hedges are in demand these days, but despite the temptation to buy into this story, we’ll stick with boring old treasury bonds, gold, and the dollar as decent hedges in this environment. Apple is hot, trendy, and has been a very nice investment since 2009. But Apple as the new safe haven? Please.