Mr. Market proved no match for Apple
Company | Starting Price* | Recent Price | Total Return |
|---|---|---|---|
| Apple | $420.59** | $648.11 | 54.1% |
| $650.09 | $677.14 | 4.2% | |
| Rackspace Hosting | $41.65 | $55.81 | 33.9% |
| Riverbed Technology | $25.95 | $21.09 | (18.7%) |
| salesforce.com | $100.93 | $147.23 | 45.9% |
| AVERAGE RETURN | -- | -- | 23.88% |
| S&P 500 SPDR | $126.50** | $142.18 | 12.39% |
| DIFFERENCE | -- | -- | 11.49 |
Source: Yahoo! Finance.
*Tracking began at market close on Jan. 6, 2012.
**Adjusted for dividends and other returns of capital.
So far, so good, but the markets aren't making my job easy. All four indexes ended last week higher, for the fifth consecutive week, led by the small-cap Russell 2000, which closed up 2.29%. Both the S&P 500 and Dow Jones Industrial managed gains, rising 0.87% and 0.51%, respectively, but only the tech-heavy Nasdaq came close to the Russell's return. Big gains by Apple, Google, and other Silicon Valley heavyweights led the Nasdaq Composite up 1.84% for the week, CNBC reports.
Notable newsmakers
More than anything else, optimism appears to be fueling the rally. The Chicago Board of Exchange's Volatility Index, or VIX, widely considered the best gauge of fear in the stock market, fell another 8.6% and is now off more than 42% year to date. At 13.47, the VIX now sits at a five-year low, CNBC reports.
And that's in spite of worrying news from some parts of the tech world. Facebook
Facebook shares fell more than 4% on Friday alone, hurting thousands of employees, IPO investors, and Netflix
On Friday, Groupon
Finally, both Apple and Google rallied, but for different reasons. The search king soared on cost-cutting news. Management is laying off some 4,000 workers from its Motorola Mobility unit. A smaller division may divest interests in set-top boxes and concentrate on developing smartphones and tablets. Google also spent a reported $25 million to acquire the Frommer's guides in what appears to be an effort to get more of us searching the site for travel information.
Apple rose as speculation over its TV plans continued. The Wall Street Journal reports the company is in talks with cable providers about pumping live TV feeds through its set-top boxes. The next day, Jefferies & Co. raised its price target for the stock from $800 to $900 per share. Oh, and the Mac maker paid out its first cash dividend in 17 years. (You can see the impact in the adjusted starting price for my Apple position in the table above.)
What are you buying now?
As much as Apple is driving gains for the Big Idea portfolio so far, there's still a lot we don't know about the company's long-term strategy to own tablets or even TVs. That's why we've introduced a new premium Apple research service with a kick-off report that details the opportunities and challenges in store for shareholders. The research includes a full year of updates, but only if you act now. Get your copy today.
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