Apple has just begun to pay a quarterly dividend for the first time last quarter. Apple is becoming seen as a great source for a fixed income, as it is able to generate enormous sums of cash, even as it reinvests into itself and into its partners each quarter. A special dividend would not only assist current shareholders including all the hedge funds and mutual funds who hold 68% of the float of the stock, but also each retail investor who holds the stock in retirement accounts, college savings plans, and individual trading accounts.
Over the last 2 months, Apple has dropped from $700 to $547.5.
While I wasn't a huge fan of investing in Apple at $700, the recent drop makes me somewhat bullish.
I expect Apple to return to $600 or higher within a couple of months.
AAPL retreated from early gains after Pres. Obama repeated his insistence that the rich pay more to cut the federal deficit, although no one can tell if it is just posturing before fiscal cliff talks begin next week.
One of the key reasons the market sold off was investors' doubts about whether the two sides can reach an agreement to avoid the "Fiscal Cliff." Both parties are saying the right words. Speaker of the House Boehner announced yesterday that Republicans would consider additional tax revenue under the "right conditions." He had to read directly from the teleprompter in order to keep from veering off message. The president has always spoke eloquently about the need for bipartisanship and "working together" but has rarely, if ever, has shown the leadership and effort to make this happen. Let's hope this time his actions match the rhetoric.
The second reason the market sold off is that it really needs to in order to get over the looming fiscal cliff. Both sides need the cover of a plunging market in order to be able to come to the concessions needed and that will be unpopular to their bases. Much like the market had to plunge some 700 points on the Dow after Congress first rejected TARP before it could muster enough political will to get the bill over the finish line on the second try. Look for the market to continue to be volatile until the politicians do what needs to be done.