‘Opportunity often comes disguised in the form of misfortune, or temporary defeat.’  Napoleon Hill 

Apple- $571 Billion

Amazon- $358 Billion

Facebook- $354 Billion

Google- $528 Billion

When you look at the market values of each of the companies above, what is hard to remember is that every single one of them has been in the doghouse of investors over the last 10 years.

You might not recall, but at one point, Microsoft injected a few hundred million dollars when Apple’s (AAPL) stock reached an all time low of 8 dollars per share.  After the internet bubble, Jeff Bezos’ equity in Amazon (AMZN) reached five dollars per share, and only a few years ago languished several hundred dollars below where it currently trades. The same hold true for Google, or now Alphabet, (GOOGL) and we all should remember only a year after it came public, Facebook (FB) sold for below $20 dollars a share as the legend of Mr. Zuckerberg was merely, shall we say, a hoodie.  

Markets change, companies progress, and clearly, they can become worth far more in a relatively short period of time. Some would argue the run for these specific companies is too much, too fast. In fact, if you compare their values to something so insignificant as Mr. Buffett’s beast Berkshire Hathaway (BRK-B) ($356 Billion) or General Electric (GE) ($286 Billion), one might suggest Amazon and Facebook are in orbits where gravity will have a hard time keeping them aloft.  

All four of the tech superstars carried their weight and then some when they reported earnings this week. Not much was expected from Apple, but when it sells 40-50 million units of product every quarter, no matter how down on the company Wall Street gets, it earns so much money investors still find it attractive. Plenty of pundits would argue the stellar reports from these juggernauts provide the essential support for the market in a business environment which is hit or miss at best. When second quarter GDP growth came in at a paltry 1.2%, also came the realization that the no growth environment remains difficult to shake, like a irritating cold.

Cars and housing are strong, energy not at all. In fact, oil has been down for six straight weeks, nearly twenty percent off its high of 50 bones a barrel. The large integrated oil companies all reported disappointing earnings last week, in direct contrast to the terrific technology treats. It seems the general consensus of the investment community is energy will remain in the doghouse until at least 2017. Of course, we have known this for the last year, which brings us back to the quote from our friend Napoleon Hill. The pertinent question being is this the real thing, or just a head fake?  The ultimate answer is what makes investing so interesting.

Looking forward, if you remember about a year ago this time, August turned out to be a particularly treacherous time as the broader averages fell nearly 10% for the month. There were lots of cross currents at work, including the traditionally light volumes and plenty of adversity in the Chinese markets. Investors seem very nervous a similar result will happen again. My own thinking is this is a slow time of the year and there are a jitters aplenty, but to expect the same thing to happen at the same time year after year goes against the laws of statistics, gambling, and investing. Each event is an independent event and it is one of the first principles of stats 101. It does not mean we won’t be down 25% come September, but my hunch is not likely. Maybe 26%. Just teasing.