IBM update

Then – Dec. 7, 2012 – and now charts as usual;

ibm dec 7 2012 vbibm jan 1 2015

If there ever was such a thing, this is the quintessential blue chip stock par excellence. It is also fairly unique in that it is one of the very few DOW stocks to record negative (stock price) returns two years in a row. This flies in the face of the broadly accepted “Dogs of the Dow” MO whereby you are supposed to buy the bad performers at the end of a year as they are bound to regress to the mean the following year. For 2 years now this has not worked as the stock has lost about $60 or a little less than 30% over that time period.

    Oddly, these guys, or girls, have done everything right, all 431,000 of them. First they are owned by such celebrity investors as Warren Buffet which is roughly the equivalent of being on Oprah’s favourite book-list. Next they buy their own shares by the truckload which obviously does wonders for the “earnings per share” metric. To be able to do this they borrow un till the cows come home, which , of course, meets with the warm approval of the Fed. that specifically keeps rates low for this purpose. Then they have learned to live in the “now”, carpe diem if you wish, rather than dreaming about an uncertain future. They invest about 1/2 of what companies like this typically do in research and development.

    But it seems like the world does not know what they are doing, what their purpose in life really is, and lately it would seem that they don’t either. The EW target remains far below the present level and despite a good deal of ambiguity the best EW count suggests that we are in a wave 3 down which is not yet complete. Look for $90 as a minimum.