Fri 3/16/12 4:01 PM – Market Wrap Up, Bond Sell-Off, Apple

Stock markets in Asia finished mixed, Europe was up between 0.4% – 1.1% and the US finished mixed. Gold was up slightly, oil was up strongly 1.8% and bonds were up. The dollar was down .7%.

For the week though the S&P 500 stock index was up 2.5%. That’s a great week. Europe was up the same amount. Small stocks in the US lagged large caps and that is worth keeping an eye on.

The biggest news this week was that money has finally started to come out of the Treasury market but so far it has gone to cash rather than stocks or other types of bonds. Treasuries have been, after all, the safe money haven.

For the week, gold lost a bit over 3%, 20 year Treasuries lost 4%, high quality corporate bonds lost 2% and high yield bonds were unchanged as they have as much in common with stocks as bonds. Oil was about flat.

In stocks the leadership groups continue to be financials, especially banks, tech stocks and consumer cyclicals. Growth has performed much better than value.

Apple has been the star, up 43% so far this year. It is the largest stock by market value and because it is both a growth company and priced below the market average it is owned by both growth and value funds. BTW, it is also owned by many dividend-oriented funds even though AAPL does not pay a dividend and it is owned in many mid-size and small-size oriented funds even though it is the largest stock on the planet.

So great is Apple’s size that in the size-weighted indexes like the S&P 500 it is 4% of the entire 500 stock index and account for almost half of the increase in the index so far this year. It has become a must-own stock for mutual funds, not matter what the orientation. This kind of extreme popularity usually elevates the risk in owning a company but on the other hand, most managers think the risk is in not owning it. As I say, the value for Apple is below average and profits grew 84% over the last 12 months! Think of that, the biggest stock on earth grew profits 84%. Wow!

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