No Need to Fret, Apple Is Doing Fine – by Farhad Manjoo, The New York Times

“Let’s get this out of the way first: Despite what you may have heard, the iPhone is not dying. Neither, by extension, is Apple.It’s true that in an earnings report on Tuesday, after weeks of speculation by Wall Street that iPhone sales would finally hit a peak, Apple confirmed the news: IPhone sales grew at their lowest-ever rate in the last quarter. And the company projected total sales of as much as $53 billion in the current quarter that ends in March, which would be a decline of 8.6 percent from last year and Apple’s first revenue drop in more than a decade.But if Apple is now hitting a plateau, it’s important to remember that it’s one of the loftiest plateaus in the history of business. The $18.4 billion profit that Apple reported on Tuesday is the most ever earned by any company in a single quarter.It’s necessary to start with these caveats because people have a tendency to react strongly, almost apoplectically, to any suggestion of weakness on Apple’s part. Like pickles, cilantro and Ted Cruz, Apple inspires extreme opinion. The doubters are now ascendant. Apple’s share price has fallen more than 11 percent over the last year, in stark contrast to gains by the other four American tech giants.”

Source: No Need to Fret, Apple Is Doing Fine – The New York Times

A Moveable Glut – Paul Krugman, The New York Times

Paul Krugman makes articulate arguments for more stimulus spending in the US and Europe.

“But these aren’t just a series of unrelated accidents. Instead, what we’re seeing is what happens when too much money is chasing too few investment opportunities.

More than a decade ago, Ben Bernanke famously argued that a ballooning U.S. trade deficit was the result, not of domestic factors, but of a “global saving glut”: a huge excess of savings over investment in China and other developing nations, driven in part by policy reactions to the Asian crisis of the 1990s, which was flowing to the United States in search of returns. He worried a bit about the fact that the inflow of capital was being channeled, not into business investment, but into housing; obviously he should have worried much more. (Some of us did.) But his suggestion that the U.S. housing boom was in part caused by weakness in foreign economies still looks valid.”

via A Moveable Glut – The New York Times.

Relative to long-term corporate earnings, stocks remain more expensive than at any point from the late 1940s through the early 1990s. nytimes.com|By David Leonhardt

If the Price Earnings Ratio is still above 24, it is still high, and stocks are still expensive. A PE of 15 to 20 is probably average historically.
Price/Earnings = PE. A $20 stock that pays a $1.00 dividend annually, has a PE of 20/1 which equals 20.

Part of the Problem: Stocks Are Expensive

Relative to long-term corporate earnings, stocks remain more expensive than at any point from the late 1940s through the early 1990s.

nytimes.com|By David Leonhardt