In an article I posted today at Seeking Alpha I introduced what I call the “first year fallout syndrome” (FYFS) when a new Federal Reserve chair takes control. It can set the stage for a big, opportunistic stock market correction.
To quote my own article: “The first year of the 20 year reign of Alan Greenspan as chair of The Federal Reserve is unforgettable. He and his team tinkered with monetary policies and by October we experienced the worst one day stock market plunge in history…a 20% shocker!
“His successor, Ben Bernanke, took the reins of The Fed in 2007, and by August of that year the first signs of the great financial meltdown began. During an inauspicious week that August leveraging requirements were tightened and the markets began to free fall.”
In thean article I offer 5 stocks – Vodafone (VOD), ConAgra Foods (CAG), Citigroup (C), HomeDeport (HD) and PennantPark Investment Corp. (PNNT), that have 25% to as much as 100% upside potential. How I wish I’d included Apple (AAPL) in that list of 5. Little did I realize that a few hours after my article would be released, the world’s most valuable stock would announce blowout earnings results and a 7-for-1-stock split.
If that wasn’t good enough, Apple announced it would increase its stock buyback program to $90 billion. The stock soared 8% in after hours trading to around $566.
My sense is that Thursday should be a great up day for the market and especially the NDX. Here’s how the Associated Press summarized Apple’s big announcements:
“The Cupertino, Calif., company will spend an additional $30 billion buying back its slumping stock through the end of next year. The commitment increases Apple’s stock buyback program to $90 billion. Apple Inc. has invested about $46 billion in its stock since the program began in 2012.
— Apple’s quarterly dividend is being increased 8 percent to $3.29 per share from $3.05 per share. Making the payments will cost Apple more than $11 billion annually. The dividend has now risen by 24 percent since Apple began making the payments nearly two years ago in an about-face from the co-founder Steve Jobs’ long-standing resistance to parting with the company’s cash. Jobs died in October 2011 after a long battle with cancer.
