Whether or not Mario Draghi’s (President ECB) comments yesterday are enough to save the euro is open to debate. What is not in doubt is that the markets loved it. NASDAQ powered up 2.2% to 3135. Looking back in my records that’s the highest since 16th Nov 2000. NASDAQ hit an all-time high of 4965 in late March 2000 – so still some way to go to reach those dot.com heights.
The ‘problem’ is that Apple is such a huge proportion of the NASDAQ - >15%. Yesterday Apple hit another all time high closing at $676. That’s a mere 67% rise YTD. Why a problem? Well, if Apple fumbles next week with its launch of the iPhone 5, its share price will be hit and NASDAQ will tumble. In turn that will bring down most global indices too. Even if you don’t own Apple shares yourself, every pension scheme, ISA, unit trust etc will be affected. So far, you have a lot to thank Apple for – even if you don’t know it. But remember shares can go down as well as up.
And there is increased competition around. Although the Nokia Lumia/Microsoft Windows 8 launch earlier in the week hardly set the world on fire, I suspect that Windows 8 Mobile will become more of a competitor to Apple than it is now. But perhaps the more significant announcements came from Amazon with its new Kindles and Amazon Fire tablets. Amazon Fire already has 22% of the US tablet market. The new Fire has an entry level price of just $159. (More details – See FT article) So far the Fire has not been available in the UK but the new version will be on sale here in a few weeks. I am sure it will be a very popular Christmas present.
Then there are many other smartphone and tablet announcements in the offing. Apple’s new products are going to have to be super exciting to ward off the increased competition.
Footnote – Amazon has announced 2000 new permanent jobs in the UK and 3000 temp jobs over Christmas. Amazon shares were also up 2.1% yesterday – 45% YTD.
Note - I am a ‘happy’ long term shareholder in Apple, Amazon and Microsoft.