Apple's far-reaching ripple effect
With Apple now among the most reviled stocks, people are fleeing derivative plays as well.
Cramer wrote the post before the market open, when Apple and most stocks mentioned dipped. While many, including Apple, have recovered in morning trading, there's no denying the ripple effects from Apple's recent plunge from over $700 to near $500 in the tech sector.
Have you noticed the bizarre moves in tech lately? Apple (AAPL) has become among the most hated stocks in the universe -- something to be exacerbated Monday, I am sure by Citigroup's merciless downgraded call from "buy" to "hold." So now, people are fleeing not just Apple but all of the Apple plays. The plunge, for example, in Cirrus (CRUS), the Apple sound play, is hideous and seems to be accelerating. Qualcomm (QCOM) is now swooning. We own Broadcom (BRCM) for ActionAlertsPlus.com, and it's become a tough hold, even though the company recently guided up and is not dependent upon Apple as so many semiconductor companies are.
But technology represents a huge chunk of the S&P 500 ($INX), so you can't just overlook it if you are a portfolio manager. You have to take that Apple money, and that Apple-related money, and put it elsewhere in the sector.
Now, this is no mean feat. First you have to deal with the fact that Apple's so-called "disappointing" numbers would be nirvana for just about every other player, at least in the personal-computer area. Buying Microsoft (MSFT) here just seems like a lesson in taking a beating. Intel (INTC) is no different. We heard from Dell (DELL) last week and there's nothing worth owning there, despite Goldman Sachs' upgrade from sell to buy last week. Hewlett-Packard (HP) is a disaster and I don't think it is done going down. Western Digital (WDC) and Seagate (STX), two obvious suppliers, are dirt cheap -- but, unless they go private, they are just decent dividend plays, particularly Seagate with its 5.5% payout. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
The obviousness of the declines in PC land sends most investors looking elsewhere.
So where have they been going? First, they have sought to find the stocks that have still beaten expectations handily. Unfortunately, that's a very small universe. There's Salesforce.com (CRM) and most recently there's Adobe (ADBE). EBay (EBAY) is quasi-technology, and that's worked well.
There are also two prospective earnings reports that could produce some highlight names as proxies for tech -- notably, Oracle (ORCL) and Accenture (ACN), both of which are set to report this week. I expect Oracle to be fine, although I worry that so many think it will to be much better than fine. As for Accenture, I like it and think it can surprise to the upside once again. Both of these are similar to IBM (IBM), with delicious recurring revenue from long-term contracts.
What else? This weekend we learned that Cisco (CSCO) could be selling its Linksys home-router business, something you might know as that little blue box attached to your cable wire. I never understood this acquisition to begin with, and I think that the disposal will be well-received.
That desire to own Cisco has spread to a host of networking stocks. That includes competitors Juniper (JNPR) and Ciena (CIEN), even as they have been missing quarters, as well as Xilinx (XLNX), a chip supplier.
Sure enough, other more-industrial chip companies have been doing well, too, including Texas Instruments (TXN), and Cypress (CY), which is more of a play on the Amazon (AMZN) Kindle and other non-Apple devices and looks incredibly attractive to me. So does Analog Devices (ADI).
What's funny is that all of these non-Apple plays do not have anywhere near the possibility of besting Apple for product or even earnings momentum. But it doesn't matter. They are chits in the tech game, and right now those chits have more value than Apple and all of the players on its stage.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long AAPL, BRCM, IBM and EMC.
More from TheStreet.com
If companies like Apple would split their stock maybe the common man could
buy a few hundred shares.
Its all taxation related. So many people bought apple around $380-$400 and are facing huge capital gains tax next year. So the smart play is unload it this year and buy it back in January.
Municipal bonds are doing the same thing. After a year of huge gains they are suddenly selling off.
You may consider that there is something fundamentally wrong with Apple or with double tax free 5%+ returns suddenly but the more rational explanation is gain.
I swear I have always thought that Obama's presidency will be marked by "unintended consequences" and it will be.
man this guy amazes me ...how does he keep his job repeating nonsense daily?
he knows how markets and trading work but he can't beat the indexes with his crappy picks
Jim, if you're going to write an article, at least come up with a topic that has true insight and not just latch on to the hot topic with nebulous insight and pointless banter.
There are natural waves of popularity, MSFT, Google, RIMM, Apple, etc. Regardless of what they've done in the past and what they are going to do in the future you can only guess what people will gravitate towards.
RIMM died on the vine, not because they were crappy technology, but they lost the edge that made them cool, and if you look at the trends in technology, don't look at what the 40 year old father and mother of two are doing... they aren't cool. Look at the pre-pubescent because in 4 years the rest of us will catch up to their hip ways.
No one wants to do what their parents are doing, RIMM was "my dad's phone" and iPhone is going the same direction.
cars that park or break on their own are coming along.
manufacturing wise there are nice new machines to economically produce parts in a backroom. but the companies i hear doing this work are not public stock companies. (3d systems).
the logistics of moving material is being well honed. many companies i see as suppliers to my day job carry near zero inventory yet deliver in 3 days to 3 weeks which is warp speed anymore. but again, i think the material handling logistics improvements are coming from non-public stock companies. (look up manufacturing resource planning software or enterprise resource planning software).
"If companies like Apple would split their stock maybe the common man could buy a few hundred shares."
You don't want to sink your fiat savings into Apple, it's rotten to it's foreign-manufactured core.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.