Warren Buffett (Trades, Portfolio)’s favorite market indicator tumbled from its Oct. 1 reading of 147.8% to 135.4% on Friday following an “October slump” that saw each of the “FAANG” stocks shed over 7% during a spooky month for investors.
US markets continue October slide on Apple’s announcement on termination of iPhone-sale reports
The Dow Jones industrial average sank nearly 150 points in morning trading, led by Apple Inc.’s AAPL 7% nosedive following weak December-quarter revenue guidance and Chief Financial Officer Luca Maestri’s announcement that the Cupertino, California-based tech giant will no longer report iPhone, iPad and Mac unit sales going forward.
CNBC columnist Sara Salinas reported that top analysts denounced the move, saying that it increases “fears the company has something to hide.” Daniel Ives of Wedbush Securities said in a statement the “jaw-dropping” announcement represents a “tough pill to swallow” for Wall Street: Over the past 10 years, tracking iPhone units is “critical to the thesis” and has become “habitual” to investors. While new product launches “catalyzed Apple to focus more on segment revenues,” skeptics are engendering fears that higher average selling prices making up declines in iPhone sales introduces the potential for Apple to “conceal softer sales in future quarters,” according to Jefferies Financial Group Inc. (JEF) analyst Timothy O’Shea.
Table 1 lists the performance of a portfolio that invests in 100 shares of each of the “FAANG” stocks on Oct. 1: Facebook Inc. FB, Apple, Amazon.com Inc. AMZN, Netflix Inc. NFLX and Google parent Alphabet Inc. GOOGL.
| Symbol | Company Name | Current Price | Change (%) | Value | Gain |
| AMZN | Amazon.com Inc | 1,672.93 | 7.40 (0.44%) | 167,293 | -33143 (-16.54%) |
| NFLX | Netflix Inc | 317.01 | -0.37 (-0.12%) | 31,701 | -6442 (-16.89%) |
| GOOGL | Alphabet Inc | 1,080.90 | -5.09 (-0.47%) | 108,090 | -12763 (-10.56%) |
| FB | Facebook Inc | 151.09 | -0.66 (-0.44%) | 15,109 | -1135 (-6.99%) |
| AAPL | Apple Inc | 207.72 | -14.50 (-6.53%) | 20,772 | -1954 (-8.6%) |
| Summary | Â | Â | -2.64 (-1.42%) | $342,965.00 | $ -55,437.00 (-13.91%) |
Table 1: Summary of losses for each FAANG stock for the period between Oct. 1 and Nov. 2
Stock market remains significantly overvalued
The Berkshire Hathaway Inc. BRK.ABRK.B CEO’s market indicator stood at 135.4%, which is still above the “significantly overvalued” threshold of 115%. Based on this market valuation level, the stock market is expected to return -1.3% per year over the next eight years.
Disclosure: No positions.
