How about the commercials? Hopefully.

But if you didn’t check out these two videos about stock trading or a discount brokerage named etrade. Pretty funny commercials.

This was the first one.

[youtube gdfvWAp5GUw]

This is the second one and I thought it was better.   Good work etrade!

[youtube 6vW9gUmooFg]

But what does this really tell us about the company?

Has the company released a earnings report? Are they laying off a ton of employees? Did the CEO just make some huge announcement? The answer NO.

Nothing has changed… And this is part of the learning process for me. I must realize that nothing has changed in terms of the company. The stock is reacting to things the market says. So this has brought down the stock. However, is the company still a good rule #1 company? YES.

However, after saying that I’m still watching the Technical indicators. Because if the big guys are getting out, so am I.

Yahoo Search and other products disappoints and has weak 2008 sales outline – CNN report

eBay.ca and others cutting listing fees and increasing commission to combat increased competition – CNN report.

Amazon’s stock drops 12% in after hours trading – CNN report

So why are all these stocks dropping in numbers? Is it because of the possible recession that everyone fear’s (and seems to be the excuse for everything that happens on the stock market)?

Or could it be that investors are re-analyzing the numbers and figuring out that these stocks maybe over-valued? It’ll be interesting to see what happens tomorrow after Google releases their profit report.

“Acceleware annouced the launch of its seismic data acceleration solution that provides a multi-fold performance increase to reduce lengthy processing times”

I’m interested in Acceleware as I have 300 shares in my risky business section of my portfolio.  I see this as good news for Acceleware as Oil and Gas is a multi-billion dollar industry.  As with all of their products if they can market themselves correctly then they’ll definitely increase their earnings.

Read the full press release here.

Let’s discuss some numbers first.

If you crunch the numbers and calculate the value of the AAPL stock or the sticker price. You’ll be happy to know that currently it’s undervalued. Apple has had an equity growth rate of over 25% for the past 5 years and an earnings per share growth rate of over 70% for the past 5 years. Calculating a value for the stock (or a margin of safety) is tricky because of such a great growth rate. Can they sustain the same rate?

However, if we calculate using a fairly conservative growth rate of 24%, EPS of $4.55 and PE of 31 (current PE) I get a sticker price of ~$300 with a margin of safety of ~$150. Apple is currently trading at $136, $14 dollars below the margin of safety! Wow, seems likes it’s now on sale.  Hmmm, let’s look at this in a bit more depth.

Meaning – Check (I own 3 iPod nano’s and a MacBook 2.0GHz Intel Core 2 Duo – White)

Moat – Check (Who doesn’t want an IPOD over some other MP3 Player?)

Margin of Safety – Check

Management – Steve Jobs is the definition of a Rule One Management running the company as if it’s his only asset.

Would I be happy to own this business and have it as my only asset? YES! (who wouldn’t?)

This is definitely a Rule #1 company. However, just because it’s a rule one company doesn’t mean you should always own the stock.

Did you get out when the technical indicators told you to get out?

Looking at the chart below we can see that there is a large drop on January 3rd to 4th. This is the time when all three indicators (MACD, Simple Moving Average and Slow Stochastic) all cross downwards: the exit point. If you exited on January 4th you would have sold at $180 per share. Between January 4th – 23rd the stock has dropped down to $135. You would have saved yourself $55 per share.

Now what? Well, it’s on the watch list and we wait till the technical indicators tell us to get in (or back in).   In the meantime we keep growing our watch list.