8 Stocks and ETFs Your Financial Advisor Is Buying Right Now

Now, let’s turn our attention to Apple. I don’t like Apple as a long-term investment at all and explained on CNBC last July why this is the case. At the time Apple shares were trading above $130. Apple is the most widely covered stock in the universe. Everybody knows everything about Apple, so you can outperform other investors only if you are better at analyzing the available information better than other investors. Apple operates in one of the most competitive industries and currently has huge margins which give the consumer goods company a market cap of more than $550 billion. The stock earns about $50 billion a year, so the main question investors answer is really simple. Can Apple retain its huge margins and keep making $50 billion a year for the next 10-15 years? In other words, can Apple trick consumers into paying an extra $200 per phone for the next 10-15 years?

I am not certain but history tells me that this isn’t very likely. Nokia and Blackberry investors paid dearly in the past for their optimistic assumptions. I believe Apple is one recession away from a major correction in its share price.  We aren’t currently in a recession, yet Apple is already projecting a revenue decline for the current quarter. Smartphone market is saturated andthe rate of innovation in the industry slowed down significantly. The effects of price competition by low-cost Chinese players haven’t been felt yet but I believe things will change dramatically when US economy goes into a recession.

In the final section of my article I will go back to Trackstar’s weekly report to highlight 3 ETFs. The most popular ETFs among financial advisors were Energy Select Sector SPDR ETF (XLE), iShares 20+ Year Treasury Bond (TLT), and iShares Nasdaq Biotechnology (IBB). Both energy and biotech were among the hardest hit sectors this year and financial advisors were probably betting on a short-term rebound in these stocks. IBB is down about 25% this year whereas XLE is flat because its large exposure to mega-cap energy stocks. Exxon and Chevron together account for more than a third of XLE’s assets. This tells me that it XLE is viewed as a safe bet on a rebound in oil prices. On the other hand TLT is a flight-to-safety play that are favored by investors who are worried about a deterioration in economic growth and expect rates to decline.