Apple Inc. (AAPL), SPDR Gold Trust (ETF) (GLD): Second Half Playbook – Which Market Laggard Can Become a Leader?

The first half of the trading year is over. For all of my readers, I hope it was a successful venture in the markets and your outside lives.

Given the numerous concerns heading into 2013, few investors expected to have a breakout performance in equities. We entered the year with concerns such as the looming fiscal cliff, payroll tax hike, and lukewarm corporate earnings forecast. President Obama won his re-election bid and investors reacted by hitting the “sell” button, with the market reaching a November 2012 low.

The dust began to settle when it became clear there would be no capital gains or dividend tax increases, and the Federal Reserve announced plans to increase its quantitative easing (QE) program. Ultimately, the Dow Jones Industrial Average posted its best “first half” performance since 1999, opening at 13,104.30 on Jan. 2, and closing at 14,909.60 on June 28.

To begin the second half of 2013, I thought it’d be worthwhile to discuss the top underperformers in the market year-to-date. Let’s consider the following readers choices, which have received a lot of news and media attention.

Innovation or not?

Despite its falling share price, Apple Inc. (NASDAQ:AAPL) is still widely perceived to be the world’s most valuable brand. Shares of the technology giant fell 25.5% in the first half of 2013.

Let’s consider the bear case on Apple Inc. (NASDAQ:AAPL) before predicting if the stock can rebound. Investors are concerned that slowing demand for smartphones and tablets will affect Apple Inc. (NASDAQ:AAPL)’s top-line revenue and a falling gross margin could affect bottom-line earnings. The company also faces increased competition from new devices such as the Samsung Galaxy S4, HTC One, and Google Nexus.

There’s a lot of moving parts, but I think Apple Inc. (NASDAQ:AAPL) can make a comeback in the latter half of 2013.

First, Apple Inc. (NASDAQ:AAPL) is the main beneficiary of a PC market in secular decline. We are in the early innings of a long-term trend as old PC inventory is replaced with newer tablet devices. While competitors have made inroads against iPhone, Apple Inc. (NASDAQ:AAPL) maintains a stronghold of the tablet market with the iPad. In my piece The Contrarian View: Four Reasons to Sell Google and Buy Apple, I outline why the tablet market is expected to triple in the next four years.