Recently (Thursday, 8/8), The Wall Street Journal had bad news about Apple (AAPL).

Their “Marketplace” section’s top article (Android Seizes Phone Market) presented Apple’s 3-year inability to grow iOS market share even as weaker competitors gave up gobs of it. The winner: Android-based phones, now with a quasi-monopoly of 80% market share, up from 25% three years ago. Apple? Stagnated at 15% to 20%, with the latest results below the bottom end of that range at about 13%.

The articles describe symptoms of a fundamental problem at work that portends lower earnings and profit margins in Apple’s future. The problem is the dreaded technology S-curve…

This article is published on SeekingAlpha.com

Wednesday, everything seemed so right with D.R. Horton (DHI). Analysis had revealed a high quality, well-managed company. Then the excellent industry news ramped up sales and earnings expectations. Thursday morning, sure enough, Horton announced that it not only beat the average EPS estimate by 24%, but also exceeded the top of the analyst estimate range.

The result? The stock market rewarded D.R. Horton’s stock with a -9% drop.

So, what went wrong and what should we do next?

This article is published on SeekingAlpha.com

Outstanding homebuilder industry sales and pricing news for June was just released, yet homebuilder stocks so far have not reacted. The news is exceptionally good because expectations have been so negative (i.e., the “surprise” factor is high).

With this proof that new homebuyers are undeterred by the higher mortgage fixed-rates, we would expect the pressure to lessen and homebuilder stocks to rise. However, thus far today – nothing. Moreover, two homebuilders will report their June-ended quarters tomorrow…

This article is published on SeekingAlpha.com

Typical of many warnings being proffered to investors these days, Michael Santoli (formerly at Barron’s and now with Yahoo! Finance) has written Retail Investors Should Lower Expectations. He cites many reasons to be cautious and expect lower returns from “nearly all” asset classes. I’ve found Michael’s writings to be well-done. However, I believe his latest article misses important points and puts overreliance on public investors’ past timing mistakes.

His thesis (also supported by other market observers) is that, after over-cautiously missing out on the past 4+ years U.S. stock market run, investors now are blindly chasing stock performance as they run from plummeting bonds. However, he overlooks two important items that make this analysis wrong in today’s markets…

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The good news continues for both the housing market (demand and prices up, foreclosure supply diminishing) and homebuilders (activity and confidence up). Real estate has become desirable again, spurring buyers, investors and lenders. The only “bad” news has been higher fixed mortgage rates. In 2 Reasons Rate Rise Makes Homebuilders A Buy, I discussed why, contrary to the numerous media reports, this rate rise is an incentive to both buyers and lenders. Now we get two additional pieces of information adding to housing’s positive outlook.

Here’s the information and what’s coming this week that could spark homebuilder stocks…

This article is published on SeekingAlpha.com

In 2 Reasons Rate Rise Makes Homebuilders A Buy, I described how rising interest rates will likely boost home sales, not weaken them. Two important forces could be unleashed by a rate uptrend. First, potential home buyers can be influenced to act sooner, thereby avoiding higher mortgage rates later. Second, banks, seeing an increase in interest (profit) margin coincident with a reduction in refinancing fees, can be driven to readopt their more normal mortgage loan activity by allocating more funds and relaxing their stringent borrower requirements.

The residential construction industry should be a primary beneficiary, and, among the publicly traded homebuilders, D.R. Horton is particularly appealing. Here’s why…

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The sharp drop in homebuilder stock prices last week was based on the belief that interest rates up necessarily means home sales down. In today’s environment, that logic is flawed. The correct evaluation should be that the rising interest rates will boost housing’s comeback, not defer or diminish it. Therefore, those hammered homebuilder stocks give us a special opportunity.

This article is published on SeekingAlpha.com

We had great news today (Thursday), but the response was tepid. Rather than being disappointed or dismissing the news, here is why we should be excited at both the developments and the investment potential it opens up.

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Last month, Apple (AAPL) seemed a good buy because its yield was attracting income buyers (Apple: Analytical Shift Makes Stock A Buy). Now, not only is the yield still attractive, but Apple’s investor antipathy and diminished growth expectations are added reasons to buy – i.e., to be optimistic about AAPL as a stock investment.

Here’s how to view Apple’s stock value and growth prospects…

This article is published on SeekingAlpha.com