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Calm Down & Look at Apple

If Fed Chair Jerome Powell had intended to instill calm at the conclusion of the Federal Open Market Committee [FOMC] on Wednesday evening the 26th, he failed. Markets remain deeply uncertain and unhappy, both with continuing tensions with Russia over Ukraine and with headline inflation nudging 7%, well above the 2% target. The FOMC is expected to raise the target range for the federal funds rate in March with possibly further 'incremental monthly increases,' the policy-setting committee suggested in its statement.

Powell has gone from being the market's friend to its possible adversary. The Fed's sudden hawkish shift illustrates its determination to bring inflation down rather than protecting elevated asset prices. Presently USA Bond yields suggest rates will rise from near zero to 1.5% [some even suggest 2%] by year-end, but given the volatility and so many imponderables, it's anyone's guess.

Longer-term investors should not be too worried. It's not unusual to have 10% plus corrections; what is remarkable is that we have had so little of them in the past 12 years.

Remember, the S&P dropped 33% in a matter of days in March 2020 as markets gulped at the potential damage Covid might do. In the event, and with hindsight, it was a fantastic buying opportunity. Declines of 10 to 20 % have occurred 29 times approximately every 2.5 years since 1946 and for the long-term investor represent nothing more than a blip.

This brings us to Apple [AAPL], which has just reported astonishing figures with revenues exceeding forecasts up 11% at nearly $124 billion, earnings per share at $2.10 against an expected $1.89, and encouraging comments on improving supply chains.

Service revenue and Mac income led to growth approaching 25% for the quarter.

Apple stock has retreated from its all-time high of $183 but moved sharply higher in after-hours trade on Thursday the 27th to $166.

Anyone buying 100 Apple at its December 1980 IPO of $22 a share at the cost of $2200 would now be sitting on 22400 shares [adjusted for five subsequent stock splits], amounting in value to over $3.7 million.

The power of long-term investing!