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Old 06-24-2009, 02:33 AM   Nav to Top  #1
ShaggsTheStudd
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Default Apple, google, microsoft hedging.

Take a look at some of the worlds most favorite and hated tech companies, based on google finance's info:

AAPL  Mkt Cap: 119.55  P/E: 24.11
MSFT Mkt Cap: 207.72B P/E: 13.44
GOOG Mkt Cap: 128.17B P/E: 29.67

MSFT looks to be trading at a reasonable P/E near 10. AAPLE and GOOG look like wallstreet believe that these companies are going to go up up and away. I disagree. Microsoft has 2 great things going for it. Windows 7 looks like it is going to be a hit, I think it might put a dent in the AAPL market. Bing has google nervous.

I think AAPL and GOOG are going to lose some of their innovation premium over MSFT. MSFT has been seen as the laggard, but I think they are finally stepping back into the ring.

I am looking at shorting $1 of AAPL and $1 of GOOG for every $2 of MSFT I go long on. Over the past month or two, this looks like it would have made some money. I think the market agrees with me, but I don't know if the trend will continue.

AAPL - Apple Inc. - Google Finance

The nice thing about playing it this way, is even if we see a market "correction", the hedge should still play out. In fact, a little bit of downward market movement might even shake out some of those paying the GOOG/AAPL premiums.
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