The Reformed Broker) passed along Monday at his blog in response to Kass noting that he "won't be missing many steps" after successful cancer surgery:
... not only did he not miss a step, in many ways his commentary throughout the fall has been elevated. His short and then go-long calls on Apple, in particular, were exquisite. And to think, he's been running his fund, posting day in, day out, and making his media appearances while privately coping with something like this -- it's inspiring to me on many levels. Damn straight. And one more philanthropic shout-out to that piece of crap disease. Exquisite. Good word. I'll go with nimble and seemingly prescient. This hit Kass did on CNBC Monday wasn't half-bad either. It got pretty intense at times. And, by and by, it covered valuable ground. You can pull lots of useful stuff out of that. First and foremost -- and my focus here -- what Joe Terranova said:
Apple has become a casino. I think it's problematic. I think it's reflective of the way we think in the markets. I think algos are here to stay. The machines are faster than all of you, and you can't trade that fast anymore.Terranova made two more crucial points. First, do not try this at home. If you're Kass, you're sharp enough to trade this thing against the quants and machines. If you're not, you'll get eaten alive. Second, Terranova said the company's capital allocation strategy stinks. By doing a special dividend and/or accelerating the pace of buybacks, Apple can help put it to rest -- its stock is not a trading vehicle; it's an investment. I never bought the idea that it's the shareholder's money and if they want capital return, give it to them. Frankly, I want to see Apple bring its cash into the U.S. and attempt to put it to good use inside and outside of its business. However, given the realities this stock faces, it might not be a bad idea to throw your weight around aggressively on the dividend/buyback front. There was more good stuff to come out of that exchange. I nodded my head in agreement quite a few times. Everybody on that CNBC panel made good points, particularly Kass and Terranova.
They're all right. It's a casino. A trader's stock. Don't try to trade it. And Kass expressed what amounts to a long-term bear case. I agree with several components of his pessimism. However, as I explained Monday on TheStreet, this harsh, volatile and sustained sell-off absolutely has something to do with capital gains-related profit taking. That's where Kass and I part ways. It's not only about taxes, but that's what started this; everything else that came after only intensified the selling. If you're sitting on AAPL profits -- retail, institutional, small position, large position, whatever -- you had to think about taking them, no matter what stage of life you're at. If you initially decided against it, these last few sell-offs probably helped shake out the strongest of hands. Only the most emotional, stubborn, brave and, dare I say, crazy AAPL bulls have not sold one share. Sure, buy some more on the dips if you're truly a believer. Just don't do it with "your" money. So, you had a $50,000 stake in AAPL turn into $100,000. Here's hoping you took one of the stock's recent rallies to pull out half or, preferably, 3/4 of your capital. Now, you can bank some of those profits, put them to work elsewhere and reassess AAPL and buy shares in the low half of the $500s. Just don't get all bull-headed. I love Apple, but that doesn't mean I love AAPL. And I know that if sanity and rationality governed the world, none of this would be happening right now. In a perfect world, AAPL meanders, slightly outpacing the market, before Apple blows out the holiday quarter and the stock follows with a rally that rips the few shorts in the stock's heads off. Apple and Amazon.com ( AMZN) share some characteristics: bulls love to talk trash, but few people have the guts to go short for more than a quick trade. That shows there is at least some sanity and rationality left on Earth. And if you spread out your risk vis-a-vis your AAPL profits, you're also thinking with a sane and rational mind. Put a little in the bank. Invest a little somewhere else. Buy yourself or your lover something nice. And then, maybe, dabble in a few more AAPL shares after the fiscal cliff dust settles and the company gets set to report holiday earnings in late January. Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.