Meet the new fear gauge: Apple. It’s accessible. Everyone knows it and probably owns more than they ever knew. It’s everywhere — in ETFs and mutual funds and discretionary stock accounts. Its products are in your office, your back pocket, or favorite reading chair. And it can generate more emotion than the Volatility Index because of it.
So it may feel surprising that over the past two months, the price performance on the VIX and Apple are nearly mirror images (see here): Apple has lopped off more than one-quarter of its market value while the VIX has zigged and zagged its way higher, dipping earlier this week as the market unraveled.
Yet action in the VIX (which has been setting new trading volume records) seems ho-hum and Apple is the bone-shaker. On StockTwits, the VIX might get the hashtag #wakeup — in tune with a WSJ blog: Vix hits the snooze button again. But the stock-no-one-could-stop has gone from #AppleOnFire to #AppleUnderFire.
There’s a lot of head-scratching on action on both the VIX and Apple. “Why won’t the VIX go higher,” asks Adam Warner in his blog. Steven Place asks on his options blog “Is the VIX too complacent?” From a technical viewpoint, the answer is no, he says. If you look at the VIX going out 90 days, you’ll see a lot more anxiety in the market, he writes. But the current index — which factors in expectations for the next 30 days — is pretty tame. And that is what you would might expect during the upcoming holiday season.
Apple is just as puzzling. Paul R. La Monica from The Buzz @CNNMoney.com, tweeted yesterday in disbelief: “AAPL now down 25% from its all-time high. But forward P/E just 10.5. And it has dividend yielding 2%. When will the pain stop?” Scott Murray tries to put the plunge in context, saying that now Apple is in the right volatility zone; its run-up was actually the anomaly.
To me, Apple is feeling like the crucible for all investor fears — both professional and small. Taxes on both capital gains and dividends are likely to go up — by how much? On a practical matter, best to lock in gains now. It’s not just that. The world is changing in so many unpredictable ways, both globally and at Apple. Through these past years of turmoil and triumph, Apple has been steady, creating products that consumers love because they make users feel special when doing something quite ordinary — like sending a text or listening to a song. Steve Jobs understood that if you infuse the humdrum with a beautiful aesthetic, life would be a little sweeter. But with Jobs gone, the temple to beauty doesn’t seem inviolate. Even Apple is now offering perks to keep its staff; working there doesn’t seem like a privilege. In a larger sense, Apple was a symbol of the prowess of American enterprise. And now all of that seems in doubt yet again. The election, rather than settling things, has heightened everyone’s sense of just how difficult the road ahead is and how serious the task. And so as our confidence gets sapped, Apple takes a bruising. It’s the more perfect proxy for what many investors are feeling now.