Bears are in control.

The cover picture of Barron's this week say it all.

With that said, there was a balance in the articles this week.  Randall Forsyth, head scribe for Barron's had a great column that boiled down to DC is dysfunctional but not dysfunctional enough to let the economy go off the end of a cliff.  Let's hope he is correct.

Kopin Tan (one of my fav Barron's writers) had an article called "Precipice Anyone."  It supports some of Forsyth views but acknowledges we should be prepared and have some cash on the sideline to pick up some deals when we see spillage at the edge of the fiscal cliff. 

I liken it to the days when NA Indians would drive a heard of buffalo off a cliff to harvest hides, meat, and horns.  They knew how much they needed but hearding 3,000 buffalo is not an exact science.  There may be a few who get caught in the herd and just fall over the edge.  Kopi is saying even if we have some responsible action from the parliament of whores in Washington, a few bison might fall off the cliff.

Tiernan Ray, another of my favs wrote a piece about AMZN and AAPL.  I encourage you to read it.  It is a well researched explanation of valuations for both companies.  I know almost all of you have some AAPL in your portfolios and I would bet big bucks one or several of your 401 K holdings have AAPL.

Ray's piece lays out the data points discussed at last weeks earnings reports, but explains how operating margins work, since this is the big bugaboo about the slight AAPL miss.  Without plagiarizing Tiernan, I can relate to you a personal story that explains what is temporarily happening to AAPL margin.

In a former life in the wire and cable world I enjoyed a nice discount on autos from Ford, GM and Chrysler, because I was an exec and we had national contracts with the Big Three.  I was entitled to the Ford X Plan which allowed me to buy a Ford product at 3% over standard mfg cost (not the grandly manipulated mfg's invoice all you car bargainers know about).

Devin and I were in the market for a full size Bronco.  The model had been in production for 17 years.  The sticker on the vehicle at the time was about $32,000 (a lot for the time) and I was able to buy it at $16,800.  The reason why we could get is so cheap was the production costs had been amortized to death so their margin on that vehicle was impressive.

Apple, has been building and launching a lot of new products.  (Ok they are rebuilds of existing products.)  Those rebuilds take on new set up cost and line costs so the first few quarters of iPhone 5, the new iPods, the new mini iPad, the shuffle, the redesign of  the Apple TV device did have a marginal impact on the operating margin taking to from an industry leading 42% to 39%.

My feeling is that this is a buying opportunity as Apple hovers around the 600 mark.  We have a Dec 22 625 dollar put we sold for $22.50 currently in really bad shape.  If we wanted to buy it back it would cost us about $40.00.  I think the stock is currently way oversold at 604.  My break even if I get the shares put to me would be $602.50.

Before we take a look at the week ahead, I may have spotted an interesting value play.  CTCT Constant Contact, Inc. provides on-demand email marketing, social media marketing, event marketing, and online survey products primarily in the United States. It offers email marketing products, which allow customers to create, send, and track professional and affordable permission-based email marketing campaigns; and social media marketing products that allow customers to manage and optimize their presence across multiple social media networks. The company also provides event marketing products, which enable its customers to promote and manage events, communicate with invitees and registrants, capture and track registrations, and collect online payments; and online survey products that enable its customers to create and send surveys, and analyze the responses. In addition, it offers customer support services to customers and trailers through phone, chat, email, and social media. Further, the company provides ancillary services, such as custom services to customers who like its email campaigns, event promotions, or surveys prepared for them; and online training programs to educate participants on email marketing and social media marketing best practices, as well as a workshop programs. It markets its products directly for small organizations, including retailers, restaurants, law and accounting firms, consultants, non-profits, religious organizations, and alumni associations. The company was formerly known as Roving Software Incorporated and changed its name to Constant Contact, Inc. in 2006. Constant Contact, Inc. was founded in 1995 and is headquartered in Waltham, Massachusetts. 

Yes this is the very company I use to bring you these words of wisdom.  They got whacked really hard Friday for barley missing estimate earnings.  It came down 27% to $11.93.  At that level, its forward looking P/E is 14 and change, an amazing cheap ratio considering the 600 plus % earnings growth of late and an expected 50% growth forecast.  They have no debt and about $2.77 a share in cash.  When you adjust the P/E for their cash, you are looking at 11.03.  Cheap Cheap Cheap for a growth stock with no debt. 

We may go in before the market tomorrow and start a new position as we think there will be a bounce on this stock at the opening.  DO YOUR HOMEWORK.  We are buyers below $12.00.

Once in a while a reader sends me some piece of info they feel worthy of mentioning here.  Doug, someone in the business of investing sent me a great piece about selling PUTs agains the GLD ETN which as you know tracks spot gold.  The article pimps a January $160.00 PUTs sale at 2.70. 

Thank you Doug, but we were a bit ahead of that curve. On the 18^th we sold some December GLD Puts.

 Basically it means we earned 230 dollar for the PUTs we sold and we will have to buy GLD if the ETN is below $160.00 on December 22.