“There are few people on the planet that can destroy wealth faster than an Apple analyst,” Ernie Varitimos writes for AppleInvestor. “With the release of a single ill-timed investor note, Apple stock can plummet 2-3 percent, wiping out $billions of shareholder value, not to mention the affect on futures and dozens of derivative stocks. By what right has such immense power been bestowed upon these people. If they had real talent, they’d be clawing for a spot on the brokerage sales desk, because that’s where the real money is.”
“The fact is most analysts have very little investing or trading experience, and they do very little of the actual data collection and analysis,” Varitimos writes. “They are nothing more than glorified financial reporters… At any time, an analyst might release a investor note that could affect Apple’s price and in turn, your position…something you never figured into your analysis. So, consider that brokerages employ these spokespersons, who play reckless with our fortunes.”
Varitimos writes, “If fundamental analysis had any validity at all, if it was a tried and true scientific method, being performed by experienced and wise analysts, then you would think they would agree for the most part, or at least be in the same ballpark. But you can forget that, because 40 different analysts looking at the exact same data will come up with 40 different conclusions.”
Much more in the full article – highly recommended – here.
MacDailyNews Take: BINGO!
Plumbers require more certification than Wall Street analysts, who, as far as we can tell, require none at all. No offense meant to plumbers; all possible offense meant to so-called “analysts,” many of whom we consider to be charlatans at best and market manipulating scam artists at worst. — MacDailyNews, October 20, 2009
Related articles:
Edward Zabitsky: Wrong on Apple in the past, present, and future – March 27, 2013
Insufficient number of data points from Apple supply chain lead analysts to conclude the worst, of course – March 13, 2013
Why bad AAPL news just keeps on coming; Apple analysts fail to accept changing sentiment, reality – February 25, 2013
The best and worst Apple analysts over the last 2+ years – February 17, 2013
Apple analysts: Stupid or lazy? – February 3, 2013
Some Apple analysts ‘dissatisfied’ with life? – January 18, 2013
The mainstream tech media and most analysts are delusional – January 4, 2011
When an analyst is quoted, the publisher should also supply links to previous predictions by that analyst so that we judge how reliable their previous predictions were.
A new line of business for the folks at Rotten Tomatoes?
most AAPL analysts don’t take the time to perform even a rudimentary BACN analysis and adjust for BUN (+-COD). No LATTE curves, no PEAR graphs, just a 2D spreadsheet with last year’s data lol
Exactly! And the financial morons listen to these people. As a result they are ruining the value of a perfectly healthy company.
The thing is, they’re not really destroying Apple’s value as a company but they are hurting average shareholders immensely. As long as Apple can constinue to sell large numbers of products to consumers, the company will remain very valuable. The analysts can’t change Apple’s REAL revenue, profits, cash, etc. which are heart of Apple’s financial fundamentals. Those things can only be changed by increasing or decreasing of product sales. However, these analysts are hurting Apple’s IMAGINED wealth by way of share price and by damaging Apple’s mindshare for investors. No matter how much the analysts downgrade Apple’s share price, Apple will never be worth less in REAL value to companies like Netflix or Priceline or Google. Apple has real collateral and it’s in the bank along with other real assets. Saying any of those companies are even close in value to Apple is being done by smoke and mirrors.
Collateral is never based on future earnings, so I don’t quite understand why future earnings carries so much weight in the stock market. I can’t borrow huge sums of money from a bank by telling them I’ll make $XXXX in the future. They’d think I was crazy. If something happened to my future plans, the bank would be out of a large sum of money and get almost nothing back.
A company can’t really pocket future earnings, so Amazon currently can’t be worth more than Apple, no matter how high its share price is artificially inflated. However, shareholders can certainly benefit from an inflated share price. Hedge funds are basically turning future earnings into hard cash for themselves. Some of these things are truly fascinating for a person like myself who lived in a world thinking that value can somehow be quantified using basic fundamentals. Of course, that’s not true as I see more cases all the time where it doesn’t hold true. That muddling of value is really hurting our economy.
Laughing_Boy48
“Collateral is never based on future earnings, so I don’t quite understand why future earnings carries so much weight in the stock market. I can’t borrow huge sums of money from a bank by telling them I’ll make $XXXX in the future. They’d think I was crazy. If something happened to my future plans, the bank would be out of a large sum of money and get almost nothing back.”
You must not have very much experience (none?) in securing capitol for business ventures. That is absolutely and completely incorrect.
If they were truly talentless, they’d be working for Microsoft by now.
Don’t hate the player hate the game.
‘Tis a fool who thinks Wall Street is anything more than a casino table built on public conjecture. And that’s all fine, but it’s no place to stake the value of a real company.
I feel the need to defend casinos in this instance. When you enter a casino, you know the odds are stacked in the casino, but to an extent the odds are fixed, or can be influenced by skill. You don’t have people spouting opinions about the value of your cards and people can’t withdraw money from the pot based on them.
Could not agree more!
Casinos have the house odds in their favor. But at least they will lose their business if they are caught rigging the games.
And someone is watching to see if they are rigging the games. I wonder how much better Wall Street would be if the US hired the Nevada Gaming Commission to keep an eye on them. We sure wouldn’t have a bunch of limp ducked “regulators” explaining to Congress that they had never taken a major case forward for criminal prosecution. They’ll go after Martha Stewart, but not Jamie Dimon.
“By what right has such immense power been bestowed upon these people.”
That’s pretty simple, by the right of a weak herd like society, a very unbalanced one at that. The antithesis of ANALysis is synthesis. ANALysis is the breaking down by an asshole. What is really needed is the reverse, asshole’s breaking down. That won’t happen until people wise up and do something to change the environment that allows this to flourish. It’s not easy as one great synthesis put it. “rectum darn near killed ’em”.
It’s pretty scary that 40 analysts can look at Apple and come up with almost 40 different views. There’s really something wrong about that. There has to be. Can a company’s current value really be that misleading? Aside from guessing about future earnings, it should really be simple. Dollars are in fact, dollars. Dollars in, dollars out, profits. That’s what financial balance sheets are for. It’s those earnings multiples that are really freaking me out because they seem to be randomly assigned to companies for reasons I can’t possible fathom.
The thing about this is that these so-called “Analysts” couldn’t work in the industry they analyze!
All of us here know full well there are decent and even GREAT Apple analysts and we want to hear what they have to say because they are insightful.
But now, with the en masse conversion to the superior, progressive platform, these GREAT Apple analysts find themselves in a maternity ward filled with SCREAMING BABIES! So its hard to hear the grown ups trying to speak to us over the raging cacophony of callow juveniles.
😥 😥 😥 cry: 😥 😥 😥
yes, i left out a colon: That’s why I’m not a professional coder.
One of the very few MDN posts regarding WS that I’m 100% on-board with. There is one little caveat – Those of us who listen and, worse still, react to the nonsense published by analysts and regurgitated by other analysts. We don’t have to invest based on what analysts say. Invest in Apple, it’s a good company – period.
What do Sean Hannity, Rush Limbaugh and Bill O’Reilly have in common? Everything, they make money creating opinions. Although they are entitled to their own opinions, we are not. Pay them no heed. Do your own research. Play your own hunches. Billions are lost only if you sell. Had I sold AAPL at 705 and red bought at 419 I’d be happy and think my opinion was worth something. But if you think Johnson and Johnson’s PER at 23 is a better deal than AAPL at 10, you are certainly entitled to that opinion. I. Think not so I still buy AAPL.