“Last year, Apple, one of the Four Horsemen of the Nasdaq, was a superstar, going up no matter what happened elsewhere in the markets. This year, it has not been so fortunate,” Tim Melvin writes for RealMoney.com.
“In comments today, Jobs blamed the price decline in part on the actions of an unnamed hedge fund. Those unnamed hedge funds get blamed for a lot of things these days and have been cited as the cause of virtually every problem in modern society. As it turns out, this time it just might actually be their fault,” Melvin writes.
Much more in the full article here.
[Thanks to MacDailyNews Reader ” JES42″ for the heads up.]
Quarter after quarter of record profit and the stock tanks…
Can we sue the Hedge funds – I would think that we could especially if you can sue for selling too many iPhones.
are so into the company ( well deserved of course )
It makes for a very easy target for naked short selling.
Also makes it easy to print stories about jobs dying.
Face the fact folks people driving cars made of of gold didn’t get there playing fair. It is a rigging game always has been always will be.
Lucky for us this elephants are so huge that sometime that Sh*t more money than you can make in a lifetime and that is what we are all fighting over.
BRING BACK THE UPTICK RULE.
REGULATE HEDGE FUNDS.
START SENDING PEOPLE TO PRISON.
FIRE EVERY AT THE SEC AND MAKE IT ILLEGAL FOR THEM TO EVER WORK FOR PRIVATE INDUSTRY, PAY THEM WELL
HOLD NEWS REPORTERS LIABLE FOR REPORTING LIES
GOT THAT CRAMMER YOU SOULLESS JOKE
CNBC SHOULD BE FORCE TO PUBLISH A CHART OF ALL ADVERTISERS, EMPLOYEE HISTORY, AND ANYTHING ELSE THAT WILL CLEARLY SHOW THEM AS CROOKS ON A STICK.
the good news is that Apple earning will become so
overwhelming the LONGS will have the last laugh.
so the the FAT cats who would sell their own baby for a take over insider trade keep using the world as your ATM
rich people such – John Waters
@Whatever
If fat people can sue mcdonalds for being fat…. or people suing dunkin donuts for not having common sense and burning themselves….. I definitely think we can sue the hedge funds.
If you are unwilling to bloody the nose of the “unnamed hedge fund” by buying back your stock when they short your stocks down, you are just inviting them to come back and do it again.
If Apple took a billion dollars and pulled their stock up earlier this year, they would be shorting someone else’s stock now.
@Jersey_Trader
If Apple Brought back a billion dollars of stock the hedge funds would spread a rumor that Apple was in trouble and then short it some more.
Calm down everybody.
People can only manipulate a stock downward for a finite time. If they want to make money, they will eventually have to manipulate the stock upward. This creates buying and selling opportunities for themselves and perceptive investors.
If you think AAPL is artificially depressed, then buy more stock. In a few months, the hedge funds will artificially inflate the stock. Then you can sell and profit with them.
The one thing hedge funds cannot do is stop the fundamentals. AAPL will make a ton of $$ from the iPhone and the stock will eventually go up. I believe that a trailing PE ratio of 30 is way low for the amount of profit from 10M iPhones.
@jersey trader
I’ve read that buying back stock is a short term fix for a dying compan, like a belleagered Dell. What’s your thought?
Naked Shorts are well illegal. Doesn’t stop the hedge funds, pension funds or corporate investment portfolio managers form doing it. And the only ones ever prosecuted for Naked Shorts has been individual investors. I think the SEC needs to start enforcing some of the rules they have and start drying up most if not all the artificial leverage that has been allowed into the market. If you going to but 1000 shares of AAPL at $120.00 per share you need to have the $120,000.00 to pay for it an not just 40%-60%. The stupid part is you can buy a commodity with just 4% to 9% of the cash needed to buy it.
I could also go into the Derivative and Indexed Options trading and it’s negative effect on the markets but, that would be for a different rime
Amen.
Well said.
The bastards need to be put in jail.
Period.
Take out a contract on these hedge funds managers…if the Gov. won’t take care of them…let them feel the heat of the real world!
@Demon: Naked shorts are not illegal in the USA, yet. They damned sure should be. Naked Short Selling (shorting a stock you don’t have control of) is the exact reverse of buying a stock on margin, and that was banned during the Great Depression.
Stock market is nothing more than white collar gambling. Does anybody really believe it isn’t largely controlled by large…(too large) hedge funds. The market doesn’t reflect the true worth of a company…
@ Tommy Boy
Shorting a Stock is not illegal, but a Naked Short is Illegal at a point.
Naked short selling, or naked shorting, is the practice of shorting a stock without first borrowing the shares or ensuring that the shares can be borrowed. Naked shorting is not necessarily a violation of the federal securities laws, and can contribute to market liquidity, but is illegal when it drives down stock prices. In 2004, the Securities and Exchange Commission (SEC) issued “Regulation SHO” seeking to curb abusive naked shorting. Concern about abusive naked short selling has increased during 2008, and in June the SEC issued a temporary order restricting short-selling of the shares of 19 financial firms deemed systemically important.
In July 2006, the SEC proposed to amend Regulation SHO, to further reduce failures to deliver securities. SEC Chairman Christopher Cox referred to “the serious problem of abusive naked short sales, which can be used as a tool to drive down a company’s stock price.” and that the SEC is “concerned about the persistent failures to deliver in the market for some securities that may be due to loopholes in Regulation SHO.
In June 2007, the SEC voted to remove the grandfather provision that allowed fails to deliver that existed before Reg SHO to be exempt from Reg SHO. SEC Chairman Christopher Cox called naked short selling “a fraud that the commission is bound to prevent and to punish.” The SEC also said it was considering removing an exemption from the rule for options market makers. Removal of the grandfather provision and naked shorting restrictions generally have been endorsed by the U.S. Chamber of Commerce.
SEC Chairman Christopher Cox in March 2008 gave a speech entitled the “‘Naked’ Short Selling Anti-Fraud Rule,” in which he announced new SEC efforts to combat naked short selling. Under the proposal, the SEC would create an antifraud rule targeting those who knowingly deceive brokers about having located securities before engaging in short sales, and who fail to deliver the securities by the delivery date. Cox said the proposal would address concerns about short-selling abuses, particularly in the market for small-cap stocks. Even with the regulation in place, the SEC received hundreds of complaints in 2007 about alleged abuses involving short sales. The SEC estimates about 1% of shares that change hands daily, about $1 billion, are subject to delivery failures. SEC Commissioners Paul Atkins and Kathleen Casey expressed support for the crackdown.
the 3 day settlement rule is BS
how for can they drive a stock in 3 days?
AAPL prob 20 pts 100,000 x 20 = 2 mill / buy 40 people “in on it” you get a $50,000 pay check for 3 days work.
Same with the banks when it is their money it is removed from your account instantly, when you deposit it takes 5 days to clear …… mmmmmmm
People in charge of making this shit up had one thing in mind SCREW YOU
Kill the FED!
KILL THE ELECTORAL COLLEGE
Kill the war Machine.
Kill Microsoft
and long live
Jimi Hendrix
John Lennon
Martin L King
Baba Ram Dass
Alan Watts
Krishnamurti
and everyone else out there that cared for someone other than themselves.
Serving ice cream on a diamond spoon leads to war.
open your mind and read some Loa Tzu
rant open
\
discloser
LONG AAPL
“Naked shorting is not necessarily a violation of the federal securities laws, and can contribute to market liquidity, but is illegal when it drives down stock prices.”
Not quite. It *can* be illegal when the intent is to drive down the price by flooding the market with sell orders, which is when it becomes manipulation.
It’s a massive can of worms to try to prosecute, and the problem would be far better solved by the exchanges than the SEC. All an exchange would have to do is require proof that the short seller *can* borrowed the shares that he’s promising to deliver. That will limit the number of short sales possible, because the scarcity of shares to borrow will be a natural limiter.
-jcr
Math Geek got it exactly right.
Naked short sellers and hedge funds cannot keep a stock down if the fundamentals of the company, as well as its market sector, are strong.
In recent weeks, each time AAPL rose, it gave back its gains, either that same day or the next day.
E.g. this past Monday, the market gapped up after the news broke this past weekend of the government conservatorship of Fannie Mae and Freddie Mac, AAPL gapped up and rose to the ~$164 area, but then quickly lost momentum and dropped back to the ~$158 area.
The net result has been a gradual decline in the stock from ~$180 down to ~$150 over the past several weeks.
The root cause of this decline is not naked shorting, although I’m sure that is happening.
The root cause is, rather, that technology as a sector is being underweighted by many market actors, based on unfavorable economic fundamentals:
In uncertain economic times, consumers cut back on discretionary spending, including technology products, e.g. large screen TVs, computers, communication devices, etc.
(The same price action is hitting other tech leaders, including GOOG, AMZN, EBAY, and to a lesser extent, RIMM.)
That is the fundamental hurdle that AAPL has to overcome. Plenty of investors are betting that AAPL will, in fact, overcome it. That’s why the stock hasn’t collapsed any more than it has.
As Math Geek wrote, if and when AAPL demonstrates staying power during this economic downturn, or if and when the economy shows clear and convincing signs of recovery, then AAPL — and the rest of the technology sector — will be regularly weighted or overweighted by market actors again.
So ignore all this nonsense about hedge funds, naked selling, and market manipulation. Yes, all three of these influences exist, but they all add up to an irritating gnat, as compared to the elephant in the room, which is unfavorable economic fundamentals.
Hey MoMo, you sure you aren’t the same “momo” guy that writes for that, ah, “streetwise” website which is supposed to help people make “actual cash”? You got an iPhone yet or still using your RIM job? And how’s your hedge fund coming along this year?
chaff – the stuff that jet fighters throw out to distract missiles headed their way…
Why does the SEC think they need to protect core financial institutions and not protect other companies from abuse?
http://www.sec.gov/divisions/marketreg/emordershortsalesfaq.htm
People who make money short term by creating fluctuations — cost other people. Anybody who is long and has to take money out of the market for other reasons is loosing big. Not everyone can wait it out, and eventually everyone has to take some money out. Long term holders are also affected by the short term fluctuations because of their equity.
Setting up a system that gives large incentives for hard to prosecute illegal behavior, which has great impact even if only a few people do it, is just crazy. This is exactly what they are doing. Here are a few possible reasons for their behavior
a) They think people always act altruistically
b) They delude themselves to think they can catch the abusers and use enforcement as a cure
c) They and their friends are making money off of this themselves
d) The people who are making the money are applying a lot of pressure (incentives or threats) on them.
e) Almost all of the above
X asks: “Why does the SEC think they need to protect core financial institutions and not protect other companies from abuse?”
Simply stated, the SEC doesn’t think that at all.
Rather, the SEC introduced this ban on naked short selling in 19 stocks as a temporary, emergency measure. Temporary, in that it has already expired, and emergency because the financial sector went through significant turmoil this summer.
The SEC is now investigating ways to expand the scope of any future ban on naked short selling. Options range from limiting any future ban to (as this summer) a handful of financial stocks, or expanding it to possibly the entire financial sector, or the S&P;500 stocks, or even the entire market as a whole.
Each of these options has pros and cons, and it behooves the SEC to examine them carefully, and solicit feedback from other interested parties, including other regulators, stock exchanges, brokers, market makers, investors, and of course Congress and the administration.