Elmer-DeWitt reports, “This one was a classic slingshot, described succinctly by Jason Schwarz in his seminal Apple: Seven Reasons Shorts Love It: ‘If you can keep a good stock down,’ he wrote, ‘then you are able to load up for the ride back up. It’s like a slingshot — the harder you pull, the more propulsion you generate.’
MacDailyNews Take: “[Hedge funds and other investors] target strong companies like Apple with lies and rumors. In fact, it works better with a strong company like Apple, because after being artificially sunk, it then bobs right back up and the shorts can have their way with it all over again.” – MacDailyNews Take, April 8, 2009
Elmer-DeWitt continues, “This slingshot was timed to bring Apple’s shares down in advance of the company’s first quarter earnings report on Monday. The action started at 9:12 a.m. Friday when theflyonthewall.com reported, without explanation, that Deutsche Bank had removed Apple from its short-term buy list — a report that was immediately picked up by the talking heads at CNBC, who mischaracterized it as a ‘downgrade'”
“What actually happened, as the folks at Deutsche surely knew but didn’t bother to report, was that Apple’s six months on their short-term list had expired that morning, triggering a computer instruction that removed it from the buy list automatically,” Elmer-DeWitt reports. “No matter. The boys were looking for a reason to take a whack at Apple, and this news fit the bill. They set the wheels in motion, and by the close of trading the stock had fallen 10.32 points (3.55%), shaving $9.3 billion off the company’s market cap.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “James W.” for the heads up.]
I blame Obama
@ Macromancer
The banks have been under huge regulation over the last 30 years. In fact, the Congress specifically required the Banks to make high risk, subprime loans to non-qualified buyers through the Community Reinvestment Act. This act was given teeth in the 90s that penalized banks who did not have high percentages of sub prime loans. Then Fannie Mae and Freddie Mac were used to buy the bundled sub prime loans, thus creating a government guarantee. Fannie Mae and Freddie Mac were acting as government agents in this process. Government created the housing bubble by forcing bad loans and also keeping the interest rates at sub market level via the Federal Reserve. The entire crisis was created by the Government.
Thanks Kent.
Macromancer is just one of those who watches the government create a problem , then asks the government to solve the problem it created. The common sense of a crow bar.
It does not really matter for the long-term investor. If Apple keeps performing, the highs will get higher and the lows will get higher too. When it comes time to sell (even long-term investors should sell and take profit at some point), just pick one of the up swings. The only thing I’m worried about is a general downturn in the market, like what happened last year during the financial crisis.
I actually bought a bit more one Friday, but I acted too soon in the day, before AAPL dipped below $200. Oh, well. I’m hoping to see new highs next week.
Macromancer, my poor little retard:
Fannie Mae Eases Credit To Aid Mortgage Lending
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ‘‘If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
The New York Times, September 30, 1999:
Fannie Mae Eases Credit To Aid Mortgage Lending
I hate politics.
Anyone with even a cursory understanding of basic history can clearly see that the Clinton administration is to blame for sowing the seeds for not only the current economic malaise (creating the housing bubble by forcing lending to unqualified borrowers), but also for the events of 9/11 (blowing the chance to get Bin Laden when offered him on a silver platter, bombing the aspirin factory, etc.).
Those without a cursory understanding of basic history voted for Obama-Biden.
Don’t be surprised when, several years down the road, seeds of future tragedies are found to have been planted during the ignorance of the Obama administration.
Democrats aren’t equipped to be a modern U.S. President. They simply don’t have the backbone nor the stomach required to do the job right.
Welcome Back Carter, indeed.
Mister Historian,
George Walker Bush and George Herbert Walker Bush were president or vice-president for 20 of the past 29 years.
Jimmy Carter was President when the Community Reinvestment Act was passed into law. Bill Clinton was President when it was expanded and more enforcement provisions against Banks that did not create enough bad loans were added. When George W. Bush was President his treasury department warned in about 2004 about the risky behavior Fannie Mae and Freddie Mac were engaging in and Barney Frank and Maxine Waters said there was no risk and it was racist to oppose the subprime loans. The Housing Bubble was caused by Democrats, though the Republicans could have fought harder against the insanity.
@Arnold Ziffel
“George Walker Bush and George Herbert Walker Bush were president or vice-president for 20 of the past 29 years.”
Yep and all the bad shit happened the other 9. And what does Bush being VP have to do with anything. The VP has no power to do anything anyhow. Clinton was Pres 8 of the last 17 and Obama 1 so that is 9 for DEMs and 8 for REPs. All those #s are BS. What makes 29 mean anything?
The damned recession was caused by people that shouldn’t be able to buy a house buying a house or buying too much house. Hell my wife and I bought a home in 02. Back then anyone could buy a house. We didn’t even have to get a credit check. They just asked us how much we made. We qualified for well over what we bought. We were smart and bought only what we needed and now we are able to keep our house and even double up on payments. Other people went crazy and got in way over their heads. People should be responsible for their decisions and if they bite off more than they can chew then they should f**kn’ choke on it.
Forget politics, I would love to hear some pissed off investor found the people that drove the stock into the ground and took them out. He was then caught but rewarded instead being thrown in jail.
“People should be responsible for their decisions and if they bite off more than they can chew then they should f**kn’ choke on it.” – CEOs and banks to?!
All of your drivel is so short sighted.
Bush… Clinton… GW Bush… Reagan… Carter…
idiots all of you!
Ever since the colonists kicked out the King and his good men, things have gone downhill.
Before the radicals, there was no worry about Fannie Mae.
No “too big to fail”
No worries about unstable car manufacturers.
No irrational national debt.
Blame the colonists, if your really being honest with yourselves.
All politics aside the author’s ‘slingshot’ rule is a dangerous concept.
Growth stocks tend to correct on average 72% when they finally start to tank and they often start their decent when their fundamentals look the best.
Now, I’m not saying this is Apple’s story. What I am saying is, do NOT buy on weakness. Your opinion about what a stock should do will not keep it from falling farther.
Obama is featured in a movie– exposing greedy hedge funds and market manipulation called “Stock Shock.” Even though the movie mostly focuses on Sirius XM stock being naked short sold to hell, I liked it because it shows the dark side of Wall Street. DVD is everywhere but cheaper at http://www.stockshockmovie.com
@ lectrcMAN,
Poppy Bush was Director of CIA for one year during Ford’s presidency, and evidence unearthed by Russ Baker for his seminal book, “Family of Secrets,” indicates Poppy was active in the CIA for his entire adult life. Don’t think he had any power while he was VP? Think again.
I still don’t get it. None of this matters in the long run. Unless you’re a wannabe investor trying to flip a few quick bucks trying to daytrade, this news has absolutely no bearing on your investments.
“The boys were looking for a reason to take a whack at Apple, and this news fit the bill.”
Well, keep in mind that the US stock market is in ultra-paranoia mode due to propaganda implying that federal government prevention of irrational, insane investing by US banks will prevent the return of rational capitalism in the USA, aka cognitive dissonance thinking.
When dumbass stock investors, typically day traders, are in ultra-paranoia mode, they listen for an ant to trip over a grain of sand. At which point they sell their most solid and reliable stocks (again cognitive dissonance thinking) believing the economic world is about to collapse. (o_0)
Paranoia and propaganda get a lot of traction these days, in case you hadn’t noticed.
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*DING*
Yes you are correct. It is also known as FUD.
OT:
Tard comments about ‘The Housing Bubble’:
1) “The Housing Bubble was caused by Democrats, though the Republicans could have fought harder against the insanity.”
2) “Government created the housing bubble by forcing bad loans and also keeping the interest rates at sub market level via the Federal Reserve. The entire crisis was created by the Government.”
INCORRECT.
There were, as per usual, a multitude of factors involved. But here, IMHO, is the biggest:
Where do people invest while their country is turning into a ‘Service Economy’? Meaning, the country doesn’t actually create much of anything any more due to manufacturing and banking and corporations and jobs blahblahblah ALL going overseas?
People invest in tangibles like REAL ESTATE.
So what happens when this investment movement inflates the price of real estate beyond actual value? The investment systems dependent upon real estate sales generate incentives to make poor investments. One of these major incentives was the drastically drop the interest rate on loans. Notice how the current interest rate in the USA is still at the dead bottom of the well.
So what happens to a country where interest rates are artificially suppressed and incompetent, unsafe loans are handed out to anyone with a buck in their hand? The monetary stability and reliability of the country is gradually scoured out until it is HOLLOW. Thus the ‘BALLOON’.
So point your fingers polti-tards where the blame all belongs: The source of the problem. It started at least 20 years ago when the USA was dumped as an investment center and investments went over seas.
And yes, as I indicated above, there is a lot more involved, including the collusion of the US federal government with the investment/banking/real estate system. The Bush League in particular had a massive incentive to stop the Real Estate Bubble from crashing. Thus they were specifically the ones who crashed the interest rate in order to create further incentive to make poor real estate investments.
I know some of you won’t get it. So maybe make an effort to study such stuff and maybe you will get it.
And yes, the Democrats are just as unrealistic about the investment crisis and solving the ongoing Bush Depression.
OT:
Correction:
Should read: “The investment systems dependent THAT upon real estate sales generate incentives to make poor investments.”
Sorry.
OT:
End of the day. Sorry some more:
Should read: “The investment systems THAT ARE dependent upon real estate sales generate incentives to make poor investments.”
8-|
I see my mentally challenged friend Kent is back and is tossing out the usua, rather misguidedl political crap. C’mon Kent, don’t get as tiresome as I’m a PC or Zune Tang. Repetition is a sign of the mentally weak.
Tell me you are different…..
Buster – did you take your meds today? And wipe the drool off your chin
@ F.Maxwell
From the Wall Street Journal, November 9, 2009 — PART 1
F.Maxwell – before reading please pull your head out of the orifice between your legs.
“By EDWARD PINTO
All agree that the bursting of the housing bubble caused the financial collapse of 2008. Most agree that the housing bubble started in 1997. Less well understood is that this bubble was the result of government policies that lowered mortgage-lending standards to increase home ownership. One of the key players was the controversial liberal advocacy group, Acorn (Association of Community Organizations for Reform Now).
The watershed moment was the 1992 Federal Housing Enterprises Financial Safety and Soundness Act, also known as the GSE Act. To comply with that law’s “affordable housing” requirements, Fannie Mae and Freddie Mac would acquire more than $6 trillion of single-family loans over the next 16 years.
Congress’s goal was to force these two government-sponsored enterprises (GSEs) to purchase loans that had been originated by banks—loans that were made under the pressure of another federal law, the 1977 Community Reinvestment Act (CRA), to increase lending in low- and moderate-income communities.
From 1977 to 1991, $9 billion in local CRA lending commitments had been announced. CRA lending by large banks increased dramatically after the affordable housing mandate was in place in 1993, growing to $6 trillion today. As Ellen Seidman, director of the federal Office of Thrift Supervision, said in a speech before the Greenlining Institute on Oct. 2, 2001, “Our record home ownership rate [increasing from 64.2% in 1994 to 68% in 2001], I’m convinced, would not have been reached without CRA and its close relative, the Fannie/Freddie requirements.”
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Associated Press
The 1992 GSE Act was the fuse, and the trillions of dollars in subsequent CRA and GSE affordable-housing loans would fuel the greatest housing bubble our nation has ever seen. But who lit the fuse?
The previous year, as Allen Fishbein, currently an adviser for consumer policy at the Federal Reserve, has noted, Acorn and other community groups were informally deputized by then House Banking Chairman Henry Gonzalez to draft statutory language setting the law’s affordable-housing mandates. Interim goals were set at 30% of the single-family mortgages purchased by Fannie and Freddie, and the Department of Housing and Urban Development has increased that percentage over time. The goal of the community groups was to force Fannie and Freddie to loosen their underwriting standards, in order to facilitate the purchase of loans made under the CRA.
Thus a provision was inserted into the law whereby Congress signaled to the GSEs that they should accept down payments of 5% or less, ignore impaired credit if the blot was over one year old, and otherwise loosen their lending guidelines.
The proposals of Acorn and other affordable-housing advocacy groups were acceptable to Fannie. Fannie had been planning to use the carrot of affordable-housing lending to maintain its hold over Congress and stave off its efforts to impose a strong safety and soundness regulator to oversee the company. (It was not until 2008 that a strong regulator was created for Fannie and Freddie. A little over a month later both GSEs were placed into conservatorship; they have requested a combined $112 billion in assistance from the federal government, and much more will be needed over the next few years.)
The result of loosened credit standards and a mandate to facilitate affordable-housing loans was a tsunami of high risk lending that sank the GSEs, overwhelmed the housing finance system, and caused an expected $1 trillion in mortgage loan losses by the GSEs, banks, and other investors and guarantors, and most tragically an expected 10 million or more home foreclosures.
As a result of congressional and regulatory actions, the percentage of conventional first mortgages (not guaranteed by the Federal Housing Administration or the Veteran’s Administration) used to purchase a home with the borrower putting 5% or less down tripled from 9% in 1991 to 27% in 1995, eventually reaching 29% in 2007.