“Warning, Apple Inc. stockholders: Scam artists in the stock market are going to try to cheat you out of your money,” Brett Arends writes for MarketWatch. “They already know how they’ll do it. They’re working on the details right now. Count on it.”
“Maybe it’ll be a semiprofessional hedge fund in Connecticut. A money manager in La Jolla, Calif., or West Palm Beach, Fla. A couple of former college roomies in Silicon Valley or Seattle,” Arends writes. “The scam is easy; some will fall for it.”
“Here’s how it’s going to go down: First, scammers will go into the derivatives market and buy a bunch of put options on Apple shares. Puts are effectively a bet that a stock will drop quickly. Then they’ll send out word that Steve Jobs is terminally ill with cancer and isn’t expected to return to work,” Arends writes. “Simple. Easy. Free money.”
“The stock will plummet. Nervous investors will bail in panic. The put options will balloon in value. (Look at what happened earlier this week: Apple stock initially dropped more than $20 on news of Jobs’s new health problems.) The scam artists will cash out, and walk away,” Arends writes. “What makes this possible is Apple’s refusal to say anything whatsoever about Jobs’s illness or his absence… Nature abhors a vacuum. And if Apple won’t offer details, that leaves the door wide open for others.”
Read more in the full article here.
MacDailyNews Take: With history as our guide, we can’t disagree with Arends on this one.