“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.
At this point I’d say that kind of possibility is priced into Apple stock.
This piece reads like a shameless attempt to get Apple shareholders to demand info about Jobs’ situation. Give it a rest!
Just lift the damn iron curtain apple and give the owners of the company, your share holders a succession plan. Im sick of this shit
“What makes this possible is Apple’s refusal to say anything whatsoever about Jobs’s illness or his absence”
Wrong as usual. Apple actually has said sonething about Jobs’s absence. In fact, they’ve said all that they are legally required to say about Jobs’s absence.
First off, how does anyone know whether or NOT there is a succession plan in place? We, the shareholders are NOT entitled to a succession plan. All a written PUBLIC plan does is let those top execs know they are NOT wanted. It lets other companies know who is considered good talent to poach and who is vulnerable.
Apple is loathe to discuss business operations in public, so, it may have a plan already in place. It may just choose NOT to put in on it’s home page…
NEXT, no one has a right to know about Jobs’ health issues. The only right we have, is to know that, for an indefinite time, he is taking leave from the company for medical reasons. Apple announced this. Anything else is a violation of his privacy. And in fact, it may be a violation of certain HIPAA laws.
Sit tight people. The smartest ones look at the bigger picture.
The smartest investors won’t fall for the scam.
Hey bobo,
If the whole thing upsets you so much, why don’t you just sell your stock? Or, I hope you are begging every other company that you hold in to tell you their succession plans, too!
For me, I am sick of all these armchair investors claiming they know what’s best for Apple. Trust me, it was not your tiny investment that made them great. The other issue I have is everyone jumping on the band wagon that Apple will fail without Steve. Please go talk to Disney, GE, Ford, Mercedes Benz, Walmart, etc. that they should close up shop since their visionary leaders are no longer with us.
They have done this exact sort of thing over and over for a decade. No matter how good the announcement, or how much it goes up immediately afterward, there is typically a letdown that hedge funds try to accelerate with rumor and tactical trading. Apple is especially vulnerable to this strategy because there are so many investors with gains to protect, so much mythology about a cult of personality bullshit, and a very tight lipped PR function at the company. All you can do is ride it out, or if they drive it really low, add to your position.
If you buy and hold, then short term stock fluctuations resulting from manipulators will have no effect. That doesn’t make it right, but there is no need to panic. If you believe that AAPL is likely to go down, then you should reconsider that investment. If you tend to emotionally react to rising or falling share prices, then you should reconsider your investment strategy – perhaps mutual funds with periodic, scheduled investments will ease your concerns.
“What makes this possible is … ” having a financial system that is so inadequately regulated that scams of that nature are considered acceptable and the perpetrators are allowed to get away with it.
Worse still, they get away with it time and time again.
I was pleasantly surprised to see that AAPL has stood up tolerably well to the news of SJ’s leave of absence. That could mean that it will also withstand rumours of this type too. Hopefully these short traders will get their fingers burnt.
“What makes this possible is ….”
Yes to AlanAudio – although may I add investors who know little or nothing about what they are doing, and act/react like nervous grasshoppers —- hardly more knowledgeable than those that think that some wife of a deposed Nigerian diplomat chose THEM to help her get the $20million out of the country.
@Penelope Pickles
@m159
I agree.
Let’s hope that if the “scammers” (scummers actually try it) that the SEC and FBI will be on their asses before they can crap in their pants. Also their are lots of big investors who are long Apple who would be happy to help authorities discover the frauds.
In addition the market knows Steve’s health history and that he is taking a leave of absence for health reasons.
If people don’t see the huge value in Apple even under these circumstances they should get out or not buy.
With all of the known info a large number of analysts who follow Apple have considerably upped their price targets to substantially above $400.00 and at least one analyst has a target of $550.00. If all that you already know scares you, get the eff out.
If you are excited about Apple’s future, as I am, you know what to do.
I don’t feel that any stockholder is entitled to have more info than has been released.
Deal with it, doubters!
What makes this possible is sleazy people who call themselves “investors”. This is the exact kind of thing the government should be regulating. This is “legal fraud” that does nothing but damage from a sociology-economic perspective.
To help protect all of us from some of these practices tax laws could help. Gains on stocks held for less than 30 days should be taxed double. Losses on stocks held for less than 30 days should not be deductible.
I have thought about this to, it’s not just the scammers, it’s the hit whoring bloggers who are even more irresponsible. remember Tim Cook’s departure to HP ? If it’s not this, it’s that, and if it’s not that is that.. they will always find something. Even this article will cause some people to sell.
Is this really news? Stockholders of any company are always at risk. It’s called… gambling! It’s nice to know scam artists have a plan before they do something rather than just winging it… but, I won’t count on it. There are laws against the kind of things the scammers are trying to do, whether that’s a deterrent or not. Not all nervous investors will bail in panic, some will hold to see what really happens. When the AAPL stock dropped on news of Jobs’s health status, news of his health is not new. Who said that just because Jobs is taking time off means things are turning for the worse? Don’t write the guy off so quickly. Apple may come forward with news about Jobs’s health, when it’s relevant. Rest assured, you can bet Steve already has a succession plan in place should he, or any other key person, leave the company, for any reason.
You’ve got to be kidding me with this article. Anybody that surfs the net or trades Apple stock knows that this has been happening since Steve first got sick. There’s not a day that goes by that someone does post something about Steve’s health.
@bluejay
I have a feeling/hope that bloggers/others who try this will also be investigated by the authorities. It is also likely that they will feel the wrath of Apple fans/investors, as never before.
It’s also quite possible that Apple has a special security team that will work to discover who is behind any fraudulent info.
The market finally is beginning to appreciate this unique company. Their will be people rising to Apple’s defense, in the face of fraudulent info, from a huge variety of sources.
Uhm, if you don’t want to get burned, investors should not put their trailing stops too close to the current market price. For investors, time is your friend, and you can ride out flash crashes and other manipulations. For traders, Arends should not be putting ideas in people’s heads!
@Penelope Pickles
None of my other investments can get the stock price knocked around like apple due to one man, so sorry if i get a bit miffed on apple bullshit secrecy. And my few 100k in apple is chump change to them, but investors as a whole make up a majority of their market cap. Sounds like you don’t have much skin in the game. Keep dinking the koolaid buddy
Just proves the regulators are a bunch of incompetents.
Mr. Arends, today is the 20th and Apple made the announcement on the 16th. You are jumping the gun just a little on this one. This article is actually for the 20th of March.
@ bobo
Please let me know what other companies give health reports for their executives?
Apple are obliged to say if their executives are taking leave of absences and that’s it.
And exactly what does Apple keep secret? Trade secrets maybe particularly unreleased products.
I much rather Apple announce products when they are close to release than the bullshit that companies that M$ do in touting products that never appear. Those should be sued for making claims that are never substantiated.
You guys remember when bloomberg actually release their premade obituary.
Lol. Zero shame in this here game.
Thanks Brett!!! You slime-spewing bile-seething shit monkey!
Way to tell us what WE LONG AGO FIGURED OUT YOU HAVE BEEN DOING FOR YEARS. Brilliant! “Hey folks, look out for fear-fomenting assholes like me and my bald cuddle buddies Cramer and Moritz. We’ll steal your freakin’ pants!” You know, since I hadn’t heard you say anything stupid for a good long stretch, this makes me happy as a case of diarrhea.
Guys like this really make me want to look for Twenty-first Amendment Remedies.