Hedge funds, bloggers and the origin of Apple rumors

“Today we have a perfect example of why Steve Jobs hates bloggers. Do you really believe that the iPhone 5 release will be delayed until the fall, at which time it will be released alongside an iPad 3? Seriously? You think Apple is ready to freeze the iPhone market for three months and cannibalize sales of the iPad 2?” Jason Schwarz asks via Seeking Alpha.

“When it comes to Apple news, there is no gatekeeper, no filter and no editor-in-chief demanding reliable sources,” Schwarz writes. “It’s a bunch of conjecture supported by vague sources supposedly coming from Apple (yeah, right!) or some unconfirmed (and uncomfirmable!) Chinese supplier. We’ve seen it before and we’ll see it again.”

“Unfortunately, this wild west of a blogosphere leaves stocks like Apple vulnerable to irrational price swings based on false reports,” Schwarz writes. “We all know that Apple trades according to the calendar just as much as it trades according to fundamentals, so any information related to product release dates is capable of moving the stock.”

Schwarz writes, “Back on February 18, when Apple was trading at $360, a rumor was generated from analysts at Yuanta Securities with alleged supply chain contacts that the iPad 2 would be delayed until June. At that time, Apple stock was ready for a technical correction, and it used the rumor to aggressively sell off. Over the course of two trading days, the stock sold off $20. The rumor was so widely reported that investors were shocked when Apple announced a March event and even more shocked when Jobs (who bloggers had declared had six weeks to live) appeared to announce that the iPad would hit stores on the 10th of the month. Obviously, that rumor proved to be a joke — but the dramatic price movement in Apple stock was no laughing matter. When a stock is ready to technically sell off, it will find a reason … and that false iPad report was too conveniently leaked at the opportune time. It reeked of hedge fund involvement. The proof was in the volatile price action of February 22.”

Much, much more in the full article – highly recommended – here.

12 Comments

  1. “Hedge funds seek to limit the window of time they are at risk in owning any particular stock”

    To that end they will distort and short and leave no casualties.

    Know the company you invest in, do your own research and have conviction in your investment. Be patient and don’t go with the herd.

    Jason Schwartz know what he’s talkin about.

  2. Fantasy:

    Apple gives 500 million to SEC & DOJ to track down and connect these Blogging Bastards to hedge funds. They then prosecute the BB’s and hedge funds and send them to Guantanamo ( this is why Obama kept it open).

    Wakes up.

    1. I hope you realize that your informants violated their NDAs by telling you about these. I know that if _I_ had told you, I would have violated mine.

      Somehow, I think I shouldn’t have said that. :/

  3. But…but…you don’t understand! There’s no such thing as stock manipulation. It’s all just a conspiracy theory. nobody really makes any money selling rumors and FUD. It’s all in your head. Us professional investors know better. yadda…yadda…yadda…

    1. It is just sad that the wrong people are earning money on the back of the innovative and successful. How large is the unproductive part of the moneyflow in the realm of the stock market? If this part would be invested in new research, THAT would launch the economy in the revival. But instead the leeches get rich.

  4. So capitalism brings some gadgets to some of the masses and inflicts great misery on the great masses. The market’s a scam, moving money around produces no tangible goods and provides no social benefit. Wealth is a burden the poor have to pay for with every meal, every bill, every tax. Stop subsidizing the rich, stand up and say “ENOUGH!”.

    Wednesday morning rant over, I have to go to work now …

  5. The syncing of iPhone iPad iPod for one release period some time in future is for LiquidMetal bodies for all and 4G phone network.
    The later the release the more chance the network will be compliant to the phone and not have a new phone with a old network system as happened with the first iPhone and then x months later release a new phone with minor modifications for new network compatibility.

    As well Apple can’t make magic all the time!
    There’s designers block a la writers block!
    10 years of magic is pretty good but 100 years?

    That 10 years of magic is 25 years of Jobs pent up genius.

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