“Apple, as hedge fund managers are well aware, is one stock that always bounces back,” Philip Elmer-DeWitt reports for Fortune.
“Whenever I see a chart like the one [that] traces the trajectory of Apple’s (AAPL) share price over the past 36 days, I’m reminded of Jason Schwarz’s ‘Apple: Seven Reasons Shorts Love It,'” a supremely cynical view of the stock market that may be the best thing The Street published in all of 2009,” P.E.D. reports. “The nut of his thesis can be boiled down to two sentences: ‘If you can keep a good stock down,’ Schwarz 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.'”
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P.E.D. reports, “Apple, as Schwarz reminds us, is the favorite punching bag of the hedge funds and institutions that control more than 70% of its shares. It’s a pretty good bet that the earnings Apple is scheduled to report in less than two weeks will set new records, and savvy fund managers know this. If they were dumping the stock in early June, it’s only because they were planning to snap it back up in advance of Apple’s July 19th earnings report.”
Much more in the full article here.
Many pension funds have invested heavily in Microsoft. Microsoft’s shares, though, havn’t increased in value for a decade. Bad, investment, really bad. Had they invested in AAPL, they would be bursting with money.
When investors have no comprehension of the industry in which they’re investing, you’ve got a classic dung-in, dung-out situation.
History keeps repeating itself.
Here’s a bit of DIDO (dung in dung out) for your enjoyment. It’s taken from her song “Thank You”.
My tea’s gone cold, I’m wondering why
I got out of bed at all
The morning rain clouds up my window
and I can’t see at all
And even if I could it’d all be grey,
but your picture on my wall
It reminds me that it’s not so bad,
it’s not so bad
I drank too much last night, got bills to pay,
my head just feels in pain
I missed the bus and there’ll be hell today,
I’m late for work again
And even if I’m there, they’ll all imply
that I might not last the day
And then you call me and it’s not so bad, it’s not so bad and
I want to thank you
for giving me the best day of my life
Oh just to be with you
is having the best day of my life
Push the door, I’m home at last
and I’m soaking through and through
Then you hand me a towel
and all I see is you
And even if my house falls down,
I wouldn’t have a clue
Because you’re near me and
I want to thank you
for giving me the best day of my life
Oh just to be with you
is having the best day of my life
And, right after the earnings report, AAPL will drop again, irrespective of whether this has been the most profitable quarter ever, or not.
My question is: what’s in it for Apple? Who collects the gains? “The investors”? No. The speculants.
Apple is not issuing new shares (it clearly doesn’t need the money), and it is not attempting to acquire another company using stock as part of the deal, so the stock price has no effect on the company as a whole.
The speculators only gain from individual investors if you sell your shares to the speculators while the stock price is temporarily depressed, or you sell the options rights (put/call) that they want and they are exercised. If you buy and hold your shares, then you neither lose nor gain from these short term fluctuations. I don’t play their games, so I don’t support their games. I bought Apple for my own reasons, and I intend to hold it for quite a few years.
For your consideration:
http://www.investopedia.com/articles/basics/03/020703.asp#axzz1RSNXD38t
Pure, deceitful, stock manipulation.
Interesting. At the moment, Apple is up $6.00 today, and I know of no hard news that would prompt that. But as frustrated as I am at all the shenanigans of the hedge funds and short sellers to manipulate Apple stock, their actions to keep the beach ball submerged under water may actually create a nice buying opportunity for small investor schmucks like me.
In the end, I still look at good investments in the long term. I am a firm believer in the thoughts of Peter Lynch and Warren Buffett, and am constantly reminded that in the long run (NOT day-to-day), a stock’s price will EVENTUALLY track its earnings. Earnings and stock price don’t move in lock-step. But eventually, the beach ball will squirt out of the hands of the manipulators and come to the surface.
For once, that’s one spinning beach ball from Apple I’m glad to see.
The stock market is far from the idea that stock values are based on performance and growth prospects.
Nowadays it is all about how the system can be used for those in control.
If you have spare cash to invest apple is a good bet especially of the stock has been depressed for a while.
If this does not give an uninformed person an insight to how the markets are not a free market to raise capital for the economy nothing ever will. Remember that when politicians try to steal the Social Security Trust Fund and thrust part of your retirement into the markets.
Remember when Dubya went around the country trying to push the “privatization” of Social Security after the 2004 election cycle? Imagine how many tens of millions of elderly and disabled would have nothing right now after the debacle of 2007-2008.
Funny how not a soul in the “villager” Beltway media or Wall Street crowd mentions this even as the Teabaggers have set their sights on this idiotic idea.
If this happened the stock market would rape the SSd fund. That’s the only reason gw wanted to do it. Pure greed.
The same has happened with apples cash. All the brokers are saying apple should release the money. Only Because they want to get thier filthy mitts on it.
It doesn’t matter, if you invest for the longer term. The “average” price will keep going up, as long as the overall stock market does not tank (which is a significant risk right now).
In fact, it may even help. You can pick probably pick up additional shares below the near-term average price, and when it comes time to sell some (for whatever reason), choose a time when it nears another all-time high. Take advantage of the AAPL “slingshot,” instead of complaining about it… 🙂
Now, if you’re the type of person who constantly worries about everything, I guess owning AAPL would be a nightmare. The “manipulators” are making money because there are enough people who buy with enthusiasm at the high points and then sell in panic as it drops again.
The market is in an uptrend (of sorts) so buying isn’t off the table but consider the last five trading days on AAPL have three in below average volume and two only slightly above. The weekly chart really tells the story.
Also, from the article:
“If they were dumping the stock in early June, it’s only because they were planning to snap it back up in advance of Apple’s July 19th earnings report.”
Not possible. Big money can’t get in and out of a stock that quickly. They may want you to think they are but the volume / price action tells the story. They could be pumping the price up?
Apple’s chart is all over the place and is a risky trade. (IMHO)
A buy and hold strategy can get you in trouble.
A better plan would be to keep your losses small and let your winners run. At some point AAPL will either calm down and form a proper buy point OR make you glad you didn’t get in here.
“Apple, as Schwarz reminds us, is the favorite punching bag of the hedge funds and institutions that control more than 70% of its shares.”
Really? He mentions the amount owned like it’s a bad thing. I want large institutional sponsorship. They’re the ones that keep price above that 50 period moving average offering us all kinds of valid buy points on the way up. That’s our advantage and it’s a huge one. We can get in and out of stock easily. Big money? Not so much. At least not very quickly.
AAPL is nobody’s punching bag. If price is becoming “wide and loose” you should probably take that as a sign to not buy, get out, take some profits off the table or at least tighten up your stop losses and let the market shake things out.
This is going to be fun to watch.