“Apple, as hedge fund managers are well aware, is one stock that always bounces back,” Philip Elmer-DeWitt reports for Fortune.
“It’s hard not to be cynical about Wall Street when you see a chart… which traces Apple’s (AAPL) share price over the past four weeks,” P.E.D. reports. “It not terribly surprising that the stock has shot up nearly 20% in the past two weeks to close at an all-time high Friday of $422. The iPhone 4S is selling briskly and the company is expected to report record earnings on Tuesday.”
“What’s harder to rationalize is why it fell more than 16% in the two weeks before that to hit an intraday low of $354.24 — the day the iPhone 4S was unveiled and the day before Steve Jobs died,” P.E.D. reports. “I’m reminded in times like these of Jason Schwarz’s Apple: Seven Reasons Shorts Love It, first published in 2009.”
The meat of it can be boiled down to two sentences:
“If you can keep a good stock down 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.”
P.E.D. reports, “Schwarz, who publishes a popular investment newsletter, is no Zuccotti Park protestor. He’s a Wall Street insider who knows something about how the game is played.”
Read more in the full article here.
[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]
There are some of us who figured this out for ourselves long ago and enjoy taking that slingshot ride back up quite regularly. In fact all the Apple stuff I have (and I have a lot) was bought for “free” (sort of) using this slingshot.
We’ll see if AAPL goes down Monday and up on Wednesday.
NO, it’s destined to go back down as usual… You already saw what the earnings are going to do… The insiders are already done with it, now it crashes, remember??
The stock does not go down after earnings AS USUAL. I don’t know why people keep trying to perpetuate this myth. In fact it’s about 50-50 over the last couple years.
Buy on rumor, sell on news, effect?
No.
It’s a nifty theory that has a lot of empirical evidence and credibility; I’d invite you to follow the link to PED’s original article (his is a very helpful and informative blog generally covering Apple financial analyses—worth daily visits) that has the helpful links to get the details on this theory.
That’s why even a CAKE vector tracking AAPL has to adjust for PBAJ.
I’ve been banging the cash holdings = stock value parity drum for a couple years now. it seems destined to happen.
You can’t keep a good stock down.
Many a times Wall Street played the game to the extreme. They not only burned their fingers but also destroyed companies and economies.
If I had purchased some stock from apple long ago, I would be enjoying so pretty decent loot right now. I was originally planning to purchase some stock in the past but seeing the economic problem that looked like it could get worse (and it recently did), I changed my mind and just kept the money I was gonna use. But now, I’m starting to regret that decision since apple is doing the complete Oposite of what you would expect to happen to businesses with the economic decline going on.