Short Apple: The greatest trade ever?

“Short sell Apple? Wouldn’t that be the greatest short in the history of shorts?” Mitch Tuchman wonders for MarketWatch.

“t isn’t hard to find famous money managers buzzing about this idea. Jim Chanos, who made his fame shorting Enron and who is a huge China bear, tells Bloomberg TV ‘we’re getting afraid of heights’ in Apple stock,” Tuchman writes. “Jeff Gundlach, the bond guru at DoubleLine capital, started talking up short sell Apple earlier this year: ‘If I were one of these crazy hedge fund guys, with the slick haircuts and fancy shoes and racing stripe shirts, the trade I’d put on is 10-times-leveraged natural gas long versus 10-times short Apple.'”

Tuchman writes, “As passive investors, we would never encourage leverage or taking short positions on anything — or even taking part in active trading at all — but a simple examination of the Apple timeline tells a pretty interesting story… The problem for active money managers now is how to “guess right” something that is absolutely unguessable.”

Read more in the full article here.

22 Comments

  1. “The problem for active money managers now is how to “guess right” something that is absolutely unguessable.”

    Plenty of those are in cohorts to move aapl exactly where they want it when they want it.

    This article is just a signal for the brokers to start playing the game. We will see aapl being bounced around as the market pumps up and then cashes in. It won’t stop until it is clear that iP5 is yet another huge success and Apple beat expectations again.

    The risk in Apple is so small at the moment that these games can be played indefinitely. With their PE the chance of major revenue issues is minimal.

    1. I wouldn’t take this article at face value.  I watched the Chanos interview on Bloomberg, and he did NOT say that he would short Apple.  

      Chanos is a short-side seller and was asked about shorting HP & Dell.  Yes, he said, I’m short those.  But he hedges his bets, so he is long Microsoft so as not to have a short position against the PC industry overall. 

      Why not use Apple as your offset to the HP/Dell short? Because Apple is not ‘playing in the same space’ — i.e., Apple is not primarily a PC maker — and because Apple’s stock has already gained a lot and is therefore more expensive than we would purchase (to offset industry risk against HP/Dell).

      I’ve seen the Chanos interview quoted multiple times, but either the reporters are dumb or are purposely going with the ‘Chanos shotts Apple’ headline in order to attract readers.

  2. Sensationalist Hit Whoring.
    And he forgot the harder part…
    It’s easy to predict WHAT will happen. I have no doubts AAPL will certainly crash and come to an end some day given an infinite amout of time, eventually he will be right. (but hopefully not until after I retire in 20 years)

    The HARD part is to know WHEN it will happen within a short window of time.

  3. If you don’t agree with their take, put your money where your mouth is and make them wrong by buying AAPL. Buy big and push the stock up. Sit on the fence and the price will drop. The market moves because of what you do or don’t do. Take part in it.

        1. so dumb isn’t dumb enough? You still find a way to kick it down a notch.

          What conspiracy theories? lol. You obviously don;t understand trading, but hey, it’s your money.

    1. You have to love the “absolutely unguessable”. I assume he is looking at a 1 or 5 day chart. Man, click the 1, 2 or 5 year option on that chart. Idiot!

      AAPL is cheep and I am already all in and have been for a long time. I started buying my first shares of AAPL at the peak of the Y2K bubble when it was in the $60’s back then. Bought more in the $20’s and even more in the teens. Almost always owned AAPL and at this time I am about 95% in AAPL.

      I may sell some in November when it does it’s yearly dip and buy something like gold. I will diversify 50% or 60% of my AAPL next year or soon after that. I am looking forward to retiring this year. Just holding of until after the elections.

      “absolutely unguessable”. Clueless idiot! They get paid to type that stuff?

      1. I sold when AAPL just peaked at over $700 and am waiting to get back in at $640 in the next month.

        By the way, there are few practical uses for gold other than contacts in electronics. Jewelry is a waste of money.

        1. 313 – So you think $640 is in the cards?
          Only if Planet X is sighted on Monday!
          With China Mobile ready to finally get their own iPhone and
          double iPhone sales in China you would have to be a fool to wait for a drop not to mention the iPad Mini that will gut Amazon’s Nexus 7.

          1. so you never invested stock. you don’t know what you talk. it’s not just predict near future but intuition. you don’t know how much iphone 5 will be successful in China when android smartphone has 88% of market share. they don’t buy expensive useless phone which you can’t even use apple store freely. it’s just piece of shit if you can’t do it. there are a lot better smartphone in the market. ipad mini? well, I think that ipod touch 5th Gen. is much better. if apple will release it, they should justify price point & improve spec. you can’t just sell it with ipad 2 spec & resolution. so price will be higher? don’t you get it? it doesn’t match any price between ipod touch and new ipad. as a matter of fact, 7 inch tablet just starts $199. if apple won’t sell it by that price, apple will fail. it doesn’t matter how much apple has done.

        2. I’ve tried that strategy before. It often works. The problem, though, is that every once in a while the market instead runs away from you. And then what? You wait, thinking it has to come down, but runs away some more. And eventually you have to bite the bullet and get back in.

          I’ve made money several times doing it, but going over the entire history I would have been much better off just staying in. So that’s what I do now.

          Anther big advantage of staying in is taxes. Staying doesn’t incur a tax hit until you sell, and even then it will be at the capital gains tax rate, not the income tax rate.

          As per Chanos’s idea of 10x leveraged short, Apple’s going to make $60B in profits in the coming year. Anybody who wants to short that is nuts. That’s just wishful thinking and hoping that something goes wrong and no big thing goes right. Financial suicide. What if Apple introduces an iPad Mini and its a big hit? With a leveraged short, boom, you’re broke. What if Apple sells 250M iPhone 5’s? Broke again. And what if they do both? Start practicing the phrase “Would you like fries with that?’

          1. It is a question of buying patterns and who is buying or selling. If the retail public is buying or the institutions are buying, it makes a difference. The difference is amplified when there is selling.

            Right now, the retail public are running out of spare money to put into the market. They rarely sell and it is the institutional buyers who are selling or on the side lines.

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