The invisible hand that pushed Apple’s stock price up and down for six years

“What if you could see the prices of the stocks you’re following only once a day, but other investors following the same stocks could see the prices as they changed?” Philip Elmer-DeWitt asks for Fortune. “That, in broad strokes, was the situation from 2007 (when the Securities Exchange Commission created a national market system) until last Monday, Dec. 9, when NASDAQ and the NYSE began reporting small trades of less than 100 shares to the “consolidated tape” — the stream of prices visible to the public.”

“That might seem like a minor change, and for most stocks it probably is,” P.E.D. reports. “But for a high-priced stock like Apple (AAPL), which was selling in lots of 100 for more than $56,000 Monday, odd lots are a very big deal. Most investors can’t afford to drop $56,000 in a single trade. According Nanex CEO Eric Hunsader, 45% of all trades in Apple are in lots of less than 100 shares, and therefore invisible to the public under the old regime… ‘Several things will happen,’ says Namex’s Hunsader, a critic of high-frequency trading. ‘First, games that used to rely on that asymmetric information will no longer work. That in itself is good, with no effort on the part of the investor. Second, it will allow retail applications to better detect the supply/demand picture, etc. By knowing where these odd-lot trades are executing for example.'”

Read more, and see the chart, in the full article here.

24 Comments

  1. The market is only efficient to the degree that it is transparent. To have asymmetric information available to some that trade and not to others is inherently corrupt and it is a good thing that this huge loophole was closed.

    1. Man, iceberg orders would give you a stroke. Or dark liquidity pools.

      trading is a very high technology married with high society kind of game. There are all kinds of loopholes far worse than reporting odd lots on the public ticker.

  2. I’m not a day-trader so this doesn’t help me at all. I put my money in Apple and let it sit to get my dividends. I take money out only if I need the money for something special. I may look at the daily movement in comparison to other stocks (which has been a source of great pain over the last year) but mainly my goals are long term. I don’t have the money to spare to buy on the whims of the market.

    1. It helps you because you have “put my money” in Apple at unrealistic prices for the last six years. If you sell some AAPL “for something special” why don’t you want to know if you sold it at a fair price?

      1. … Day-Trading. Senseless and risky – my opinion.
        I do trade on ThinkorSwim/TDAmeritrade, and can see the generic price of the stocks I research or seal with. It may not be precise, but my trades happen at the price I specify or at the best price at the moment – the chart is merely a handy guide.
        “Sold it at a FAIR price”? what does “fair” have to do with the stock market. I buy when I see an advantage and sell when I see sufficient profit. What does “fair” have to do with it? Hedge fund traders have been manipulating AAPL’s price for decades now. Not fair, that. But, nothing to do with me.

        1. The reason investors strive for a fair price is because moment to moment any given price is fair or not. It’s a subjective term and essentially equates to the price the trader decides to buy or sell at the time based on their analysis/strategy.

          No reason to take it so literal. and personal.

    2. You don’t have to be a daytrader to monitor your investments. You don’t have to be a daytrader to diversify your investments. Always diversify. There are better stocks than AAPL for dividends. Putting your money in AAPL or any other stock or investment and letting it sit (forgetting about it) is not a plan. Always, always have a plan. Complaining about stocks that you have watched go up forever, and you failed to invest in eventually, is inexcusable. Why would you just sit and watch? That makes no sense. None at all. Either invest in them or quit complaining about them. But it’s no one else’s fault.

      1. It’s a plan that worked for me. I am sitting on a pile of money because I have done just that for many years. The annual dividend is more than my total original investments in the stock.

      2. You should read mark cuban’s thoughts on investment diversification.

        Plus, it’s funny to watch you invent some response to an imaginary investor on here. lol.

      3. Here comes the bragging and knocking of Apple investors that GM the know it all “doesn’t believe” buzz off you two time punk, you wouldn’t know a big investor and you’ll always be a little big mouth.

        1. I didn’t say anything about how I invest. Although I do follow my own advice. No, not bragging dopey. Just commenting. Just like you. Only mine has merit. How has that AAPL investment gone for the last 14 months? Doesn’t take a genius, even you should be able to figure it out, to learn to diversify your investing. Common sense. Something that so many here don’t use when investing their money. It’s one thing to worship a company, speaking to you fanboys, it’s another thing to put all your money blindly into that company. Never put all your eggs in one basket Jim. Surely even you understand that? And to all those supposed millionaires who keep commenting here………..sure .

          1. “How has that AAPL investment gone for the last 14 months?”

            Ha, ha, ha….Cherry pick much? Even so, with a couple of judicial trades I’m back to where I was 14 months ago. Selling all my AAPL at $440 in late June and buying back at $402 on July 1 helped me achieve 40% gains this year.

            Diversify? Why? If I had a better stock to buy I would be all in with it. Since AAPL is still my best option, I’m all in AAPL. Diversification “protects” you from gains just as much as it protects you from losses. My investment strategy is not about which way the herd is stampeding today. Nobody can predict that. It’s about where the grass will actually be greener next spring.

            Yep, you just keep badmouthing everyone else as “fan boys” and discounting their successful investing as fabrications. You keep arguing how stupid it is to be biased, yet you seem never to look in the mirror while making that argument.

            1. I think this is the same guy I have watched in several different forums over the last 6 or 8 years. Always the same condescension and bragging. Always the “expert, dispassionate, high powered trader”. Always trying to belittle those who appreciate Apple’s fundamentals and performance. I think the name was “Conschmillo” on Yahoo Finance. There were other names and forums, but always the same tired line of BS.

            2. Nope Zeke. Just plain old GM. Don’t post on any other sites. And I don’t claim to be an IT genius in my 60s with a 20-year-old wife and a two-year-old baby. You’re the braggart on the site Zeke. You’re embarrassing sometimes. And I’m no high-powered trader Zeke. Just someone who uses common sense when investing. And I’m no daytrader either Zeke. You seem to be very defensive Zeke. Perhaps you know little if anything about investing? And no one appreciates the fundamentals of AAPL anymore than me. I don’t think we rattled your cage to get a remark from you anyway Zeke.

            3. I know a dozen guys like you. Puffed up with their own “expertise”, never having quite gotten where they envisioned they’d be by now, and always having to have the last word. You’re very predictable.

        2. … GM’s comment, Jim. He said “Always diversify.” Which is well-respected advice. He said “There are better stocks than AAPL for dividends.”. I’m a dividend investor and can tell you that’s the truth. He said “Putting your money in AAPL or any other stock or investment and letting it sit (forgetting about it) is not a plan.”. Well, that is a bit controversial, but I like it.
          He did NOT say “AAPL is a bad stock”. Or “you should not invest in AAPL”. If that’s what you read, you should have checked your preconceptions at the door.
          For the record, my tally is ~20% net profit yearly. Playing the dividends, mostly. AAPL has been good to me, in the past, but I’m getting out of it now. Not because it’s a Bad Stock.

          1. Thanks but you’re wasting your breath on fanboys. They consider investing sticking money under the mattress and going away for a few years. And then there’s Zeke. Zeke constantly comes up with scenarios where he somehow traded in and out of the market at the perfect times. And we all know that he did that.

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