As investors appeared to shrug off tensions between the United States and Iran, Apple shares rebounded in pre-market and regular session trading on Wednesday.
On Tuesday, Apple stock fell from a new high near $300 on concerns that a protracted war might erupt. In after-hours trading, Apple fell even further, down to $292, on news of a retaliatory missile strike by Iran. That wild but temporary drop in after-hours trading represents the increased volatility—and often irrationality—in the low volume trading that occurs outside of the market’s ordinary trading session.
But the resilience of Apple shares — even in response to serious threats to the health of the global economy — demonstrates one of the benefits the company has realized from its massive share buyback program that has taken place across the last decade.
In using its cash to buy back its shares and retire them, Apple has concentrated the value of its remaining shares for its investors. The buyback program has also had the effect of taking shares away from traders willing to sell on negative news. That appears to have significantly eliminated the weak hands remaining among the company’s investors, resulting in less irrational fluctuations.
Analysts who formerly appeared capable of knocking billions of dollars off of Apple’s valuation by simply issuing a fearsome report speculating about competitive pressures are now seeing a very limited response to their warnings. In part, that may likely be due to their widespread failures to predict or interpret the direction of the market.
MacDailyNews Take: As we wrote back in January 2018:
The following qualifications are required in order to be a financial analyst:
• Zilch; and
So, why do brokerage firms employ analysts? Because brokerage firms make their money on commissions and fees. In other words, the act of charging investors to buy/sell securities. Analysts recommend buying or selling based on scant evidence, misreading evidence, wild guesses, and/or coin flips. Some even – GASP! – lie.
The few good analysts actually listen, realize they never have all of the information, and actually use some math to try to make accurate calls based on the paltry information they do have at their disposal. Most analysts exist to create churn – buying and selling – in order to generate commissions and fees for the brokerage houses that employ them. The “business news” outlets treat their pronouncements and “concerns” with much seriousness and deep consideration, as required by every decent charade that involves a monetary exchange.
Most of the “Apple analysts” in the world couldn’t analyze their way out of a wet paper bag.
[Thanks to MacDailyNews Reader “TomL” for the heads up.]