Will the Manipulation of Apple Ever End?

| About: Apple Inc. (AAPL)

The latest Apple (NASDAQ:AAPL) rumor came across my Briefing.com InPlay service this morning at 10:03 a.m., Eastern Time: "Apple recent dip attributed to renewed speculation that Jobs will step down (333.29 -1.44)."

For all I know, this one might actually be true. It apparently first hit the Fly on the Wall website. This latest rumor comes on the heels of well- (and over)-publicized recent "news":

  • JMP Securities analyst Alex Gauna downgrades AAPL on supply chain concerns. Several analysts came out shortly thereafter to downplay, and even refute, Gauna's report.
  • Lines at Verizon (NYSE:VZ) retail stores appear short as the wireless carrier launches its version of Apple's iPhone.
  • The National Enquirer publishes photos, apparently, of an ailing Steve Jobs leaving a building and stepping into a late model Honda Civic.

I put "news" in quotes not because I believe all of the sources qualify as hacks. (For instance, Gauna is not a hack, just an analyst; The Enquirer, on the other hand...) I use the quotes for two reasons. As a society we have stopped giving any critical thought whatsoever to what qualifies as news. And, as an extension of that, the stock market -- the apparent "smart money," the people with the power to move a stock like Apple -- react (emotionally) with more force to pieces of gossip and inane speculation than they do to long lines and actual business results.

The poster children of the 24-hour news cycle, Fox and MSNBC, deserve the lion's share of blame for blurring the line between news and entertainment. And these networks think nothing of permitting disingenuous comments, staged debates, and flat-out ploys as a means of influencing public opinion about serious events many Americans now view as theatre. The stock market suffers from a similar societal ill.

The stock market has always been one giant emotional rollercoaster, but the same dynamic that has rendered political discourse in America pathetic exerts pressure on stocks. Given the omnipresence of message boards and blogs, it doesn't take much for the less-than-savvy manipulator to float a rumor, watch a stock tank, and either make a killing on a short sale or scoop up stocks at bargain prices. I am not accusing any of the recent reports or rumor mongers of doing such a thing, but investors would be crazy to think it does not happen, particularly on a closely-scrutinized stock like AAPL. Does the SEC even investigate this type of stuff, or is it too busy making an example out of Martha Stewart?

When Apple experienced a flash crash in February, I got stopped out of one position and lost some money. Color me manipulated. Today, on the latest rumor, I purchased an AAPL March $340 weekly call option on a dip, expecting a bounce. As of this writing, I've yet to get the anticipated uptick, but I have set myself up to lose no more than $89, even though I swore I would never set a stop on AAPL again.

It's a complete tragedy when a stock that investors should be able to view as a flight to safety becomes so sensitive to rumor, innuendo, and ultimately meaningless news that you're probably best off staying away. With AAPL, the search for a stock that carries with it billions in revenue and profit, massive earnings growth, a pristine balance sheet, top-notch corporate governance, status as a cultural icon, and total market domination ends. Hopefully, long-term Apple investors will reap long-term rewards for allowing themselves to be burnt, even if only on paper, by short-term noise and manipulation.

Disclosure: I am long AAPL.