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Robert McDonald
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FROM INSIDE SILICON VALLEY: Sorting the truth or likely truth from the noise is a key attribute of the successful investor. My commentary is a distillation of some of this effort relative to particular stocks and investment areas. My publishing at this point in time is limited to the blogsphere,... More
  • WHY WE SHOULD CARE ABOUT THE 12/05/2012 APPLE MARGIN HIKE SELLOFF 3 comments
    Dec 8, 2012 2:03 PM | about stocks: AAPL

    To: The Financial Lexicon

    Re: Your Seeking Alpha article dated 12/o5/2012 "Apple's Margin Hike Sell-Off: Should You Care?" http://seekingalpha.com/article/1047121-apple-s-margin-hike-sell-off-should-you-care

    I thank you very much for your homework but not the implication that there is nothing really wrong with what happened to Apple share price on 12/02/2012. I remain deeply concerned about what might have happened.

    I have to care big time that some obscure clearing house called COR can trigger or contribute to a 4.8% selloff in a $500B Fortune 500 company with impunity. I have to care that COR can apparently do this with no accountability or justification.

    I have to care that this could be yet another stock price manipulation scheme engineered by some folks on Wall Street trying to outfox other investors including individuals who would not even know such an action was possible.

    I have to care big time that there are no controls or that no validation is required for such actions meaning that they can be arbitrary. Or done on a scratch my back and will scratch yours basis.

    I have to care big time that this kind of thing disrupts what is advertised as a fair marketplace.

    I have to care as an individual investor with my largest position having sold off 4.8% today despite sound company financials, sound company business fundamentals and sound company position in the marketplace.

    I have to care that dividend paying Apple valuation remains at depressed levels and was pushed back down today despite a TTM PE< 13, a forward PE <10, a PEG < 0.5 and a cash and equivivalent of >$120B. This is despite having been as successful as any company I have followed as an investor for the last 20 years.

    Something is very wrong with this picture and I do not like it.

    Disclosure: I am long AAPL.

    Stocks: AAPL
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Comments (3)
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  • xeys_00
    , contributor
    Comments (76) | Send Message
     
    I still think Apple will be at 600 in January. And that's being conservative.
    8 Dec 2012, 05:12 PM Reply Like
  • rjrjrj
    , contributor
    Comment (1) | Send Message
     
    Very simply what is happening is - Apple has a HUGE investor base holding $500 billion in shares. When a panic starts due to whatever trigger - manipulation, margin hikes, Earnings miss, the stock sell off feeds on itself. It becomes a rush for the exits. To replace these investors new ones come in at lower prices. It takes time to stabilize and resume momentum. Often, a catalyst is needed to calm investors and get them back in.

     

    Technical analysts are not helping matters by yelling out ranges from $420-$480.

     

    Secondly, Apple did have two technical misses / narrow beats vs. Wall Street consensus. Investors are cautious ahead of the next earnings report which may also exhibit weakness (unlikely but possible). After Jan earnings (if strong as pros expect), we can expect to see new strength in Apple.
    9 Dec 2012, 06:00 AM Reply Like
  • xeys_00
    , contributor
    Comments (76) | Send Message
     
    But the "estimates" are ridiculous. You'd have the same results and accuracy waving chicken guts over a dead goat and counting the number of flies landing in a 10 second range. Nobody talks about this either. It's the analysts that miss, not the company.
    9 Dec 2012, 01:09 PM Reply Like
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