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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
  • RECAP OF EVENTS CONTRIBUTING TO THE BIG APPLE FALL 2012 SELLOFF 0 comments
    Dec 12, 2012 12:48 PM | about stocks: AAPL

    Here is my recap of the events leading to and contributing to the big Apple selloff of Fall 2012, a selloff that I now believe is largely over. The full closure on the selloff will occur when 2012 tax selling also comes to a close but we can already see a stabilization and some upside on Apple stock pricing. The absolute deadline for 2012 tax rates qualification is trade completion on or before December 31.

    The selloff began with outsized portfolio adjustments selling into overdone fear of competition and other worries aggravated by a media negativity blitz. . There is speculation that the blitz was engineered to be especially negative by manipulators of various sorts. For example we saw the attention that two bit COR Clearing received with it's highly publicized margin adjustments, adjustments that have not been confirmed by any other firm that I am aware of. The usual CNBC talking head goings on about Apple became uglier than normal over the last month, and significantly, we saw the usual Asia supply chain statements speculating that order drop offs in calendar Q1 were due to Apple sales falloffs. This is in the face of totally contradictory information with Apple already anticipating an iPhone 5S build.

    Notice that indie bloggers and analysts as well as sell side analysts remained very positive during all of the selling and any lowering of expectations, if any, were relatively minor. A reasonable conclusion is that none of these folks believed the negativity nor that the dip was here to stay. They obviously still believe that Apple long term fundamentals are intact.

    Adding to all of this gloom and doom, we have had accelerating tax selling moving into November and December. This just might have been the biggest single stock tax sell off ever given the gains Apple had racked up since Mar 2009. This selling was undoubtedly significantly magnified by justified worries of increasing 2013 tax rates. Plus there is the in on-going fiscal cliff worry that has still not been resolved.

    Keep in mind Apple languished similarly during the same period last year, less extreme but languished never the less. In hindsight there was also a large run up in share price starting as noted in Mar 2009. This would add to 2011 tax selling and this was undoubtedly a factor in the sluggish share price and intermittent dips occurring between October and mid December 2011. It is very important to note that on December 20, when one would normally expect tax selling to slow down, with the stock starting at $360, we saw an amazing largely uninterrupted run to $640 by early April 2012. I am not saying the run will be that good in 2013 but we at least have run back to $700 and possibly above given the strong Fiscal Q1 results we are likely to see near the end of Jan.

    Disclosure: I am long AAPL.

    Stocks: AAPL
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