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I lost money on my investments until I learned how to invest. When money is involved, people tend to be naive and foolish. The more the money, the worse people's actions/outcomes. Now a days, I am ready when opportunity knocks. Does this make me a lazy investor? What is the outcome of chasing... More
  • Is There One Simple To Understand And Verify Cause For Apple's Stock Volatility? 1 comment
    Jan 4, 2013 4:10 PM | about stocks: AAPL

    Background: Apple shares are way down since their $705 share price in mid September 2012. Wall Street analysts are downgrading Apple's future. Media pundits are in Apple attack mode. The options costs and spreads are stunningly high and wide. Meanwhile, Apple continues to execute very well. Who is manipulating the public here?

    Thesis: Forced selling initiated some decline in Apple stock back in late September and early October 2012. This precipitated a much larger intentional decline to profit both on the moves (first down and later up) and the volatility (short expiration options).

    Perspectives: Actively managed funds have suffered large outflows, so these funds have sold off Apple (and other) shares. Actively managed funds have hit their maximum limit on exposure to any one stock due to Apple's large share price rise in 2012. Indexed funds have seen some investor outflows, too. Forced selling. Hedge funds have shorted Apple. Microsoft has attacked Apple as part of their $2B advertising budget for Windows 8, Windows 8 RT, Windows Phone 8, and Surface. Wall Street analysts and pundits have published extreme theses on Apple that cannot be vetted. Click bait bloggers are making money on spurious articles based on outrageous titles. Overall, any signal is drowned in all the manufactured noise.

    My purpose is to clarify who is making the Apple stock price volatile. This brief article ignores Apple's future discounted cash flow as a secondary and basically positive influence. Actively managed funds, index funds, hedge funds, investment bankers, institutional investors, Microsoft, and Samsung have millions to billions at stake here, but only some paying to drive public opinion. A very few are public monopolists or criminals.

    Endgame: There is one single risk to Apple Inc. The crush of disinformation might fundamentally change Apple in its vulnerable years after Steve Jobs died. This is the time for Apple employees to ask each other, "What would Steve have done?". I know that Steve Jobs explicitly told people not to ask this basic question. But Steve did not say "never".

    Grounded Fact: People cannot get enough of Apple Inc. Talk to real people. It takes discipline to ignore the noise.

    Disclosure: I am long AAPL.

    Additional disclosure: I have looked into buying more Apple stock or some call options. However, the market has beat me on all positions. People are far more greedy, so I pass on this hand.

    Themes: technology, volatility Stocks: AAPL
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  • You have said more in fewer words and with more meaning than I could have. That is why I dislike your piece. Unfortunately I must agree in principle with it, as it is what I have been trying to say in many posts for a while.
    12 Feb, 03:00 PM Reply Like
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