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It comes down to this: most shares of Apple are being held by large institutional investors, and they have guidelines on how much of their portfolio can be cons
by Cookingboy 14y ago
It comes down to this: most shares of Apple are being held by large institutional investors, and they have guidelines on how much of their portfolio can be consisted of a SINGLE stock. Before the drop, Apple has grown almost 70% this year, which has made it a huge portion of a lot of investment institutes' portfolio. Selling some of the shares for a profit-taking and re-balancing of position is what happened next. That's exactly what happened back in May when the stock dropped close to 20% as well.
Now you may ask why it has dropped close to 30% this time? Simply because the market in itself was not doing well during this past month either. After the usual 20% correction, the market was hit with Obama's reelection, the fiscal cliff uncertainty, uncertainty on next year's capital gain tax increase, plus the usual end-of-year-profit-taking. So the correction went quite a bit further than those investment institutions have expected. That is why pretty much all analysts on Wall Streets right now are EXTREMELY bullish on Apple, since those fund managers will inevitably use this opportunity to restock (pun intended) their portfolios with cheap AAPL shares in the near future.
And don't listen to anyone who tell you Apple is "over-priced", right now it has a lower P/E ratio than Microsoft, so unless you really believe it has lower growth potential than Microsoft in the near future, the stock is quite undervalued. The stock has outgrown MS, Google, etc by quite a bit in recent years, but Apple's bottom line have grown by even more.
- mkr-hn 14y agoPeople are more willing to be critical of the company now that the reality distortion field is down. Being critical of is not the same as being anti-. I don't see a single anti-Apple comment in this thread.
- Cookingboy 14y agoExcept being critical has nothing to do with OP's question. Internet criticism do not account for large market fluctuations like this. Only fundamentals, either in the company's balance sheet (which is not the case) or market forces (which I believe is the case) can have influences like what we have seen. Steve Jobs have been dead for a while, and criticisms of Apple have been around far longer than his death. I am not arguing for the validity of those criticism, I was simply trying to answer OP's question from a stock market perspective, which is what he asked.
- mkr-hn 14y agoYou edited out what I was replying to. I should have quoted it.
- Cookingboy 14y ago@mkr I edited out the part where I was thinking OP may not get the best answers because HackerNews is pretty anti-Apple. I took that part out not because I don't stand up to my words, but because it doesn't contribute to my answer and may distract the conversation (you down-voted me over that part instead of my real answer is proof). I have no interest in starting or be involved in another flamewar whatsoever.
- mkr-hn 14y agoI downvoted a needless stab at critics. That's a fine reason to downvote. Changing votes (especially when the target of the downvote goes away) is one of a long list of features HN needs to take from Reddit.
- Cookingboy 14y agoI did not mean it to be a "stab" per se, people are entitled to their own opinions, but I was genuinely concerned with OP's prospect of getting un-biased answer here. Too many people are too emotionally involved when it comes to Apple. And from what I've read so far on this issue from many other sources, many Apple critics use the price drop as a way to validate their opinions, which I think is a bit too soon at the moment (the critics may or may not be right, but right now it's definitely too soon to tell) and the drop can be explained by perfectly reasonable market mechanism in the short term.
- mkr-hn 14y agoI think the impression of anti-Apple sentiment (imagined or real) is worth discussing though. Write up a blog post/self post and submit it.
- Cookingboy 14y agoI edited out the part where I was thinking OP may not get the best answers because HackerNews is pretty anti-Apple. I took that part out not because I don't stand up to my words, but because it doesn't contribute to my answer and may distract the conversation (you down-voted me over that part instead of my real answer is proof). I have no interest in starting or be involved in another flamewar whatsoever.
- mkr-hn 14y ago> "because HackerNews is pretty anti-Apple. I took that part out not because I don't stand up to my words," It is not. Why would you (wisely) edit that bit of idiocy out to avoid a flame war before putting it back in with two other comments? It's like you're desperate to get the stab in despite knowing what will happen.
- Cookingboy 14y agoI would greatly appreciate if you don't call opinions you disagree with "idiocy".
- mkr-hn 14y agoAn opinion with something to back it up can be discussed reasonably by reasonable people. Bold assertions with no backing are idiocy.
- deleted 14y ago[deleted]
- turbojerry 14y agoApple has been held by many hedge funds, it is known in investment industry terms as a "Hedge Fund hotel" see- http://www.zerohedge.com/news/2012-11-19/september-30-hedge-fund-hotel-aapl-fornia-added-one-more-guest http://www.zerohedge.com/news/2012-11-19/september-30-hedge-... Reggie Middleton has done some good analysis of Apple- http://www.zerohedge.com/contributed/2012-10-09/right-time-my-prediction-apple-margin-compression-8-quarters-my-cnbc-warning- http://www.zerohedge.com/contributed/2012-10-09/right-time-m...