Apple earnings spark foolish knee-jerk reactions
With a limited knowledge base, people sent this stock down 15 points on hundreds of thousands of shares.
It happened again. It's just totally ridiculous. I'm talking about the moronic trading in Apple (AAPL) right after the headlines came out. What did you know? You knew that things were basically in-line on most metrics, and while you didn't get the big guide-down on gross margins, you didn't get much good news on that front, either.
Yet, on the strength of that limited knowledge base, people sent this stock down 15 points on hundreds of thousands of shares. It was lunatic.
If you were involved in this sham of a process, you rightfully got your head handed to you, because the earnings release didn't capture the main reason you might have been negative -- the reason why gross margin didn't go higher: Apple made an accounting change that depressed the announced gross-margin number somewhat artificially. Some revenue that would have normally been included in the quarter got deferred, and that fell right out of the bottom line.
It was pretty shocking to see the scramble back up when the explanation came out on the call.
We are dealing with complicated companies here. Their results are not lending themselves to headline-writers who do not understand the complexities that companies face when they try to make their earnings reports as simple as possible. The journalists who follow Apple are almost all uniformly excellent but, in the end, they are in a race to get the story told. This is race in which there are no winners, because they are all looking at the same models of and the same analysts' forecasts and plugging in what they see and spitting out a story that has none of the nuances of what management might have to say on the quarter.
It's not just Apple. We saw the identical kind of nonsense occurring with Eaton (ETN) last Friday when, you learned, only on the conference call, that orders had turned up in the last month of the quarter and had gotten better in October. A stock that's down $1 is suddenly up $3 not long after.
We even saw it with Merck (MRK) in premarket trading, too. Taking the other side of the buyers there, enthused by an earnings-per-share beat, was like taking candy from a baby, because the revenue was weaker than expected. Plus, any cursory look at the release told you that the much-vaunted diabetes franchise, a big growth engine for a company without a lot of engines, had declining sales. That was a total shocker.
Sure, there have been plenty of instances when it's been worth beating people to the punch. I have seen times this year when so many people had been short the stock of a company with good news that sometimes, psychologically, it was just worth it to take some in when the shares were up a bunch of points. The possibility of a monster squeeze that can wreck a month, after all, is always on the table.
For the most part, though, it has been a stupid thing to do. And, for the life of me, given all of the metrics that now determine what happens with a stock, many of which you do not even hear about until right before the question and answer session, it's often more worthwhile just to take the other side of the trade.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL and ETN.
More from TheStreet.com
"people" sent the stock lower or was it the computer trade algorithms?
don't the institutions buy the overwhelming number of shares? don't the institutions use the computer trade schemes?
blame it on the people or blame it on the institutions? which is it?
The media treatment of Obama has changed over the last couple of weeks.
Thumbs up = True
Thumbs down = False
NOW Hollywierd is turning on our Dear Leader ?
RECONCILIATION is a legislative process in the Senate commonly used to pass legislation concerning spending, revenues or the debt-limit. The process has been used 22 times since 1974. More often than not, these bills have been vehicles for large reforms in the tax code, health care and other social programs from education to welfare. One key reason that reconciliation is used for major reforms is that the process is subject to different rules than other bills. Most importantly, reconciliation bills are not subject to cloture votes--the 60 vote supermajority procedure to overcome a filibuster--and thus only require a 50 vote majority to pass.
The voting record shows that reconciliation is often used as a way to pass otherwise contentious legislation that could not receive sufficient bipartisan support to reach the 60 vote supermajority necessary to clear a cloture vote. Seven of the thirteen reconciliation measures examined here passed between 1990 and 2007 were almost universally opposed by the minority party while gaining almost total unity in support from the majority using the reconciliation process.
OBAMA AND REID HELD A GUN TO THEIR HEAD AND GOT WHAT THEY WANTED
And along the way there were some FAVORS THROWN IN FOR GOOD MEASURE
Democrats and red-blooded flag waving Americans were coerced into going into War against the wrong Country, By being call "Non-Patriotic" with Bush's "you fer us or agin us."
Therefor many Dems voted for the incursion, also some from public pressure..
Strange this all coming from a "draft dodging" President that was also AWOL from his duties as a dodger in the Tex ANG...
Many may not realize, but joining the Guard, Reserves and Peace Corp, along with Student deferment were ways to "dodge the draft" back in the day....Worst was "fleeing to Canada"...
I believe Carter pardoned them.?
RE-TOG: Right you are.Last night I called several relatives in Ohio about my upcoming wedding.
They are mostly Republicans and they did more crying and bellyaching about Obama.I think I
should send them crying towels.They`re crying about how bad the Repubs are going to lose the
midterm elections.They just hate this peace and prosperity.
Barry, You just believe everything they tell you on Fox.One minute they say Obama is weak
and the next minute they say he`s a dictator.No wonder you`re so confused and mixed up.
Barry, As usual, you have no solutions of your own.Just throw rocks at Obama and cry,bellyache
and whine.I`m going to market crying towels for Republicans when they lose lots of seats in the Congress in 2014.
BUSTED , FOOL
So dumb, so broke, so delusional
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
For years, Todd Mills pushed Frito-Lay to make taco shells from Doritos. He died from a brain tumor on Thanksgiving.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.