Apple analysts should be ashamed
When the tech giant reports record results in late January, expect Wall Street to do another about face.
By Rocco Pendola
I was livid Monday morning when I wrote: Wall Street Analysts Screwing You on Apple on TheStreet.
In it, I concisely described what's happening with Apple (AAPL) -- from the lunacy of Monday's analyst downgrades to a review of the rational and logical near- and long-term sentiment.
And, here we are, Tuesday after the chaos. As I write this, AAPL is up 2.5% to $531.82.
Based on nothing but their concerted speculation, these analysts managed to knock AAPL below $500 in Monday's pre-market session. During the day, it opened at $508.93, dipped as low as $501.23, traded as high as $520 and closed at $518.83.
TheStreet's Doug Kass was correct: Apple is a trading sardine, not a long-term play.
But that's just for the time being.
It doesn't matter what AAPL trades for when you read this. In the bigger picture, it doesn't make much difference how it traded on Monday. But let's flesh that out so we get a picture of what's going on here.
The SEC needs to step in and review how Wall Street analysts do their jobs. Like I said Monday:
You mean to tell me that each of these guys, suddenly, spotted this weak trend in iPhone and iPad sales and just so happened to lower estimates and price targets at the same time, on the same morning. . . .Do they think we're total idiots?
These guys are dangerous. When you read me, it's implied: I have an opinion. I work 16 hours a day doing what I need to do to inform that opinion. But, at the end of the day, it's an opinion, not a recommendation. You take my perspective on the market and react to it -- love it, hate it, whatever -- and hopefully use it as one part of your due-diligence process on companies and stocks.
That's pretty straightforward.
These guys who, all at once, after months of extreme bullishness, come out with reduced estimates and lower price targets on the basis of "checks" they apparently did, on whimpers of "demand" problems for iPhone and iPad deserve your wrath!
People sold AAPL Monday morning. Scared long-term investors ran, only to see the stock finish way off of its lows. That's the short-term damage these guys cause.
Of course, some nimble souls traded on this and made serious cash, but you cannot expect that from a vast majority of investors who are just trying to save a buck for their retirement. You cannot blame them for reacting with emotion and selling on the word of a gaggle of greasy and fickle Wall Street analysts.
In the bigger picture, it's not even about being right or wrong. I fall on both sides of that fence throughout each year. That's expected. It's about bringing some common sense, some rationality, some reasonable thought process to what you're doing here.
Apple Stores were packed this weekend, according to TheStreet. iPad minis were selling by the dozens, by the minute. Apple sold at least 2 million iPhones in China.
It's one thing to be bearish; it's completely another to be hysterical and off by at least three to six months in your bearishness.
When retail numbers start to leak after Christmas and into the New Year . . . when Apple reports record earnings for the holiday quarter in late January, the analysts will do an about face.
I will be here demanding that the SEC asks them the tough questions.
More from TheStreet.com
- A call to action: the best and worst of 2012
- Hemispherx lied about Ampligen
- BAC: bullish trading ahead of upgrade
Thank yu Rocco! I am glad for your article. It gives me a better understanding how analyst analise. Do they know how? Do they know that investors look at what they say? Does that mean anything to them or do they feel safe because they have a job.
I am a retiree with a small IRA that I try to keep up so that I can live. I have to pay attention to what analists say about a stock. I just had to sell AAPL. Thanks to your article I will be buying it again soon. Yes I got scared when it plunged by $15-$20 at the time.
I had to teach myself how and where to invest after my husband passed away. I did not have any experience. But I made it sofar and will keep going.
Keep writing Rocco and speak up for the small investor who is trying to keep their head above water.
Geraldina Howell .
Spot on! This is one of the obvious symptoms of what's wrong with Wall Street. Individual investors don't stand a chance with these manipulators. They want a drop so they can option their way back up, quickly.
While we get left holding the bag. Trust yourself and do the homework. If a company makes money and is not overvalued and pays a dividend. That is our only hope to make money at this game.
Rocco, I don't believe the analyst did any such thing. People who have been long on APPLE are taking profits before the end of the year more than anything else. The first should show a big jump in the stock.
You are going to demand answers from the SEC? Goodness, what is your standing in the investment world that they might even listen to you?
It's most likely to continue to do so.
No matter how hard hit the stock prices.
There are a loyal iphone and ipad buyers out there which you can't find them on Samsung and Nokia users.
And those people will continue to buy and make Apple profit no matter what....
These analysts don't have a clue.
Its TAXES !!! Most long term APPL investors have huge gains even at $500.
Obama is threatening a huge rise in capital gains tax so lots of people are unloading this gain now with a plan to buy it back in January.
It is not covered by the wash rule because it is a gain not a loss.
One month ago these people were screaming AAPL $1,000!! Buy!!! These so-called analysts are either incompetant morons or crooks.
Will be interesting to watch next year; Apple has the cachet the competition is catching up. Local tecchies are heavily into Anderoid by choice.
Just sell your stock when it hits 600 and move on Rocco. Apple still make excellent products but what made Apple great and Steve Jobs legendary was their ability to innovate way ahead of the competition and market devices that competitors had no answer for.
Over the last 18 months all of Apple's moves have been either "catch-up" moves or missteps like a smaller tablet, a larger phone and map application that was such a disaster that Apple users - the biggest kool-aide drinking cult this side of Tom Cruise - actually hated it and raised hell till Apple put Google Maps back on the App Store..
While I am sure that Apple's products will continue to be excellent and in many cases better than the competition, they won't be enough so to demand the 30-40% premium that people used to be willing to pay. The new updated world of consumer electronics will still hail Apple as their king, but at much lower margins than before. That will likely land Apple in the long-term at a still stellar $350-400 a share..
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. 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 SIX Financial Information.
All hail the bull market, which ended the week with a big rally. But it also is starting to look a little like 1987, which suffered an epic blow-out.
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.