Monday, March 19, 2012

One More Look At The Monstrosity Of Wall Street - Apple's Stock

The perfect linear regression of its stock price from the 2009 lows is a sign of algorithmic trading controlling the stock.  The near vertical rise over the last handful of weeks is most certainly a sign of a contrived blow off top.  When hedge funds are able to move a price to new highs, they are often capable of catapulting the stock because there are no sellers.  In other words, all trades are buyers; a perfect opportunity to mint massive returns very rapidly with blow off price movements.  The volume in Apple over some days in the last few weeks has been massive.  Oftentimes more volume than is typically traded in a week.  There are likely quite a few shenanigans involved including substantial manipulations in the options market.

I said Apple's stock was a bubble back before the 2008 collapse.  What exactly is it now?  I'll tell you what it is.  It's a representation of the scope of the criminality in the financial racket we call Wall Street.  I believe it was back in 2007 that I wrote Apple's fair value was in the $35 range.  It started heading that direction in the 2008 collapse but now has morphed into a bubble that would make even Bernie Madoff blush with envy.  As we noted at that time, bubble economics are are also artificially inflating its business results as happened with Microsoft and other IT and consulting businesses in the late 1990s.  Factor in the cash hoard Apple has built and maybe the shares are worth $70-$100.  But that is only until the cash hoard is payed to shareholders or is ultimately needed to fund operations or whatever else happens with the money.   I tend to think that money might be spent hiring a private army to protect its Asian supply chain when China collapses.  That's a joke... about hiring an army, but the global supply chain shocks we wrote about half a dozen years ago are most certainly on their way.  Apple won't be immune.  The fundamentals could easily develop where Apple cannot even get product to sell.  (Update:  This was written over the weekend and auto posted this morning.  Since, Apple has announced a dividend and a $10 billion share buyback.  The share buyback is NOT for the shareholders.  It is for the executives as the announcement highlights.  ie, It is to make sure the shares aren't diluted in future share grants to company executives.  This is simply more of the systemic looting of the publicly-funded capital markets by private interests at public companies.  In other words, privatized gains and socialized losses.)  

Remember, it was just a decade ago that Microsoft rose to the stratosphere in Wall Street's criminal Internet bubble.  It too had $30-40 billion cash on hand and no place to spend it.   Before Microsoft decided to give it to shareholders, the stock still dropped 70%.  Apple's stock is a substantially larger bubble backed by the tens of trillions of dollars pissed into our economy over the last decade by bubble after bubble created by Wall Street, the Federal Reserve and Washington politicians   And, even today, still in the midst of a stock market bubble, Microsoft has again amassed even more cash yet the stock languishes 50% below its peak 12 years ago.   In other words, the mirage of a strong balance sheet is not going to save Apple's stock any more than it saved Microsoft.

Click on the graphic for a ginormous view
posted by TimingLogic at 7:52 AM

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