Originally Posted by Rogifan
I'm hoping this downturn in the stock will get rid of some of the daytraders and some of the manipulation. I could give a shit less if Apple is the most valuable company in the world or if their share price is higher than Google's or whatever. I'm sick of the wild swings where any rumor, even one not credible at all sends the stock down 5%. If Apple goes from a growth stock to a value stock that's fine with me. Maybe we can finally get rid of these ridiculous expectations that no one else is ever expected to meet.
daytraders don't care about the value of the stock... daytraders need action. Apple with it's millions of transactions a day,, and it's relatively broad ownership make it a daytraders dream. The price of the stock means nothing, it's the movement... and they just want movement in big chunks... and they buy and sell a couple hundred (thousand) share, mostly on margin, all day long... and then clear their positions daily/weekly, to avoid margin calls.
The ridiculous expectations are the the stock houses trying to entice people to buy the shares the houses own. When JPMorgan is 'pumping' apple, it's because 1) they have stock in their portfolio they want to sell, and 2) they want to generate commissions on the churn. When they drop the price of apple they are 'out' of Apple stock and want to buy some to put back in their coffers. These aren't the day traders per se' but the stock houses and their paid/semi-paid associates making runs on the stock.
The current issue is purely the fact that even Apple won't claim a growth in profits next quarter. With Apple always sandbagging a low number, that put analysts at a loss in terms of a number, therefore there's uncertainty, and when there's uncertainty, there is low confidence. Apple is selling more stuff, at a very high profit margin. But contrary to everyone else in these 'commodity' markets (phones, computers), they aren't trying to keep margins in the face of competition by lowering quality, instead, they are holding their market by lowering their margin.
Almost every huge company runs into this. Eventually, you have to lower your costs (cut people, quality of raw materials, or quality of output), or raise your prices to drive margin. Apple is doing neither. They are quite satisfied to make a reasonable profit (nearly 25% net), keep their quality, not overextend production lines (because an idle production line in july is likely worse than under sizing production during rollout until steady state). Of course doing this is 'leaving' short term money on the table, as well as, not ratcheting real profit margin year over year (which is by it's nature impossible to do once you saturate the world market).