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Apple stock took top hedge fund holding slot in Q2

post #1 of 14
Thread Starter 
A new report reveals hedge fund investors turned back to Apple for investments in the last quarter, making the Cupertino company the most-held stock among those investors.



Citi analyst Tobias Levkovich noted in his most recent report that Google remains the most held stock among mutual funds, a position the search giant took from Apple in March of this year. Apple, though, beat out Google, Priceline, and Qualcomm to take first place among hedge fund holdings.

Apple previously lost the top spot to insurance giant AIG in February, according to some estimates. At the time, Apple fell to third place behind Google. Google subsequently went on to become the top holding in both hedge and mutual funds in March.

Apple shares dropped below $400 for a time earlier this year, but the stock has since recovered and now sits above $500 and trending upward. Shares peaked last year at just north of $700, but concerns over competition ? as well as considerable hedge fund selloffs ? lopped a good deal of value off of the company.

Investors will be watching Apple's forthcoming media event closely, as the company is expected to reveal two new versions of the iPhone: one to address the bestselling smartphone's typical base and another to draw in more users with a lower price point. Some analysts believe the low-end model's performance in China alone could boost Apple shares at least 10 percent, adding another two or three dollars per share in earnings.
post #2 of 14
Tis all a play for profit gain. Apple is up, Apple is down. Others seem to have boring, predictable lines that bring in a steady, but lower income. Time is Apple's and the investors friend. Though understanding the patterns helps the gains.

When I find time to rewrite the laws of Physics, there'll Finally be some changes made round here!

I am not crazy! Three out of five court appointed psychiatrists said so.

Reply

When I find time to rewrite the laws of Physics, there'll Finally be some changes made round here!

I am not crazy! Three out of five court appointed psychiatrists said so.

Reply
post #3 of 14

They've spent the last few months pushing the price down. Now they're in for the prize

post #4 of 14
Wait...I thought AI just had a story up about investors dumping Apple stock. Now it's tops again?
post #5 of 14
Truly sad that this is all apparently legal. No wonder the average Joe stays away from the stock market like the plague, even though you can't make it on bonds and cash alone. How would like to invest your life's savings for retirement income only to have billionaires like Carl Icahn manipulate it away from you?
post #6 of 14
Quote:
Originally Posted by mhikl View Post

Tis all a play for profit gain. Apple is up, Apple is down. Others seem to have boring, predictable lines that bring in a steady, but lower income. Time is Apple's and the investors friend. Though understanding the patterns helps the gains.

For sure, mhikl. And yes, I am the same guy from TMO. So where did our buddy go? I wonder if he was finally given the boot...
post #7 of 14
Quote:
Originally Posted by lkrupp View Post

Truly sad that this is all apparently legal. No wonder the average Joe stays away from the stock market like the plague, even though you can't make it on bonds and cash alone. How would like to invest your life's savings for retirement income only to have billionaires like Carl Icahn manipulate it away from you?

Now, what you're asserting may or may not be empirically true, but the unassailable fact that millions of retail investors likely feel this way about 'big money' is a serious problem for the credibility and legitimacy of our capital markets. Perhaps even its long-term viability.

 

Not that any of those morons in DC seem to particularly care.

post #8 of 14
Quote:
Originally Posted by Rogifan View Post

Wait...I thought AI just had a story up about investors dumping Apple stock. Now it's tops again?

 

Of course! Which way is the wind blowing this moment?

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

Reply
post #9 of 14
Quote:
Originally Posted by anantksundaram View Post

Now, what you're asserting may or may not be empirically true, but the unassailable fact that millions of retail investors likely feel this way about 'big money' is a serious problem for the credibility and legitimacy of our capital markets. Perhaps even its long-term viability.

 

Not that any of those morons in DC seem to particularly care.

 

Why would they? Those who elect them care even less. I blame journalists, who prefer to be cowards.
post #10 of 14
Quote:
Originally Posted by lkrupp View Post

Truly sad that this is all apparently legal. No wonder the average Joe stays away from the stock market like the plague, even though you can't make it on bonds and cash alone. How would like to invest your life's savings for retirement income only to have billionaires like Carl Icahn manipulate it away from you?

If you had invested in bonds, you would have gotten your rear handed to you lately. :-(

The stock market is very liquid and spreads are pennies wide. It's probably more efficient than it's ever been. While it may be popular to think that the game is rigged, it really is not. The market is so large that manipulation is a lot harder to achieve than one might think. Heck one can blame hedge fund managers, but these grossly overpaid yin yangs didn't do all that well either. This year the average hedge fund underperformed the S&P 500 by a fairly decent margin.

If the average Joe is staying away from the stock market, then he has only himself to blame for not being able to keep up. That's not to say that you can just throw money at the market willy nilly and expect decent returns. Educate yourself on basic investing strategies. Use strategies to reduce your cost basis, and choose highly liquid products such as ETF's with the lowest fees.

Someone who wants decent returns, but does not want to spend a whole lot of time managing a portfolio could simply chose a liquid product like SPY which tracks the S&P 500 and have a simple strategy of selling out of the money (cash secured) PUTs every month. If you get put the stock, then sell covered CALLs on the position until it gets called away. It is a fairly conservative strategy that serves to lower your cost basis and therefore boosts your earnings over time, and is actually less risky than just buying the stock outright. No one knows where the market is going, but at least you are buying the broad market at a discount.

But you do have to spend a little time learning about how these strategies work, how to apply them, when they are most advantageous, or indeed, appropriate. Keeping your money in cash under a mattress or even in a savings account is just throwing away returns over the long term.

post #11 of 14
Quote:
Originally Posted by vexorg View Post

The stock market is very liquid and spreads are pennies wide. It's probably more efficient than it's ever been. While it may be popular to think that the game is rigged, it really is not. The market is so large that manipulation is a lot harder to achieve than one might think. Heck one can blame hedge fund managers, but these grossly overpaid yin yangs didn't do all that well either. This year the average hedge fund underperformed the S&P 500 by a fairly decent margin.

If the average Joe is staying away from the stock market, then he has only himself to blame for not being able to keep up.

There are various ways that the system is rigged and an ex-Goldman Sachs exec details some ways:

http://business.time.com/2012/10/22/viewpoint-how-wall-street-rigs-the-game/

"There is a misconception that Wall Street is composed of rich people gambling with other rich people’s money, but this couldn’t be further from the truth. The secret that Wall Street doesn’t want anyone to know is that hedge funds comprise less than 5% of assets in the stock market. The real big players in the market are individual households and the pension funds, mutual funds, university endowments, charities and foundations that are entrusted with your savings, donations, retirement funds and 401(k)s. They are the owners of trillions and trillions of dollars invested with Wall Street banks. So, in effect, you are the big player in the market. And when a Wall Street bank overcharges a teacher’s retirement fund or a charity on a complex product, or misprices the Facebook IPO, causing billions of dollars of wealth destruction, or helps the governments of Greece and Italy cover up their debt, or rigs interest rates affecting trillions of dollars of loans, it ultimately affects you directly and comes out of your pocket.

But how does Wall Street make so much money anyway? Surely there are times when it must lose? Actually, not as often as you might think. Consider this: There are certain quarters when a Wall Street bank makes money every single day of that quarter in its trading business. Yes: 90 days in a row. One hundred percent of the time, it generates a profit. Bank of America has pulled off this amazing feat. That is like batting 1.000. A perfect record. How is this even possible?

Two words: asymmetric information. The playing field is not even. The bank can see what every investor in the marketplace is doing and therefore knows more than everyone else. If the casino could always see your cards and sometimes even decide what cards to give you, would you expect it ever to lose?

Here’s how it happens: Because Wall Street is facilitating business for the smartest hedge funds, mutual funds, pension funds, sovereign wealth funds and corporations in the world, it knows who is on every side of countless trades. It can effectively see everyone’s cards. Therefore, it can bet smarter with its own money. Worse, if Wall Street can persuade you to trade a custom-made and impossible-to-understand structured product that serves the firm’s needs, it is as if your cards have been predetermined. There is little risk that the casino will lose in this scenario."

Being able to take large risks and not worry about losing assets or homes is a luxury that doesn't come to average people and as we've seen, some very large trading organisations have a pretty big safety net.

Another difference is the use of automated transactions. AFAIK, average people can't operate a stock robot on the exchange running computer algorithms doing transactions in microseconds. This kind of high frequency trading gives people in control of it a significant advantage. It can come with huge risks:

http://www.businessweek.com/articles/2012-08-02/knight-shows-how-to-lose-440-million-in-30-minutes
http://www.washingtontimes.com/news/2013/aug/22/operator-error-nasdaq-glitch-raises-questions-abou/

but huge gains too if you can execute loads of transactions. Average people would go through a broker and pay for a trade. It's like snail mail vs using the internet and trading at that speed and in high volume can drive markets in ways that just sweep the little guys away.

Then there's the difference in the amount of capital. Someone with $5k of a salary to invest getting a 10% return makes just $500. A hedge fund manager or billionaire dealing with billion dollar trades making 10% can make $100m in a single transaction. That's leverage that isn't available to average people and that kind of money can easily be used to gain a competitive advantage. It also results in massive salaries:

http://www.forbes.com/sites/nathanvardi/2012/03/01/the-40-highest-earning-hedge-fund-managers-3/

Some people like to quote Gordon Gecko's "greed is good" motto but you don't hear snippets from the following dialog so much:



If the stock trading system was designed to be fair, they'd ban high frequency trading altogether. Why not just make it that an individual trading entity can only execute a trade once every minute or other fixed period of time? That would make people pick their trades more carefully and stop the whole market being so volatile. They can also cap transaction volume for an individual trader. People who have billions already have an unfair advantage over people with thousands and it takes away their upwards mobility because the billions are moving the markets. It's far easier to stay rich in the stock market than it is to get rich.
post #12 of 14
Quote:
Originally Posted by Marvin View Post

There are various ways that the system is rigged and an ex-Goldman Sachs exec details some ways:

http://business.time.com/2012/10/22/viewpoint-how-wall-street-rigs-the-game/

"There is a misconception that Wall Street is composed of rich people gambling with other rich people’s money, but this couldn’t be further from the truth. The secret that Wall Street doesn’t want anyone to know is that hedge funds comprise less than 5% of assets in the stock market. The real big players in the market are individual households and the pension funds, mutual funds, university endowments, charities and foundations that are entrusted with your savings, donations, retirement funds and 401(k)s. They are the owners of trillions and trillions of dollars invested with Wall Street banks. So, in effect, you are the big player in the market. And when a Wall Street bank overcharges a teacher’s retirement fund or a charity on a complex product, or misprices the Facebook IPO, causing billions of dollars of wealth destruction, or helps the governments of Greece and Italy cover up their debt, or rigs interest rates affecting trillions of dollars of loans, it ultimately affects you directly and comes out of your pocket.

{snip}

The only problem with this is that it creates a straw man entity - "Wall Street". There is no such entity controlling the market.

There are a wide range of people who make up the group you are trying to call 'Wall Street.' Investment Banks. Wealthy investors. Hedge Funds. Mutual Funds. Traders. And so on.

You've created a fictitious villain (or, at least, the person you are quoting is).

The biggest reason that some groups can make money every day in a quarter is that they are set up to take a small commission on every single trade. It doesn't matter which way the trade goes, nor does one have to speculate insider knowledge. If they make a nickel on every trade, they simply need to transact enough trades to cover their overheads plus a few more and they've made a profit.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #13 of 14
Quote:
Originally Posted by jragosta View Post

There are a wide range of people who make up the group you are trying to call 'Wall Street.' Investment Banks. Wealthy investors. Hedge Funds. Mutual Funds. Traders. And so on.

You've created a fictitious villain (or, at least, the person you are quoting is).

I think the main target in that quote was the investment banks. You're right the term 'Wall Street' is ambiguous, it's generally used to label the entities that have the most control over the markets. Goldman Sachs is one example and there's a recent example of their market manipulation:

http://online.wsj.com/article/SB10001424127887323477604579001384260273274.html

This is the kind of thing that average people couldn't do, same with setting interest rates or at the very least knowing about these things:

http://www.bbc.co.uk/news/business-18671255

There are many reports about information being passed around at private parties and bribes being made. Very hard to prosecute word of mouth exchanges.
Quote:
Originally Posted by jragosta View Post

The biggest reason that some groups can make money every day in a quarter is that they are set up to take a small commission on every single trade. It doesn't matter which way the trade goes, nor does one have to speculate insider knowledge. If they make a nickel on every trade, they simply need to transact enough trades to cover their overheads plus a few more and they've made a profit.

That's part of the problem, there's always a middle-man for average people that's going to be profiting whether they win or lose. Look at how much they charge here:

https://www.tdameritrade.com/pricing.page#Stocks

If you want a broker-assisted trade it's $45. That forces people with low capital to take bigger risks. There was a TV show here about average outsiders training to become traders and one of them had traded while in college and lost £25k in a single day and that was him out of trading:



They exhibited lots of stress during the show, leaned towards a lack of ethics and even trading with someone else's money, they didn't make any return over the whole period but for every trade they did there were fees getting taken. People who have a lot of money don't have to make lots of trades. Icahn for example can make a billion dollar trade on Apple and make an easy, healthy return. It takes far more effort and risk to get up to that level than to stay there, which is why it's seen as a market that favours the wealthy and with the banks trading with vulnerable assets, they know that the whole system will collapse unless they are left to do whatever they want. They hedge their bets all the time, it makes sense they'd construct a safety net that defers the liability onto someone else when they fail. Look at the damage caused by the collapse of Lehman Brothers but the people at the top inside the bank knew about it in plenty of time and walked away with hundreds of millions of dollars. Average people defaulted on their mortgages because their interest rates went up. They've been allowed to operate in far too reckless a manner and there are reports about there being as much as a quadrillion dollars of derivatives:

http://business.time.com/2013/03/27/why-derivatives-may-be-the-biggest-risk-for-the-global-economy/

"While there’s no way of knowing for sure, estimates of the face value of all derivatives outstanding tops a quadrillion (1,000 trillion) dollars, or more than 14 times the entire world’s annual GDP.
Overall, the markets are extremely leveraged, which means that any miscalculations could have a domino effect. And in theory, at least, the total losses could add up to more money than there is in the entire world."




3:37 "I made a mistake in presuming that the self-interest of organisations, specifically banks and others were such that they were best capable of protecting their own shareholders... a critical pillar to market competition and free markets did break down. An ideology is a conceptual framework with the way people deal with reality, everyone has one and the question is whether it is accurate or not. I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works."
post #14 of 14
All decisions people make are essentially self-interested. It helps to remind ones self of this whenever someone gives out "free" advice that the receiver amusingly believes will make them rich.

I've found the best way for a noob (including myself years ago) to invest is in the form of small, affordable "losses". Get a chunk of money you can afford to lose 100%, study a stock you are very familiar with their product or service, and invest in them at a relative low, so long as it doesn't appear they are in real trouble. Then look for the next opportunity. Don't chase after a "hot" stock. Those are the ones that tend to rise fast and crash fast.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

Reply
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