Nasdaq to diminish Apple's share of index in rebalance

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Comments

  • Reply 21 of 53
    anantksundaramanantksundaram Posts: 18,886member
    Quote:
    Originally Posted by MacTel View Post


    I smell a lawsuit brewing.



    Can they actually legally do this? To cause a company to lose valuation even if they announce their intentions well in advance does not seem right. I'd imagine the stockholders will be a bit unhappy and looking for payback.



    There's nothing to sue over here.
  • Reply 22 of 53
    ajitmdajitmd Posts: 365member
    With an enterprise PE of 11 and sales growth around 50+%, it hard matters what the Naz is doing. Would you sell the business just because of the Naz changed the ratios? Don't see SJ panicking and selling his shares!



    Anyway, the main issues now are the iPhone and iPad sales. Can Apple maintain the iPhone sales momentum? A lot Android phones are popping around and people are using it. The iPhone5 needs to come out soon with some new features. Besides the battery life and camera improvements, I do not see what else they can improve? GPS improvements? Those would just be marginal improvements.



    The big opportunity would be the iPad2. Supply chain issues? Demand? Profit margins?
  • Reply 23 of 53
    MacProMacPro Posts: 17,878member
    Quote:
    Originally Posted by StuffOfInterest View Post


    The driver in sales will be tracking funds which maintain a share balance to mirror the NASDAQ 100 index. These is not clueless people. Of course, there are the people who will panic sell individual shares but I have no sympathy for them.



    If you don't like the game buy something like QQQ which is a major exchange traded fund (ETF) which tracks the NASDAQ 100. I gave up on individual shares years ago and only buy into these types of tracking funds now. Much safer to bet on the market than any one company.



    The anticipated drop in AAPL today is nothing to do with Apple's valuation. It is a reaction to a perceived change that is not being understood as well as tracking funds as you say. I am perfectly happy buying AAPL thank you, in fact I will probably buy a 100 more soon if this change in the NASDAQ basket distribution results in selling through misunderstanding and a short term dip.
  • Reply 24 of 53
    macfandavemacfandave Posts: 603member
    This is a far cry from the days when the company was "beleaguered."



    I bought my first AAPL shares when they were rated as an "Avoid." Now the NASDAQ says they are too successful.
  • Reply 25 of 53
    astra4astra4 Posts: 46member
    How could AAPL have such a huge weight in the NASDAQ in the first place?
  • Reply 26 of 53
    addicted44addicted44 Posts: 821member
    Ummm.....the only people who will be selling AAPL because of this are those who are REQUIRED to sell AAPL because they are indexed against the NASDAQ100.



    This is a great buying opportunity for others.
  • Reply 27 of 53
    rufworkrufwork Posts: 128member
    Quote:
    Originally Posted by astra4 View Post


    How could AAPL have such a huge weight in the NASDAQ in the first place?



    Because its value has skyrocketed in the last several years in a way NASDAQ didn't see coming.



    If the AAPL stock was worth 10% of the NASDAQ, and it doubled in value while others' went down, you've easily got AAPL at over 20%. See?



    These index funds essentially have one share of AAPL, one share of MSFT, etc. So when the value of the individual stocks go up and down, so does the index. But AAPL's done so well lately that its contribution to the NASDAQ index is out of whack. Note that bad stocks get taken off too if they're doing so poorly there's no real contribution any more, like when Citigroup and GM were taken off of the Dow index. What's happening to AAPL is A Good Sign if not A Good Thing for Apple.



    So it's actually a really good sign for Apple the company, but because of the way index funds work, it's going to take a hit as all those index funds essentially cash in their winnings. The downside for index fund owners? Their winnings go into Google and MS. ;^)
  • Reply 28 of 53
    timgriff84timgriff84 Posts: 909member
    Quote:
    Originally Posted by mdriftmeyer View Post


    Jesus H. Christ this has nothing to do with with devaluing Apple but everything to do with the NASDAQ 100 being less dependent upon Apple's stock and spread the difference across other stocks by intentionally requiring mutual funds investing in the NASDAQ 100 to have a small part of their fund in Apple and a greater portion across other blue chip stocks.



    In short, if you want to hold more of APPL you don't buy the fund but Apple directly.



    Thanks it wasn't until I got to your post that I could see any explanation of what this actually meant. The article was a bit useless, and all the first comments about devaluing stock we're obviously a load a crap.
  • Reply 29 of 53
    davidwdavidw Posts: 938member
    Fund managers aren't stupid. They're not going to all dump their shares of AAPL all at once so that they can sell it at a lower price. They got til May 2 to divest their AAPL holdings. They will sell to rebalance slowly as AAPL runs up for earnings. In the mean time they will pick up some cheap shares of AAPL today from those AAPL shareholders who don't know any better.
  • Reply 30 of 53
    maestro64maestro64 Posts: 4,415member
    Quote:
    Originally Posted by addicted44 View Post


    Ummm.....the only people who will be selling AAPL because of this are those who are REQUIRED to sell AAPL because they are indexed against the NASDAQ100.



    This is a great buying opportunity for others.





    This is true, however, there are couple of things that could happen. keep in mind Fund which are required to hold apple because they are an index fund will hold less making more shares available on the market. Econ 101 teacher you price is a function of supply and demand and if there is more supply prices will drop. The only question will those who buy will they hold and if they do they could reduce supply driving price back up.



    The reason Apple's price is high is because the demand is higher than the supply more people want to buy than the amount of share available at any given time.



    The part of the reason apple price goes up and down wildly is because of fund manager who from time to time dump shares or buy shares in large amounts to meet there internal goals for their fund.



    In the long term I do not think this will affect Apples price but it is going to take time to recover from this since there will be lots of funds looking to sell apple stock and probably not as many willing to jump in.



    For those who are wishing for a split, are you nuts, stock splits only devalue a company. It makes each share you own worth less put lots more stock in the market, read the above again to understand.
  • Reply 31 of 53
    astra4astra4 Posts: 46member
    Quote:
    Originally Posted by rufwork View Post


    If the AAPL stock was worth 10% of the NASDAQ, and it doubled in value while others' went down, you've easily got AAPL at over 20%. See?



    [...]



    So it's actually a really good sign for Apple the company, but because of the way index funds work, it's going to take a hit as all those index funds essentially cash in their winnings.



    The other question is how much of AAPL is held by index funds...



    But whatever, the fundamentals remain the same and so I'd expect this hit to be temporary, until the funds have adjusted their positions.



    After that, everything returns to normal :-)
  • Reply 32 of 53
    stevetimstevetim Posts: 482member
    I wonder if apple will move over the NYSE? or another exchange? I sure would after this.
  • Reply 33 of 53
    Quote:
    Originally Posted by rufwork View Post


    Because its value has skyrocketed in the last several years in a way NASDAQ didn't see coming.



    If the AAPL stock was worth 10% of the NASDAQ, and it doubled in value while others' went down, you've easily got AAPL at over 20%. See?



    These index funds essentially have one share of AAPL, one share of MSFT, etc. So when the value of the individual stocks go up and down, so does the index. But AAPL's done so well lately that its contribution to the NASDAQ index is out of whack. Note that bad stocks get taken off too if they're doing so poorly there's no real contribution any more, like when Citigroup and GM were taken off of the Dow index. What's happening to AAPL is A Good Sign if not A Good Thing for Apple.



    So it's actually a really good sign for Apple the company, but because of the way index funds work, it's going to take a hit as all those index funds essentially cash in their winnings. The downside for index fund owners? Their winnings go into Google and MS. ;^)



    Thanks for this clarification. We "stock market know nothings" really appreciate it!
  • Reply 34 of 53
    Quote:
    Originally Posted by DavidW View Post


    Fund managers aren't stupid. They're not going to all dump their shares of AAPL all at once so that they can sell it at a lower price. They got til May 2 to divest their AAPL holdings. They will sell to rebalance slowly as AAPL runs up for earnings. In the mean time they will pick up some cheap shares of AAPL today from those AAPL shareholders who don't know any better.



    Exactly, that is why you don't need to buy right away. Any strength in AAPL will be seen as an opportunity to sell, so they can balance their portfolio to match the NASDAQ. I suspect that their will be a sell off after every up day until the exchange funds are able to balance their holdings. I would expect the stock to hover around whatever today's closing price is for a couple of weeks. However, I'm not an expert in these things (and I don't think the experts are even that good at predicting the market), so I could be very wrong.
  • Reply 35 of 53
    damn_its_hotdamn_its_hot Posts: 1,184member
    Quote:
    Originally Posted by addicted44 View Post


    Ummm.....the only people who will be selling AAPL because of this are those who are REQUIRED to sell AAPL....



    Well and bozos of course that panic at something like this - I do totally agree that this is a great buy opportunity to make some fair gains. Then the starts here please.



    Apologies for the weak ref to Jimi's classic Purple Haze.
  • Reply 36 of 53
    damn_its_hotdamn_its_hot Posts: 1,184member
    Quote:
    Originally Posted by stevetim View Post


    I wonder if apple will move over the NYSE? or another exchange? I sure would after this.



    How can you move to a place you already are "at" (I guess). Encouraging to know that there actually people that know less than I about financials.



    Bought at $18.50 near Steve's Return time - how sweet it is. I just couldn't miss it again after missing in 1984 - still kick myself about that-I was young but I KNEW what was gonna happen and I didn't give a shit - my misspent youth.
  • Reply 37 of 53
    ltmpltmp Posts: 204member
    Quote:
    Originally Posted by joshdean View Post


    Notice how the first posters are non-investors? The rest of us are too nauseated to weigh in. I wonder how long it'll be before Apple returns to its current valuation? One month? Two months?



    I'm actually happy about this. I'm heavily invested in AAPL, but I bought, and have continued to buy, planning to hold onto it for at least several more years.



    This means that the shares I bought yesterday will lose in the short term, but that doesn't really matter to me.



    I'm going to keep a very close eye on it's value, and plan to buy another 25 or 50 shares if it drops down to the $320 range.



    I still think AAPL will hit $450 by the end of the year.
  • Reply 38 of 53
    damn_its_hotdamn_its_hot Posts: 1,184member
    Quote:
    Originally Posted by Mynameisjoe View Post


    However, I'm not an expert in these things (and I don't think the experts are even that good at predicting the market), so I could be very wrong.



    The best advice I ever got was from Sir Paul McCartney's future father-in-law when asked he told him to buy what he knew so he bought the catalog. Damn good advice.



    Of course the best rule is always buy low, sell high.



    Edit: I did not intend to make it sound like the advice was first hand. I read it in an article Many, many, many moons ago.
  • Reply 39 of 53
    stevetimstevetim Posts: 482member
    Quote:
    Originally Posted by Damn_Its_Hot View Post


    How can you move to a place you already are "at" (I guess). Encouraging to know that there actually people that know less than I about financials.



    Bought at $18.50 near Steve's Return time - how sweet it is. I just couldn't miss it again after missing in 1984 - still kick myself about that-I was young but I KNEW what was gonna happen and I didn't give a shit - my mis-spent youth.



    It is not common for companies to move to to other exchanges, but it happens more than you think. Some companies feel one or other exchange will get them a better return.



    $18.50 was a good buy
  • Reply 40 of 53
    anantksundaramanantksundaram Posts: 18,886member
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