Here is a cut-and-paste from CNN report.
Earlier we noted that with Apple shares falling below $425, it was another feather in the cap for investing god Jeff Gundlach, who predicted last year that Apple would hit this level in 2013.
It's important to note what a good call this was. Back at the time the stock was close to $600.
We asked Gundlach, via email, whether he had any additional thoughts on Apple's remarkable decline.
His short reply is that the decline is a milestone for market theory:
AAPL over the last six months offers a textbook case study in market behavior and effectively debunks efficient market theories. The weakness is all the more remarkable because it has occurred within the context of a strong overall US stock market. SPX up 5% since September 19, 2012 and AAPL down 40%.
The efficient markets hypothesis basically states the markets are always accurately factoring in all relevant information about a security, and are pricing said security "correctly."
From his viewpoint, this proves that markets are not perfectly rational and efficient digesters of news and data, but rather the product of herds and behavioral idiosyncracies, at least somtimes. Apple is a shining example of how it all works.
Both technicals and fundamentals are important. Yet, the most important thing is, what financial institution wants to do with the stock. If they want it up, it is up; if they want it down, it is down. They have the resources to manipulate market price with estimates.
We're all experts on what has already happened. The question is when will the irrational, inefficient, and imperfect market work to aapl's advantage again through the herd's bullish idiosyncrasies? Gundlach? Gundlach?
Sentiment: Strong Buy
No, you are iWrong!
Market DOES digest news and data rationally and efficiently!
Here is what is being digested:
1. Steve Jobs is dead! no more innovations. Steve Jobs used to be the vice president of product innovations in Apple.
2. iPhone market is saturated, with not only its own products, but also competitors like Samsung, Huawei, etc.
3. Competitiors' products are better and much cheaper, who doesn't want cheaper products, unless you are iDiot.
4. Apple has been resizing its iPad from standard to mini-iPad, that is a very stupid thing to do, people don't want a mini-iPad, because the mini one is iPhone, that's the miniest iPad. iPeople have already got it.
5. Almost everybody is in a 2-year contract with carriers, few customers left in the market for iPhones.
6. Apple is suing Samsung for frivolous reasons, exposing its weakness.
7. Samsung will continue to develop better products and sell them cheaper, destroying Apple.
8. iWatch is simply stupid!
9. Try iWok and iCook your iHole, stupid!
If you put Samsung or any other maker into your reasoning items, and ask yourself why should it be a "sure deal" that Samsung/others will/must be doing better than Apple in this market conditions, you will know how "efficiently" and "rationally" the market is.
(1) don't have Steve Jobs
(2) the market is saturated with iphone, google phone and ms8 phone
(3) Apple may push out a check phone
(4) now everyone has to face a Ipad and a Ipad mini, no matter which one the customer really wants/prefers
(5) everyone is in a 2-year contract with the carriers, few customers left in the market for a smartphone
(6) you may get sued frivolously, if you try to follow Apple's design
(7) anyone else may continue to develop better products and sell them cheaper
(8) iWatch is coming, though it's stupid, but that may be a hit, if you don't have one
It has nothing to do with fundamentals and technicals. Big fishes may use the technicals to pick the best cut-in timing, but it's not a "fundamental" trigger, technicals are just tools. Small fishes have to smell big fish's direction to make money, unfortunately it's hard to smell when in the water:-)
Technicals show what the market is actually doing. Fundamentals don't. If A change in fundamentals changes the technicals, it will be reflected in the change of technicals. If it doesn't, it will be reflected in the technicals as well. All I am saying is technicals reflect more than just fundamentals. It also reflects the market psychology and traders emotion. Therefor, trading decisions should be based on technicals and not fundamentals.
what you have is the future is driven by "events" , we are event-less presently, and Apple PO'd the analyst changing the way they do estimates, plus they made them work harder with the 13 vs 14 week quarter--so they are all dumping
Sentiment: Strong Buy
``The efficient markets hypothesis basically states the markets are always accurately factoring in all relevant information about a security, and are pricing said security "correctly."
remember how apple reacted to a wsj article quoting month old news on Asain suppliers cutting parts orders?