It's no secret here that we're Apple fans at Firewheel. Apple makes quality products that we're proud to use. They may not always be perfect, but they're generally much better than the alternatives.
I'm also a fan of Apple stock. For the record, I do not have a lot of money in the market, nor do I spend a lot of time trading. I can count on two hands the number of companies I've bought stock in. Over the years I've lost money on Gap, Portal Player, and Enron (no worries, I got out early... heh). I've made money on Home Depot, Whole Foods, and Apple. Gratefully the gains outweigh the losses at this point, and my biggest gainer has been Apple.
I don't day trade, and my focus is longer-ish term. But I do watch Apple's price on a daily basis. And boy has it been interesting lately.
In case you didn't know, Apple has been under some scrutiny about some options that Steve Jobs received that were reportedly backdated (a no-no). However, word is that Jobs actually never exercised the options, and thus received no financial benefit. So this should be a moot point. In fact, I hope it's a moot point. Obviously Apple ships quality products that sell—unlike Enron who did a very great job of selling air. Even so, I guess the SEC will have the final word here.
What intrigues me more though—far more than the potential of an options scandal at Apple—is the semi-blatant manipulation of Apple's stock price by so-called stock analysts. Let's take a look, shall we?
On December 12 Forrester Research released a report saying that Apple's iTunes' sales were "collapsing." Never mind that Apple is unloading more iPods than ever and that iTunes recently moved into the top 5 music retailers period. My personal purchases through iTunes have greatly increased this year. Maybe I'm an anomaly?
But we all know better. The report was flawed. The data was sketchy. But the damage had been done. Before the refuting data could hit the newswire, Apple's stock had dropped about $3 a share because of questionable report.
The following day Apple issued a press release and several other analysts countered with data that showed iTunes sales were not collapsing, but going gangbusters. Within 48 hours Apple's stock had regained that $3 a share and even put a little extra change on top of that.
Nice.
Somebody had a great opportunity there to pocket some cash with a quick, substantial two-day stock swing. Especially if you knew in advance that a damning (but flawed) report was about to hit.
Apple's stock has the perception that it's too good to be true. In fact, Apple's recent business history is almost too good to be true (failing tech company with overpriced products revived and made relevant by prodigal enigmatic leader). It's very easy to look at Apple stock like a card house. We're all just wondering when then party is going to end.
And this makes it very easy to throw some ugly story out there to down the stock for a few days, knowing that you'll make a tidy profit a few days later once Apple weathers the storm. I'm no investigative reporter here, but honestly I have to wonder if the Forrester guys have their broker on the phone minutes after they publish a report like that.
Now we have Take Two: The Options Scandal.
Two days ago Apple stock was hammered again by a report from Law.com that Apple falsified documents related to their back-dated stock options. Apple stock dropped overnight about $4 a share (to $78). Today Apple has issued the results of investigations clearing Steve Jobs of any wrongdoing. Apple stock is now trading at $85 this minute. A $7 per share swing in 48 hours.
Once again bad news followed within a day by good news. Somebody just made a boatload of cash. It pays to be in the know.
It would be nice to simply invest in a dynamic company whose products you believe in. With Apple it seems you get an extra slice of drama as well. I doubt I'll be selling my shares anytime soon. I'm content to have my fun for a bit longer. But someday when we all hear that the Forrester guys pocketed some serious coin on December 13, 2006, I won't be surprised.
