If ever there was an industry that required more government oversight, it’s the stock market. What a game. Technical indicators be damned. A stock’s performance often has little to do with financial performance, and much to do about expectations which are all too often based on emotion, not math.
A prime example is Apple’s recent quarterly results. The company’s numbers (the math), disappointed Wall Street’s expectations (emotion), and the stock got hammered like a tree frog running from Paul Bunyan.
Apple didn’t miss their numbers. The company’s financials came in slightly higher than their projected guidance. The problem with Wall Street’s gurus is expectations, not Apple’s math.
That can’t be the only reason AAPL is down about 200 points from the record high, can it?
No. There’s more at play here than Apple missing Wall Street’s crazy projections, which appear to be less analysis oriented than suppository inspired.
AAPL started the year at about $400 a share, so even with the recent downward trend, Apple has help plenty of investors make a bucket of profit (not just this year, but in recent years).
For every stock sold, there’s a buyer, so someone is buying AAPL even on the way down. Why?
Two words. Fiscal cliff.
Stockholders are far more emotional than analytic, and with the U.S. government floundering around and doing everything seemingly possible to avoid a financial or political agreement on taxes, expenses, and revenue, the market has become infused with uncertainty (emotion), so selling off a highly profitable stock now is far less risky than getting hammered with higher taxes on all that profit next year.
Is it that simple?
I think so. Regardless, we’ll find out within the first month or so of 2013 when Apple releases their latest financials, and the market has had time to digest what the government isn’t doing.
For Apple’s part, there are limited choices. Be patient. Stock prices go up and stock prices go down, and sometimes there isn’t anything a company can do to affect either direction. Patience may also be rewarded when investors calm their nerves early in 2013 when a government financial deal is reached (or, kicked down the road). And, of course, Apple still needs to make great products that fill the stores with eager buyers. As it is, no one else is doing that these days.