The absurdity of Wall Street

Fri, Mar 6, 2009

Finance, News

Can Wall Street get any more ridiculous?  Today, JP Morgan analyst Mark Moskowitz lowered his earnings estimates for Apple and also lowered his projection of iPhone and Mac shipments, citing turbulent economic conditions.  This earnings adjustment sparked a huge sell-off in Apple shares, with the stock dropping over 5% to $83.74 a share.  What makes this so ridiculous is the fact that Moskowitz lowered his earnings outlook on Apple by only 1 penny.  Yes, that’s right, $.01 led to an abrupt 5% sell-off in Apple shares.  Moskowitz also changed his price target for Apple to $100, down from a previous target of $102.  And this puts Wall St. into a frenzy?  Seriously?

Jim Goldman notes:

These revisions by JP Morgan are noteworthy if only because they are so very slight. And yet action in Apple’s shares is so very dramatic. For no reason other than downward momentum and reactionary traders once again selling first and then not even bothering anymore to ask questions later. Geez, get a clue.

Trends still favor Apple. Along with its cash, its innovation, and what apparently is the consumer’s insatiable demand for anything with that little piece of fruit on it. Today’s action is overdone.

Amen.  The reality is that the economy will have an effect on Apple’s bottom line, but shouldn’t Wall St. traders already be aware of this?  Shouldn’t this already be baked into the perception of the stock?  It’s amazing how an analyst saying something that everybody already knew can cause such a huge selloff.

Reuters has more on the story over here.



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