The analysis had something to do with big stock drops having three phases/waves, and that using some mathematical algorithm, you could kinda sorta predict the bottom, which in this dude's case for Apple was 318. Though, if earnings come back less than awesome, that shit's dropping like a rock.
The "actual" value of the company is what people are willing to pay per share for the stock times the number of shares. $500 is an opinion.
Well yeah, but you use various tools to get the value of a company and make a decision to buy it. I could say that Microsoft is only a $10 per share company; but it may never get to that point.
If everyone thought it was a $500 stock, you wouldn't be able to buy it because nobody would be selling at this price.
That's a bunch of bullshit. If someone bought 1,000 shares of apple when it was $200 ($200,000), then decided to sell off 50% of then when it was $500 ($250,000); you could make a $50,000 and still own 500 shares of a company valued at $500 ($250,000) Basically you are playing with house money. This happens all the time.
Not if you are a hedge fund. If you think you can take profit and find another company that will grow faster; you sell off and buy into another growth. Like I said "happens all the time"
Why would a hedge fund take a risk on some other company they "think" can grow faster when they "know" Apple is a $500 stock selling at $395? The whole point of a hedge fund is to "hedge" - and a $395 -> $500 sure thing is as good a hedge as there is.
Hedge funds are a different animal. They need to make huge profits to get their salaries justified. It's not wise for a hedge to go long for more than a year. That's why a hedge will sell off and put the money in another place with high growth. The value if the company is meaningless; especially when the company doesn't pay dividends.
If you say so. And a hedge fund's job is to HEDGE against losses while making a good return. So they'll buy puts against stocks that they own that are up. They lose on the puts, but it's insurance.
http://www.investopedia.com/terms/h/hedgefund.asp It's a common misconception that hedges only use shorts or puts. They have longs as well. They are just an aggressive investment company. They are active in huge profits. They will sell off to gain a huge profit, then if it drops enough; they will buy them back.
http://www.magnum.com/hedgefunds/abouthedgefunds.asp The primary aim of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive (absolute) returns under all market conditions. The popular misconception is that all hedge funds are volatile -- that they all use global macro strategies and place large directional bets on stocks, currencies, bonds, commodities or gold, while using lots of leverage. In reality, less than 5% of hedge funds are global macro funds. Most hedge funds use derivatives only for hedging or don’t use derivatives at all, and many use no leverage. (it goes on and on about minimizing risk, performing during volatility, performing will in up and down markets, etc.)
This is ridiculous. Like Denny said, the value is whatever people are willing to pay for it. If you state so emphatically that the "actual" value is $500/share, then you should be putting everything you have into long dated calls with a strike of $450-ish.
http://www.mercurynews.com/60-secon...-break-apple-stock-plummets-and-everybody-has Interesting theories about the sell offs
