Apple closes at $450; blame the analysts?

Apple closes at $450; blame the analysts?
Ever since Apple traded at $550, we pointed out the deteriorating technical condition of the stock (heck, we also pointed out the bullish "Island Reversal" on RIM $2 to $3 dollars lower), did Wall Street analysts listen? No! That is because they are trained in fundamental analysis which, as we pointed out before, requires them to waste time on researching how many Apple iPhones Apple will sell in a given quarter, guess what the margin will be, and estimate earnings . A Technical Analyst uses charts and once Apple closed under both the 50 and 200 day moving average as we showed you, it was lights out for the stock.

But some Wall Street analysts made some decent forecasts. These are not the guys who have a $1111 target on the stock, and Forbes figured out who should get kudos in the Wall Street community. Here's the rub though, even though these guys might have called part of the earnings release correct, we really didn't see any of them tell clients to dump the stock in advance of this decline, which actually started on September 21st which was the day the Apple iPhone 5 launched. On that day, Apple's shares peaked at $705. Buy on the rumor, sell on the news anyone?

According to Forbes, Raymond James' Tavis McCourt forecast the $13.81 EPS number precisely. Did he tell clients to sell early? No. The best overall performance came from an analyst well known to PhoneArena readers, Sterne Agee's Shaw Wu. According to Forbes' chart, Wu was off only by only .55% in predicting Apple's revenue for its fiscal first quarter, and was off by 3.90% in earnings. Gene Munster finished tenth, off by 2.51% and 5.43% respectively. Who finished last? Nicolae Mihalache of Traderhood whose revenue forecast was off by 20.13% and missed earnings by 15.82%

But here is the fallacy about the whole thing. As we pointed out, an analyst can forecast Apple's earnings and revenue down to the exact cent. If he did not get his clients out of the stock prior to the drop, what good is the forecast? Traders and investors profit from stock movement. Anything else is like a carnival game where the "carny" guesses your weight.

source: Fortune


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