Hubery, Morgan Stanley, and Schizophrenia

  • Posted: 27 May 2009 02:24 PM

    I am weary of trying to predict where Apple will be, pricewise, at a given point in the future.  Yes, it should be fairly easy to do given growth trends, Apple’s fundamentals, and Apple sales analysis.  We at AFB even predicted the total number of iPhones sold last year with pretty fair accuracy.  Some of our members have been much closer on earnings statement figures than the pros.

    The problem is stupidity compounded with ignorance.  A great example this quarter is Katheryn Huberty, working for Morgan Stanley as an analyst (why, we will never know).  Facing a wall of high expectations for WWDC early in June, a rehash of Steve Jobs’ health issues and a possible/probable SJ retirement or role diminishment at the end of June, as well as the usual Apple FQ3 doldrums one would think Apple’s stock price would be fairly quiet, with maybe some excitement around WWDC before falling back into its usual summer slumber.  But no!  Huberty seems to have awakened from her stupor long enough to see that her former price target of $105 for Apple seemed a bit out of date, with the price hovering around $120 for the past few weeks.  Like a slumbering security guard awakened suddenly from an unauthorized nap, Huberty has now said that Apple will soon be at $180.  What happened between last week and this, Katy, to warrant a near doubling of the Apple price target?  Were you merely asleep at the switch in the past, or are you now experiencing baseless over-exuberance?  Surely the two positions are not compatible.  One had to be WAY off, and Katy, analysts shouldn’t be paid to be “way off”.

    Of course the herd of uninformed investors sees a jump in price target for Apple of nearly double with the name of a major investment firm attached and they stampede.  The problem for me is that Huberty could have a fit of depression tomorrow and change her price target to $95.  How am I, as an informed investor, to proceed?  How can I have any assurance that there is anything driving the market but pure chance when this kind of crazyness is rampant?  I might as well take my account balance to Las Vegas and bet it all on black.

    There was a time that the informed investor had an advantage on the uninformed investor and your profits hinged largely on the acquisition of knowledge.  Now your profits depend on predicting which direction the incompetent and/or dishonest analysts and brokers will send the herd running.  I’m weary of it, folks.

         
  • Avatar

    Posted: 27 May 2009 03:06 PM #1

    I’d bet that’s MS dumping their AAPL right now.

    Signature

    The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled.

         
  • Avatar

    Posted: 27 May 2009 03:44 PM #2

    Zeke - You express my frustration completely. You couldn’t be more right.

    Signature

    “the market can stay irrational longer than you can stay solvent”
    -John Maynard Keynes

         
  • Avatar

    Posted: 27 May 2009 07:31 PM #3

    This is not the first time that Huberty has pulled a change in price target out of the bag that was significant to move AAPL, just at the time when all the technicals are screaming for a move in the opposite direction.

    AAPL was all set to continue falling this week, but her upgrade wrong-footed the shorts causing a very strong covering rally. It used to be Citigroup that set price targets based on their own book, but it looks like MS have taken the lead in this of late.

    Signature

    Throughout all my years of investing I’ve found that the big money was never made in the buying or the selling. The big money was made in the waiting. ? Jesse Livermore