Editor’s Note: This post is by Matt Hedgepeth, a friend of mine who is about to graduate from the University of Memphis with a degree in MIS and a minor in finance. He’s my go-to guy to talk to about numbers.
About 12:45pm (CST) today, I got an alert from my broker that Apple Inc. was suddenly down about 1.5% during intraday trading already. Knowing that there was specifically no reason (is there ever?) for the markets to be awry today, I immediately checked on the stock. It seems that Apple did experience a flash crash of some sorts and shaved about 10 billions dollars off of market capitalization in a matter of about 4 minutes before it rebounded slightly.
I was not alone in thinking: “What was that all about?” Of course, analysts are saying this might be the result of a Steve-Jobs-is-in-the-hospital rumor.
But I’m not here to speculate about that.
Another reason that this might be attributed to is the low Verizon iPhone lines that were reported today, but honestly, that is a non-issue when it relates to such a flash crash like this. Even when Google announced yesterday that its Android platform experienced an increase in market share, Apple didn’t even move.
We are in a new world of trading where if a trader hears this or a hedge fund manager hears that and makes an assumption, they can simply execute a few trades. This can create a chain reaction, which can end up causing a flash crash in a matter of minutes. If you’re a smart trader, and you’re holding Apple, do yourself a favor: stay smart, always monitor your shares and know the company you’re trading, and don’t believe every rumor you hear out there. You could end up losing a whole lot of money if you trade on every Steve Jobs rumor.
Remember, as my good friend Stephen Hackett constantly reminds me: Apple is bigger than Steve Jobs. He’s right. They’re much bigger.