How the stock market, and Apple's stock price, is manipulated by rumors

Last weekend a rather bizarre article appeared in the Wall Street Journal, one that claimed Apple was seeing weak demand for the iPhone 5 based on a couple of guys telling the reporter that screen orders for Q2 had been cut in half, one that original included a ridiculous 65 million unit figure that later disappeared, only to be echoed by Reuters a short time later, one that sent Apple's stock price tumbling -- again -- based on nothing more than unsubstantiated, illogical, incalculable rumor.

That it was the Wall Street Journal that published the story likely lent the story credibility it might not otherwise have enjoyed. A bunch of smart tech heads discussed the story on Branch.

Kevin Michaluk forwarded me the above video from 2010 where Jim Cramer elaborates on how he, and presumably others, manipulate BlackBerry (RIMM) and Apple (APPL) stock by spreading just these types of rumors.

I'm posting it here so I can link back to it any time and every time another one of these rumors surfaces.

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, Vector, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

How the stock market, and Apple's stock price, is manipulated by rumors

10 Comments

I think Apple needs to out with that TV fast. They need the next big thing to get there stock up.

Then what? The iWatch? And then the iCar? Apple can't play the "what have you done for me lately?" hit-driven game forever.

The Street sees Apple very differently than they see Facebook or Amazon, among others, and giving into that perception could be disastrous.

WSJ same as BI and SAI are payed by Hedge Funds for those kind of" Reports" very well... all they wants... is to sell tons of PUTS(sells options) and load tons of dirt cheap CALLS(buy options)... do not let them full you around... DUDES... there was a very similar article 2years ago...amazing how fast do people forget and trust again... Apple will report it's best QTR in history with over 60Bio in revenue... with over 30Mio iPads and over 30Mio iPhones... actually sold... and not just shipped like Some Skunk !!!

Come to think of it, becoming well-known on Wall Street, then spreading rumors, is maybe the best way to make money on stocks. Because every f-ing analyst and investor has access to exactly the same data. All things being equal, they'll all do the "right thing," acting according to game theory principles to minimize their losses and maximize their profits.

Stirring the pot, causing a sell-off or a run by spreading false rumors, is the name of the game. And you can only do that if you're a big name on Wall Street. And you only become a big name by guessing right, out of thin air, against all the other lemmings who guessed the same as everyone else. You need to become the next "rock star." And that's why there is so much oddball spin and bizarre predictions about AAPL. Everyone wants to be the next rock star analyst.

"Share prices aren't really based on how a company works.
It's all about how mass psychology works."
- Eddie Morra (Bradley Cooper, "Limitless," 2011)

Agree when something bad is said about apple sites like these post all kinds of stories trying to say things are alright. Rumor or not people can see what is going on without the need for the fanboyism from either sides

it's been reported ad nauseam. Not hear but everywhere else. that video is old and it was discussed at length all over right after the stock market crashed in 2008. It was even discussed on John Stewart. during the financial crisis he caught a lot of flack for not seeing it coming and this video was used to infer that all of wall street were cheats. Sadly, i think people liked to focus on cramer cause he's got a loud tv show but his stock picking show wasn't really why the economy tanked. In fact Cramer was one of the first really loud voices on tv calling for more regulation and ranting that the system was broken. It's ironic too that thats the video too since for a very long time Cramer was and possibly is (don't know don't watch his show recently) a huge Apple proponent. Regardless, this may be something new to imore readers but it's not new. It's also all to easy to claim every rumor is simply stock manipulation. It could be but that's extremely unlikely. And truth is some rumors will be wrong like some even on this site have been. And being wrong doesn't equate to manipulation plus short of a full investigation where you can find evidence of an SEC violation you're never gonna prove such a thing. Nobody hear has the capacity, authority, or reach to prove such a thing. All that can be done is to speculate when a story comes out, claim it's manipulation, then if by some miracle say "i told you" when there's an SEC conviction or fine. But short of that there is no way to distinguish whether the rumor is simply wrong. maybe they did decrease orders but for a different reason like they are going to a different manufacturer or building it themselves and the author doesn't know. Thus his concern is genuine but innocently wrong. This whole i'm going to post this so i can refer back to it whenever there's a stock rumor is silly. There are rumors all the time. I remember when i had a Palm Pre and there were rumors i that after 2 or 3 months on the market sales had dropped off a cliff and sell thru was down. Palm stock at some point peaked at i think around 17 bucks and dropped. Precentral.com users freaked out, claimed it was Apple manipulation. Turned out to be true. As were rumors that Best Buy had touchpads sitting on shelves that were not selling, As were rumors that Palm was losing so much money it needed to be taken over or it would fail. Yeah the stock dropped then too. Precentral in fact freaked out the entire time the stock fell. The claimed every rumor was false. They even screamed about how it was time to get in on the stock now, at $9, at $7, at $4.5. But the truth is the writing was on the wall when original pres stopped selling. People were right to bail at $14. I think it's fine to say, this rumor isn't valid then attack the pillars of the argument. I think it's lazy to simply link to an old video brings up the companies name but isn't talking about the specific situation.

Curious how none of that seemed to bother iMore editors when it was all positive, making a medium sized gadget maker one of the most valued companies in the world.

I call all this correction, and a lot more is needed. In no normal universe Apple should have more market value than Exxon or Shell, to name a few, that deal with essencial commodities, and not luxury goods.