HOW TO PROFIT FROM THE NEW APPLE IPHONE RUMORS $AAPL $GOOG

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The Apple rumor mill has shifted into high gear. Historically, this is a normal pattern prior to Apple’s new-product launches. The rumors range from the names to the colors of the new iPhones.

The big buzz Monday was that Apple will introduce a gold-colored phone. For the gadget lovers, the rumors are an endless source of entertainment. For the astute investors, the rumors leading to Apple product launches have historically provided significant opportunities to generate profits. Here is how to generate profits from iPhone rumors.

The nature Of Apple stock

The stock market does not move on absolutes, but moves based on the differential between expectations and the reality. This applies to all stocks, including Apple.

The Apple rumor mill sets the expectations. Expectations are quickly discounted in the stock price. When new rumors are better than the previous expectations, the stock price rises. On the other hand, when the new rumors paint a less-rosy picture, the stock price falls.

Medium-term examples

The consensus of the rumor mill prior to the release of iPhone 4S was that it would be the phone with incremental hardware improvements but no major new features. The reality turned out to be quite different. Apple introduced iPhone 4S with the major new feature of a voice assistant called Siri. The reality was much better than the rumors. Most analysts found that the initial sales numbers of iPhone 4S were much higher than their estimates. Analysts were falling all over themselves to increase estimates. Apple stock took off on a parabolic move.Read more at MarketWatch

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