AAPL
⚠️ Apple, along with other large-cap tech stocks (‘Magnificent Seven’), disproportionately benefits from automatic inflows into index funds and ETFs, regardless of fundamental value.
🤔 This constant buying pressure, driven by passive investing trends, may be creating a ‘passive bubble’ effect, potentially inflating Apple’s stock price beyond reasonable valuations.
📉 Even active managers feel pressured to own Apple despite potential overvaluation, fearing underperformance if they don’t hold the stock, further contributing to price support unrelated to fundamentals.
@adriarivero:
“Imagine you’re an active fund manager. Everyone is buying Apple. You think it’s very expensive, but if you don’t buy it and it skyrockets, you look bad compared to your benchmark index, your clients, and your boss. So, what do you do with that pressure? Bet against everyone and the market, risking your job? Probably, you jump on the bandwagon, justifying it by saying there’s great momentum in the stock. The active investor, who should be the guardian of rationality, ends up behaving like just another follower. Even though passive funds don’t directly set prices, their continuous flows push active investors—those who should set real prices and prevent bubbles—to act irrationally. This forms a chain where everyone pushes in the same direction, and prices rise beyond their real or reasonable value.”
Watch the exact part of the video where @adriarivero talks about Apple here:
Watch the video on YouTube
Read more articles analyzing Apple (AAPL) at the provided link. AAPL stock.
