Chinese Stock Collapses 98% in Hours After MSCI Flip-Flops: How Index Providers Saddle US Pension Funds with Stock Scams

Despite my assurances that “Nothing Goes to Heck in a Straight Line,” a Chinese stock just did.

I’m infamous for saying that “Nothing Goes to Heck in a Straight Line.” This piece of immortal wisdom even made it onto our official beer and iced-tea mugs. But today, I was proven wrong. A Chinese stock just went to heck in a straight line.

ArtGo Holdings, a Chinese company that mainly quarries marble and processes it into blocks and polished slab and that has recently been trying to expand into Chinese real estate with funds raised by issuing more shares, is now infamous because its shares, traded in Hong Kong since 2013, became this year one of the best-performing stocks in the world, with a 3,800% surge, from 0.38 Hong Kong dollars on January 2, 2019, to HK$14.8 at the close on Wednesday, giving it a market capitalization of HK$45 billion ($5.6 billion). And today the stock collapsed by 98% (red line to heck) to HK$0.30 before trading was halted a tad too late:

The surge of the stock from near nothing to $5.6 billion came as two top index providers – FTSE Russell and MSCI – decided to include the stock in their indices. And the collapse came when MSCI backtracked last night.

On November 7, MSCI announced that it would include ArgGo into its benchmark indices affective November 27. Yesterday evening, MSCI U-turned and  announced these crushing words:

Following further analysis and feedback from market participants on investability, contrary to what was announced on November 7, 2019, MSCI will not add ArtGo Holdings to the MSCI Indexes as part of the November 2019 Semi-Annual Index Review.

MSCI will continue monitoring ArtGo Holdings. The security will not be added to the MSCI Indexes until further notice.

Even rumors of an inclusion into the benchmark indices by MSCI or other index providers can drive up share prices, particularly of these types of tiny Chinese stocks because funds that track these indices – including funds in the US Federal Employees Retirement System and other public and private US pension funds – end up having to buy the shares in order to track the benchmark indices.

Speculators front-run the inclusion of stocks into benchmark indices. This front-running drives up the share price and market capitalization. When the index provider then makes the announcement of a coming inclusion, funds that track that index start buying. Many indices use market capitalization as a criterion for inclusion, and the more this market cap gets driven up, the more indices include the shares, which drives up market cap even further. It creates a stock built on vapor.

These frontrunning speculators and funds that tried to get in early got wiped out today with their ArtGo bet.

Even as shares skyrocketed 3,800% this year, the company’s revenues were already in a steep death spiral. In 2017, annual revenues were 1.27 billion Chinese yuan. In 2018, annual revenues plunged 58% to CNY 537 million. In the quarter through June, revenues collapsed by 94% from the same quarter two years earlier.

By the time revenues had collapsed in June, shares began to skyrocket, doubling from HK$1.00 on June 2, to HK$ 2.2 on June 28 and to HK$4.00 by August 12. By September 13, they hit HD$9.48. And then collapsed.

That big first spike in share price from June through mid-September occurred in the run-up to ArtGo being included in the FTSE Global Equity Index Series China Index by FTSE Russell, effective September 20.

Rumors of this inclusion caused the large-scale buying by front-running speculators and funds. As the inclusion date approached, and funds that were tracking the index had added the stock and stopped buying, front-running speculators dumped the shares, and the price plunged from HK$9.48 to HK$2.55.

This shows just how much of a scam the inclusion of a tiny stock like this by China-befuddled indices can be.

Alas, on October 3, the shares began to skyrocket again, this time on rumors that MSCI would include them in its indices. The confirmation from MSCI came on November 7. From October 3 through November 20, the shares skyrocketed 480%. And today, well, they went to heck in a straight line.

This shows the impact that these index providers have on stock market bubbles, and specific stock bubbles, no matter how idiotic. They promote this idiocy based on the principle that market cap begets more market cap — even if revenues collapse, as they did in ArtGo’s case. And when it all blows up, it’s the beleaguered pension funds and their beneficiaries that eat dust. It’s a good thing that MSCI U-turned on its decision. But it’s not a good thing that these index providers keep getting bamboozled by the lure of ridiculously inflated market cap.

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  99 comments for “Chinese Stock Collapses 98% in Hours After MSCI Flip-Flops: How Index Providers Saddle US Pension Funds with Stock Scams

  1. Unamused says:

    A pump-‘n-dump scheme.

    It’s too bad. The SEC already has its hands full lining up a putt on the 4th green for another double bogey.

    • doe dimblebrain says:

      BABA is up 2% while the market is down, and LYFT, can you believe LYFT has gone to the moon.

      Why pray tell does WOLF always focus on these obscure loser storys?

      • Wolf Richter says:

        doe dimblebrain,

        “…and LYFT, can you believe LYFT has gone to the moon.”

        Hahahahaha. That’s hilarious. You must be living out in the sticks without internet access so you can’t look up stocks. But then wait… how did you post this comment?

        Lyft is down 43% from when it first started trading. So where exactly is your moon? Beneath the surface of the earth?

        I have written plenty about Lyft, including on the first day it started trading:

        And more here:

        Just because you didn’t read it doesn’t mean I didn’t write it.

        • Hawkins says:

          Lyft is the UNICORN of all Unicorn’s on a Musk like meteoric rise, I mean this all can’t get any more insane.

          The market is down, portfolio’s went up because of the LYFT insanity :)

          We all know you have written about LYFT, the point is/was that on a day when HK stocks are collapsing the US unicorns are going to the moon :) Go figure

        • Rat Fink says:

          Doe is ….a:

          1. Moron

          2. 12 years old

          3. a paid LYFT troll

          4. All of the above

          If you chose 4. you win a date with Adam Neumann’s beautiful wife.

        • IdahoPotato says:

          “So where exactly is your moon? Beneath the surface of the earth?”

          I sprayed tea all over my keyboard.

      • Javert Chip says:


        Well, for one thing, the context of these stories (effectiveness of Chinese regulators, impact of index funds) is highly educational.

        I can’t even begin to decipher your “Lyft has gone to the moon” bleat. Put the bong down, rest for a few hours, eat a brownie, then give forming cogent thoughts another try.

    • Mike says:

      Amen. The pension funds always seem to get it in the end. Given the level of fraud in China’s companies (which admittedly also exists to a lesser degree in some other countries), prohibiting indexes and US entities from purchasing Chinese shares is starting to look very smart.

  2. exiter says:

    Front-running speculators…

    Front-running is not speculation when the front-runner is the announces [or is privy to] the “news” that precedes the event.

    • chillbro says:

      Insider trading is only illegal if you are caught

      • Saltcreep says:

        Nonono, chillbro, that’s not how the law ostensibly works. Avoiding getting caught by oversight bodies that don’t want to catch anyone significant doesn’t formally make it legal.

        The way the law actually works is that loads of stuff is illegal, or can at least be interpreted as being illegal. Real legal sanctions, however, are generally only applicable either if you’re poor or if you your actions have inconvenienced some more powerful entity.

        • NBay says:

          “Justice” is just a commodity for sale to the highest bidder. I first saw it in HS. A local rich landowner had been fighting with his wife for a long time. Small town/area. Everyone knew it. She was found shot. The County “Justice System” decided it was a transient who had been “seen” hanging around that did it. Didn’t even bother to dig some poor bastard up. Case closed. Legal fees, favors, other monies, etc, were all private and never known.
          “Legal system” works the same on all levels, only the cost changes.

        • Saltcreep says:

          I knew I should have added another possibility for having to face punishment: Being identified as a suitable scapegoat for a crime that is too public and blatant too overlook.

          Check out the timeless ‘The smith and the baker’ by Johan Herman Wessel (where they execute an old and frail baker for a murder, instead of the actually guilty smith, since the village only has one smith, but two bakers. But justice must be seen to be done!) .

          Here is a link to a translated version:

  3. 2banana says:

    Doesn’t the Russell and MSCI have auditable standards and fundamentals for a company to be included in their indexes?

    Or would that be racist?

    • NBay says:

      Since you appear to be quite sensitive to that label, what do you think?

    • Dale says:

      The SEC has already stated that financial reports of Chinese and Hong Kong stocks generally can’t be trusted.

      If MSCI can put them into an index, they should also include the prices of crack and meth.

  4. sunny129 says:

    With all the negative news – no more tread deal in 2019, unlikely further rate cuts this year (may be next year) and all the mega economic indicators flashing red, the indexes have never GO DEEP RED, atleast at the of the day!

    It looks like being propped by vested interests including PPT! How long this game of intervention will go on, by whatever, is any one’s guess! Mkts are waiting another jawboning by ‘turnaround’ in the trade deal, by a tweet from Trump!

    • jimmy lai says:

      PPT is the only possible explanation why LYFT went moon-bound today.

      HK announce that all the US Senators, Congressman, … that voted for ‘human ights” bill in DC, are now forever banned from landing in ASIA.

      I will say this about the USA, at least their consistent, they backed their coup in HK, all the way to the end.

  5. TonyT says:

    IIRC, wasn’t Snap trying to do something similar (have a big enough IPO that it would be included in the index funds)?

    I’m hoping Snap and similar We-scams go out of business.

  6. Cyclops says:

    Marble slabs make terrible kitchen counter tops. You have to seal the slabs every 3 months and it stains very easily!

    Granite countertops are much better and hardy!

    Marble is soft and easy to carve the stones probably with 3-D technology the Chinese trying to automate everything with robots!

    The entire stock market is rigged by the 1% for the 1%.

    • Gandalf says:

      I’ve had both marble and granite. Natural stone of all types are porous and prone to unremovable stains from red wine, coffee, etc. I love the look of marble, but it is also prone to cracking along its natural veins. Granite is stronger, but always comes in speckled or maze like patterns – makes it challenging to find small things on a countertop.

      The solution? Engineered quartz! Not the cheap cultured marble, but really good stuff that looks very much like natural stone and terrifically durable. I have Caesarstone

    • robt says:

      I still like stainless steel, especially after a few years of distressing.

    • Ethan in NoVA says:

      I want countertops made of polished asteroid.

  7. NBay says:

    I’m glad you brought this up. I have had doubts about all index funds for a long time for these reasons and others. They seem simple, but there are many places for greedy fingers in the pie. Since losing on them in the FC, I have gone to all CD (for local money and to prevent nickel and diming) and T Direct (always hold to maturity, since they no longer “Sell Direct”).
    Yeah, it’s hard to build a decent yielding ladder, but I try to minimize loss, and offset by downsizing lifestyle. Most all of my “bucket list” was completed by mid 30’s, anyway, now it all is.
    I never see I-bonds mentioned here, but for us very low level “investors” they seem like a good deal so I have several of them, all money I figure I can pass on to nieces, nephews, who are facing a much nastier world than I ever did. I am fortunate that I can play keep what I have, rather than try to get more.
    I’m 72, but I totally get “OK Boomer” (or maybe am among those who will admit it, and the rest of my cohort are an total embarrassment to me…total planetary pigs).

    • IdahoPotato says:

      I have been contributing anually to I-Bonds for years, but my ex-financial advisor was always trying to steer me away from them. You rarely hear about them on investment websites or Morningstar where they are always pushing bond funds with high fees.

      • andy says:

        So do I-bonds yield what the real inflation is, or is it the official inflation?

        • IdahoPotato says:

          The yield is “official” as in paltry, but you don’t get taxed until you redeem it, plus there are no state or local taxes. Beats a bank CD. I use it to keep 4 years of expenses – like an emergency fund, and consider it part of my bond holdings.

        • NBay says:

          From another angle, any Treasury product that is limited to $10K a year is most likely a fairly good deal, and therefore only appeals only to small fry (also known as “losers” by the top 10-20% of my boomer cohort).

  8. Bob Hoye says:

    Your phrase about going to Heck is worth repeating upon the right circumstances.
    One from the old Vancouver Stock Exchange is worth passing on:
    So long as the stock is going up, the public will believe even the most absurd story.

  9. Uncle Joe says:

    Looks like a classic pump n dump.

    The slow rise after the first plunge is from insiders who knew about MSCI planning to include the stock in the index. 11-7 is the bottom of the sharp rise. Then, at the top, there’s the dip where the insiders who know what’s coming get out and take their profit. Others bid the stock higher, seeing the big rise and still seeing the now old news that its going to be in an index. Then, the bottom drops out when the public gets to know what the insiders already knew.

  10. DawnsEarlyLight says:

    We all know digging a deep hole leads ‘straight’ to China!

  11. a reader says:

    I demand an updated mug design.

    • 2banana says:

      Should say:

      “Nothing goes to Heck in a straight line except Chinese stocks.”

      • a reader says:

        The exception should be in an extra small font at the bottom, after an asterisk (*).

        • Erle says:

          At least put the modified jingle in a fortune cookie shipped in the bottom of the mug.

      • DawnsEarlyLight says:

        There are no Chinese restaurants in Heck, but the Hightae Inn makes an outstanding Indian Spiced Lamb Shoulder!

      • Auld Kodjer says:

        Old Chinese proverb might apply to investors who’ve gone the journey in ArtGo:

        “He who returns from a journey is not the same as he who left.”

        • Bobber says:

          Good one.

          The Chinese are pretty new at this crony capitalist thing. It might take them a while to calibrate the B.S. meters.

        • NBay says:

          “Crony Capitalist” seems weak, considering the vile collective actions it is meant to describe.
          How about “Capitalist Cartels” or Capitalist Gangs” ?

  12. RagnarD says:

    How many of today’s modern investors have ever imagined a different way of investing than Long only index funds? “It’s just what u do.”

    This is a great coal
    Mine canary to The dangers of mindlessly buying and holding.

    The system / industry has slowly but surely and “rightfully” (as the profits have rolled in) built
    itself aRound this mindset. Fostered this mindset.

    Perhaps the bigger And older it has gotteN, the more the cockroaches have multiplied?

    • NBay says:

      Seems to be the way concentrations of money games go.

      I’m reminded of the story of how debts were once settled by moving gold on the high seas. Naturally, those inclined to piracy saw a business opportunity for investing time and skills for profits.

      So when they took it all to the City Of London, and just moved it from room to room to solve that problem, the pirates soon developed the proper skills and moved there with it.

  13. Unamused says:

    Despite my assurances that “Nothing Goes to Heck in a Straight Line,” a Chinese stock just did.

    You’re not getting the mug back.

    • bungee says:

      btw i just got mine and am stoked that they are glass. i thought it would be just kinda like a tacky, plastic, freebie gift. but this thing is really cool. and the artwork is unique and right on. im actually going to use and enjoy it. so thanks again, Wolf for the quality articles and merchandise. let us know when we can sport WS shirts.

  14. Joe says:

    Unrelated but just as important is there is now an Emergency Crisis in Quebec, Canada due to political stupidity in the big, bad fossil fuels.
    The CN Rail just went on strike and in doing so, has cut off the Propane supply that Quebec receives. Fighting pipelines for decades now has made them vulnerable to a massive Propane shortage. They currently have just a 4 day supply. Our politicians have been pushing that Climate Crisis crap and is failing to inform the public where we use it and how many products rely on it.

    • RagnarD says:

      Nothing like a whole winter night or two spent at ambient temperatures in Quebec to get your priorities straight. Fascinating philosophical battle set to play out there it sounds like.

    • WES says:

      Joe:. No problem! Quebec will just steal electricity from Newfoundland/Labrador!

      No propane? Let them “eat” electricity!

      • Prairies says:

        Stealing from the east won’t be efficient enough, they import a lot of LNG from the south and from the west. They are going to be rationing for a couple weeks, if they can get lucky enough to avoid a November cold spell.

    • Paulo says:

      Good comment, Joe. Time for the pipeline, however, I’m sure Quebec will figure out a way to blame Alberta or the oil companies.

    • RagnarD says:

      In a very similar case, the The Atlantic coast pipeline construction project (ACPL), which is to go across the Appalachian Trail, is headed for a ruling by the Supreme Court.

      Currently state courts are holding up the project by not allowing the project to cross the Appalachian trail.

      Clearly if the ACPL loses, in future it Will Become even more difficult, if not impossible, for such projects to cross boundaries like the Appalachian trail.

      it will be a huge win for eco-insanity and a big loss for rational national industrial development.

    • Mean Chicken says:

      Just in time for Canadian natural gas company shareholders to receive their bankruptcy confirmations.

    • james wordsworth says:

      The only”climate crisis crap” comes from the deniers. There is a real crisis that nothing is being done about. We have waited so long that the only effective forms of action are going to hurt short and maybe long term. The alternative however is far worse. Unfortunately humans are horrible on avoiding avoidable long term dangers. We live on a finite planet but live as if we live at a free all you can eat buffet 24/7. There are limits and we are past them.

      • Joe says:

        If you follow the media 24/7, I can see why you would think it. The constant adjusting the narrative and silencing the facts has been massive. Turning climate science into faith and not fact. Data numbers being tweaked to get that grant or paycheck.

        • Unamused says:

          The fossil fuel interests promoting climate denialism know perfectly well that climate change is an existentially serious problem. It just goes to show that they’re quite willing to invite disaster to continue profiteering for a few short years.

          There are many such cases in most industries. You live on contaminated food and are acculumating plastic waste in your organs, for example.

        • Joe says:

          The Sun has a great deal more to do with heat, frictions, gas expansions, etc.
          Our climate scientists flub with temperature data and no more.
          Yes, we have made a mess of our planet in many other ways which is a different topic…to make the argument of global warming killing birds and insects fails to address all the weedkiller and pesticide chemicals that our environment is now poisoned with…cop out, global warming did it.

        • NBay says:

          That Sun has been plotting to do us in ever since we invented fire and put it to work for us. The Egyptian Priests realized it was extremely jealous of its once absolute thermodynamic rule and attempted to appease it by worshipping it.

          Perhaps we should make it our deity again?

      • Mean Chicken says:

        Hopefully globalists will propagate human civilization to every corner of the Earth in their quest to exploit every labor arbitrage imaginable, several times over.

  15. Cas127 says:


    Excellent post, as usual.

    ETFs and index investing have done a lot of good, but I there are a lot of poorly examined corners of the industry (methodology of index inclusion/exclusion, aggregate PE calculation – ck out Russell 2000 insanity of excluding 35 pct of index members making losses!, Why there are essentially no ETFs that short the clearly riskier segments of mkt – high pe microcaps, non-billion dollar biotechs, etc.

    Again, indexing has been a tremendous boon – but the real world detailed mechanics have been poorly examined – lagging far behind soaring AUMs.

    • Mars says:

      Hi Cas127,
      FWIW, follow the Russell 3000 (IWV) for that reason. You may consider Puts, just watch open interest numbers (thin trading) and consider NTM or ATM not OoTM. 2008 event R3K was down 38% mol. You are on your own, this is not investment advice.

    • NARmageddon says:

      >> aggregate PE calculation – ck out Russell 2000 insanity of excluding 35 pct of index members making losses!

      I had no idea, that is total swindle

      >>NTM or ATM not OoTM.

      For reference, near the money, at the money, out of the money.

  16. unit472 says:

    Before Artgo detonated there was already concern about including Chinese companies in the MSCI because of that automatic capital transfer from pension and other funds into those companies.

    In the past that didn’t matter too much because everyone was on the same team playing by the same rules. Ford and VW were just auto companies. Today that benign situation does not exist. Geopolitical rivalry even differences in ‘climate’ policy are creating new blocs with different objectives and rules. Doesn’t matter if Ford develops a ICE with zero carbon emissions that goes 100 mpg the EU has mandated cars must be powered by electricity in the next 20 years. On an even grimmer note the status of Huawei is a major question over “Free Trade”.

    The idea that a CEO or CIO in London, Tokyo or New York is free to mouse click vast sums of money to wherever or whomever he wants is going to end and soon. If your money is in China when that happens good luck getting it back.

    • MC01 says:

      There are plenty Chinese and Hong Kong companies with good to excellent profits which pay good dividends: China Mobile and CK Hutchinson are two personal favorites of mine. And I have to decided to stick with Swire as well for the time being, albeit some of their decisions this year have been for once deservedly punished by financial markets.

      ArtGo Holdings is not one of these, and MSCI and Russell analysts should have known better. The company info available for free on the Internet (dated H1 2019), for example on the HKSE website, clearly hinted at yet another Chinese company that started making one thing (in this case marble slabs and whatnot) but quickly turned into a highly speculative REIT which accumulated big losses to build up a position in a completely saturated market.
      If I were malicious I’d say the owners had the company go public precisely to raise the capital for this operation. ;-)

      MSCI and Russell employ thousands of analysts worldwide, including dozens of very bright Cantonese and Mandarin speakers: I refuse to believe they didn’t see information that was freely available on the Internet, in English.
      Their decision makers should have veto’d this junk the second it was put under their noses: that they even considered it is proof of how diligently they go about their work.

      • Unamused says:

        MSCI and Russell employ thousands of analysts worldwide, including dozens of very bright Cantonese and Mandarin speakers: I refuse to believe they didn’t see information that was freely available on the Internet, in English.

        That’s how you can tell it was a swindle. Stupidity cannot explain it, therefore you must attribute it to malice.

        Malice has become more pervasive than most people are prepared to believe, and in recent decades it has gotten the upper hand. In normalising greed and lust for power, spite has also been normalised. People take much too much for granted, particularly in the US, particularly people who should know better, and particularly people who could do something about it. Societies are no longer able to solve their problems. Instead, problems are actively cultivated so they can be exploited.

        Political, economic, and ecological trends are all ominous and getting worse. Each is breaking down and no path to reversing these trends has presented itself. Each is breaking down in stages, lurching from one crisis to the next. Crisis is the new normal. The world is not going to hell in a straight line, but it is going to hell. You can watch it happen in real time.

      • IdahoPotato says:

        Thank you, MC01. I look forward to your comments (along with Unamused and Kent).

  17. Jest Love says:

    It must be traded on the HK exchange cause i dont see any ticker for an adr .
    I would load up on it …its a dead cat winner!

  18. bb says:

    A classic NEUMANNE play, wonder where, and when the next domino will fall.

  19. Bobber says:

    Some Chinese speculators were looking for fun and excitement. I hope they are satisfied.

  20. ItsTrueYouGotScrewed says:

    And the second most shocking financial news event today award goes to Yellen interview per CNBC:

    “Some of the most disturbing notes came from people who said, ’I work and I played by the rules and I save for retirement and I have money in the bank, and you know, I’m getting absolutely nothing,” Yellen recalled. “Savers are getting penalized. It’s true.”

  21. raxadian says:

    “Nothing Goes to Heck in a Straight Line… Until it Does.”

  22. Just Some Random Guy says:

    If you’re dumb enough to invest in Chinese fraud, then you deserve to lose all you money. And anyone with an IQ north of 70 knew this was pure fraud.

    • Unamused says:

      That’s how the perpetrator excuses himself, by blaming his victim.

      • Just Some Random Guy says:

        Oh please. Anyone investing in Chinese companies knows that entire economy is built on fraud. There are no victims in this scenarios only greedy people who got burned. And I have zero sympathy.

        • Saltcreep says:

          You serious, JSRB? Most people have no idea what is and what is not a fraud. People chase momentum, whether it be tulips or domiciles or crypto coins or cannabis, or some ripoff stock scheme.

          You could just say tough crap, of course, and goodbye money. But due to the deteriorating nature of savings people who have no expertise are now being forced into all sorts of financial markets where they are the prey.

          As Unamused points out, there are plenty of unprepared victims around, and plenty of welcoming wolves with big teeth trying to look like friendly grandmas.

    • Old-school says:

      I reserve about 10% of my portfolio for playing around with single stock investments. I try to buy something small cap, out of favor, making money, paying a good dividend and with a local presence that I can check out with my eyes to know it’s the real deal.

  23. JB says:

    great US dollars funding the CCP.

  24. Mean Chicken says:

    Wasn’t Milton well thought of, seems millenials and many posters here disapprove of his ideas. Good luck to you and yours.

    • Just Some Random Guy says:

      Sadly many posters and many millenials think if we just made rich people poor, magically poor people would become rich.

      • IdahoPotato says:

        Ok Boomer.

        • IdahoPotato says:

          JSRG, I am older than you are but let me assure you you are the whiniest Millennial-basher here, irrespective of age.

      • Bobber says:

        Actually, if a person has $1B and half is transferred to a person with zero wealth, there are two rich people now, not just one.

        Your comment is clearly incorrect on its face.

        The real story is you can make more people wealthy by taxing those that are extremely rich.

  25. otishertz says:

    AAPL buybacks of $6 billion a month equals $300 million a day of thier own stock which is close to 1 in 20 of shares (approx 4.3 % of vol) trading on any given day based on current daily volume and AAPL is about 8-10 percent of QQQ depending on the mix in the index.

    These buybacks are more than enough to manipulate the entire index because prices are set at the margin, meaning the next incremental transaction sets the value for the entire pile of stocks. This faking up the price increases risk and instability for all market participants.

    Why doesn’t AAPL have a better use for this money than jiggering up EPS for the benefit of management? Heck, they could produce a blockbuster budget female action hero movie every trading day with that much!

    • IdahoPotato says:

      My question is why doesn’t Berkshire do the same or give a dividend? What is it holding on to $128bn in cash for?

      Buying back a lot of stock will move it substantially. They need to pay a dividend already.

      • Old-school says:

        I think Buffet is very math oriented and follows a rigid system. My belief is that he has very rigid after tax hurdle rate for his decisions on investment. Right now with 10 year so low I suspect it is 9%. Could be 10%. Many of his long term shareholders hold shares not in IRAs which means if he pays a dividend of 4% their after tax income return is reduced to 6 – 7% even if they don’t need the income. He has told investors that need income that they can sell of 4% of shares per year and they will never run out of money.

  26. Unamused says:

    Why doesn’t AAPL have a better use for this money than jiggering up EPS for the benefit of management?

    Because it is pointless to invest in an economy that has gone into decline. The markets are already oversaturated and overinvested, so they know they cannot make more money by reinvesting in the company. Instead they use the company’s money to do stock buybacks so they can take money from investors who won’t believe it.

    There’s a lot of this sort of thing going around. Related dynamics explain how the DJIA can go up 40% in three years while the real economy has been stagnant at best.

  27. Shiloh1 says:

    Any suggestions for leap put options on any Chinese “tulip” stocks traded here?

  28. Cobalt Programmer says:

    In India (2007-), “emu birds” were promoted as a valuable bird with an international market. Emu are flightless Australian birds and Aussie’s can easily dominate the world market. Indian farmers invested in it but without any actual buyers, the scam faded away by 2011. Farmers lost their labor, investment and some cases land pledged for their loans. Government arrested a few “middlemen” who were also duped and the “big-birds” were never caught. I blamed them for not properly educated, greedy and naive. Now, I realize these phenomenon is not isolated to farmers in India. All over the world, any race, educated can fall for the “get-rich-quick” schemes.
    Tulip bulbs, postage stamps, penny stocks and now, a marble company. Artgo is not the only bad-apple. There are so many ride-share, delivery, electric-cars, real estate, social-media and mining companies, their stocks and bonds traded in US also. At this point, US can look at China and label them fools. But the movie “Reality” is coming soon to a theater near you.

    -Cobalt Programmer (My second post here. sometimes ago somebody misspelled COBAL programmer. Hence my name)

    • Paulo says:

      In BC it was Ostriches. I knew some farmers that raised breeding stock and lost their shirts, plus never heard of anyone actually buying them for meat beyond some trendy hipster restaurants that have melted away as well.

      As for cobalt, I’m trying to source some affordable cobalt drill bits. No luck, yet. :-)

    • nhz says:

      About 10 years ago some wealthy Dutch investors lost a huge amount of money by investing in a tulip bulb fund that was basically one giant Ponzi. It took years for the courts to decide if it was a scam or just another “investment” turned sour; for sure they didn’t get their money back. Yes, this happened in Tulip Bubble country (1637, long ago … people never learn …).

      There is a 19th century book about the lives of middle class citizens in my city (especially in the street where I lived) during the early 18th century when shares of the Dutch VOC company boomed and crashed (VOC market capitalization at the top was even higher than for AAPL, adjusted for inflation). People with money invested everything in VOC stock, driving up share prices; banks capitalized on the madness by offering huge loans on margin with VOC stock as collateral. Middle class citizens started building luxury estates outside the city and selling their inner city homes. Within a few years the VOC stock value crashed; most of the estates were never finished and investors lost everything. Life went on but people’s dreams were shattered; at least they had a stock of building supplies lying around near the city that was sufficient for more than a century of repair and maintenance ;)

      And I agree, it isn’t just Artgo and a few others. Basically every “investor” is now frontrunning the central banks. The “value” of stocks and bonds is produced by all kinds of scams, which works as long as people believe in it. Valuations and many other metrics of the stock and bond markets are now similar or even more extreme than in 1929, 1999 and 2008. At some point the whole market will have to come back to reality (= crash), or disappear into a black hole because it has become pure fantasy.

      • Cobalt Programmer says:

        If an individual “investor” losses money in ostrich or tulips, its personal and local. If you scale-up to the pension funds (companies, teachers and state), a large group of people all over the country will loose their money. People in 30s or 40s have a decade or so to build a decent portfolio. The major blow is for the 50 year olds, who must work in to their 60s. Its OK for the white-collar upper management people but very difficult for the blue-collar people. They are susceptible to knee or back injury easily.

        Pension funds, invest the employee monthly contributions to the index ETFs like Dow, NASDAQ and bonds. A small slip can be very fatal. No wonder, ZIRP and NIRP are frequently mentioned. If the interest rates are increased in a traditional fashion, there will be reality and its very ugly.

        • nhz says:

          Problem is that a few local ponzi’s will quickly add up to a much wider ponzi economy, where people who were NOT participating will get hurt as well (often even more than the real players). Such ponzi’s are often a symptom, caused by bad incentives and lack of responsibility (thank you central banks and politics).

          The Dutch housing crisis of 1981 (average home price minus 50-60% in 1.5 years, after a runup of +100% in five years) was caused by a relatively small number of mostly native speculators playing on margin. When things went wrong many homeowners who didn’t play were hurt severely. When the current markets return to reality the damage will be far worse and it is likely that e.g. savers (who decided not to play in the casino) will see much bigger losses than current RE/stock/bond speculators. Central banks have shown again and again that they could not care less about savers and try to bail out the speculators (their kind of people) instead.

  29. NIRP says:

    Chinese go to heck in A straight line.. HAHA..that’s the new mug print for the chinese customers.

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