I'm not so sure that temporarily changing the market cap of apple really would count as controlling it.
It's like saying: I can jump on the field at a Yankee game and "control" 50k spectators and 50m viewers. You may influence them for about a second, but the farther you try to bring the situation from the market's desire, the quicker you'll be corrected.
Sinking 1b into selling apple short would make a small, temporary dent in their market cap.
If you think something is overvalued, you should sell it short. If you think ycombinator companies are overvalued, you should contact the investors and give them odds against the ycombinator startups successes, and it would be in their best interest to take you up on it as a hedge.
In general terms, if you claim to have knowledge of a mispriced asset, there always is an implied economic action you should take to make money off of your unique knowledge.
You ignore the effect of feedback loops. You are also making the fallacy of reification (market doesn't want anything).
They key part to this lesson is that valuations are essentially arbitrary (not about market manipulation - although market dynamics are an interesting subject). Take no stock in them (pun intended) - just like you should ignore the predictions of pundits.
The following examples exemplify the meaninglessness of valuations:
If I had a kid, he/she would be worth more to me than anything else in this world. But as much as I'd adore him/her - he/she ain't worth jack to anyone else. If I'm dying of dehydration - the next cup of water is worth most of my future earnings. If I just had a glass - it's worth next to nothing. Dying because a fire is burning and you're running out of air? Oxygen tank would be pretty handy right about now. Got enough oxygen? Pfft don't need your tank.
Valuations are and will continue to be meaningless.
> try to bring the situation from the market's desire
I doubt it - you need regulatory agents to rein it in (security). Also - you are making the fallacy of reification right here.
Otherwise - it's a free for all.
Audiences love that stuff.
PS: Shorting a billion in Apple would seriously depress its price as feedback pulls in (stop losses and latent short orders) - and if you hook it up to another one - like say a debt crisis - well now you have some fun on your hands.
Also your name reminds me of that dancing monkey problem I must write about some day.
If I'm dying of dehydration - the next cup of water is worth most of my future earnings. If I just had a glass - it's worth next to nothing. Dying because a fire is burning and you're running out of air? Oxygen tank would be pretty handy right about now. Got enough oxygen? Pfft don't need your tank.
These are examples of arbitrageable opportunities. The wealth you can create by moving a glass of water from a lake to a desert is a real thing. Valuations aren't "meaningless" in that way unless you take the extreme nihilist position of everything being meaningless because it would change in a different situation. That's not meaninglessness, it's just context-sensitivity.
The fallacy of reification only occurs if you assign value to the existence of things (like "we should reduce regulation because the market wants it"). It's perfectly useful and common to say things like "the market wants" to mean "the market acts in a way such that were it a sentient being it would act this way because of a conscious desire" without actually holding the view that the market is a sentient being. That's just how English works (see, I did it right there).
People conflict agency with representation all the time.
This is not a good thing for every situation - especially abstract concepts such markets and governments.
I never said statistical arbitrage was not possible. I merely indicated that another's valuation is meaningless to your decision about future profits generated by an entity.
I'm probably a nihilist then aren't I. Why bother arguing with me at all then? :-)
It's like saying: I can jump on the field at a Yankee game and "control" 50k spectators and 50m viewers. You may influence them for about a second, but the farther you try to bring the situation from the market's desire, the quicker you'll be corrected.
Sinking 1b into selling apple short would make a small, temporary dent in their market cap.
If you think something is overvalued, you should sell it short. If you think ycombinator companies are overvalued, you should contact the investors and give them odds against the ycombinator startups successes, and it would be in their best interest to take you up on it as a hedge.
In general terms, if you claim to have knowledge of a mispriced asset, there always is an implied economic action you should take to make money off of your unique knowledge.