JEFF GUNDLACH: Apple's Plunge Has Singlehandedly Debunked The Efficient Markets Hypothesis

BloombergEarlier we noted that with Apple shares falling below $425, it was another feather in the cap for investing god Jeff Gundlach, who predicted last year that Apple would hit this level in 2013.

It's important to note what a good call this was. Back at the time the stock was close to $600.

We asked Gundlach, via email, whether he had any additional thoughts on Apple's remarkable decline.

His short reply is that the decline is a milestone for market theory:

AAPL over the last six months offers a textbook case study in market behavior and effectively debunks efficient market theories. The weakness is all the more remarkable because it has occurred within the context of a strong overall US stock market. SPX up 5% since September 19, 2012 and AAPL down 40%.

The efficient markets hypothesis basically states the markets are always accurately factoring in all relevant information about a security, and are pricing said security "correctly."

From his viewpoint, this proves that markets are not perfectly rational and efficient digesters of news and data, but rather the product of herds and behavioral idiosyncracies, at least sometimes. Apple is a shining example of how it all works.

For more on Jeffery's big call, see here >

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