A little while ago I told one of my email correspondents that 90% of the folks on Wall Street are either idiots or crooked. I probably should have added “or both”.

Now, of course, I can’t prove that assertion, but I can offer a small scintilla of evidence.

So I offer for your consideration Goldman Sachs’s Rod Hall.

A few weeks ago after Apple announced pricing for its forthcoming video streaming service, Apple TV+, Rod Hall cut his already low target price for Apple’s stock by 22 points, explaining that because Apple would offer a one-year free trial to the service and account for it as a combined hardware and services bundle discount, this would have a “material negative impact” on earnings. This sent Apple’s stock plummeting so badly that that afternoon Apple did something that it rarely does. It released a statement saying that “Rod Hall is fucking crazy”, although not in those precise words.

Now think about this for a moment. Apple brings in earnings of about 266 billion dollars per year*. This year they’ve invested perhaps two billion dollars (less than 1% of gross revenues) in their new video streaming service but aren’t receiving any revenue from it as yet. The service will be going live on November 1st, at which time anyone who has bought a new Apple device can claim a free year’s subscription; anyone else can pay five bucks per month. So going into next year, assuming that Apple lays out about the same amount for their service, they will begin to see it generate some amount of revenue.

BUT— They will also account for a certain amount of revenue for the service by moving some revenue from the hardware side onto the services side of the balance sheet. In other words they will probably have more revenue (no telling how much) for the service than they did this year (which was zero), but a small portion of it will be deducted from the hardware side of the house.

So there is absolutely no reason to think that this method of accounting should have a “material negative impact” on earnings. It should have no impact on earnings because the bottom line will be the same as if they kept the funds on the hardware side of the ledger. I think that should be easy to see.

So is Rod Hall really that stupid? If he is, he really ought to be fired.

But there’s another possibility. You see, people who invest in the stock market can profit from it even when a stock goes down in price. That’s called shorting a stock.

What if those fine analysts at Goldman Sachs, anticipating Rod Hall’s hit piece, called their most prestigious clients, you know, their whales; do they call them whales on Wall Street? Anyway, what if they called them up and ever so deftly suggested that laying a short on Apple stock might not be a bad idea?

That way their clients (only the richest ones, of course, the ones certain to keep their mouths shut because they know how the game is played) could benefit from the sharp decline in Apple’s stock price the next day. Oh, and guess what? They could also profit by covering their short and going long for when sanity returned to the market and Apple gained back its losses over the next few days.

Can I prove that Goldman Sachs and Rod Hall are crooked? After all Rod Hall is a well respected man about town.

No, of course not.

But stupid or crooked. One or the other. Which do you think?

Of course, if you can think of another explanation for Rod Hall’s egregiously stupid call, I’d be happy to entertain your suggestion.

*I got that figure by adding up the last four quarterly figures at Google Finance. If it’s wrong, sue Google, not me.