Icahn Is the Bear in Apple's China Shop

As any naked guy at a baseball game will tell you, all good streaks must come to an end.

And that -- streaks -- was sort of the theme of the week in financial news. So ride along with us as we review the highlights and extend a long streak of Gadfly Trade of the Week columns stitched together with dubious themes. In other words, we're all going streaking!

At Apple, the Cal Ripken of revenue growth, a streak of 51 consecutive quarters of sales growth ended. The disappointing earnings report vaporized $43 billion of market cap in a mere hour. As if that wasn't enough, Carl Icahn piled on afterward by saying he dumped his Apple shares after almost three years. So now Apple is in the midst of a new streak -- a seven-day share-price slump, its longest in three years. They say the second-happiest day of a boat owner's life is when he buys the boat, and the happiest day is when he sells it. An inverse phenomenon must exist for chief executive officers when it comes to Carl Icahn: The second-worst day of their lives is when Icahn buys a stake, and the worst is when he dumps it.

Icahn, in an interview on CNBC, said he sold his shares because he sees a risk in Apple’s relationship with China, which shut down Apple’s iTunes Movies and iBooks services recently. As a result, he kept alive another prevalent streak: the well-established trend of prominent Western investors staring suspiciously at the black box that is China's policy and economy and finding reasons to worry. However, with the luck they've had lately, we half expect to see Xi Jinping start handing out Apple products like Oprah during sweeps week. You get an iPhone! And you get an iPhone!

To wit, take a look at how well some other recent China speculations have played out. As Dan Loeb pointed out, his Third Point fund wasn't the only one to get burned by piling into short bets against the nation's currency as well as commodities and companies exposed to China's economy. And this kept alive a nice long streak of very vibrant writing in hedge-fund letters to explain less-than-vibrant returns. The 2.3 percent drop in Third Point Offshore Fund came amid one of the most "catastrophic periods" in the last two decades, the letter said, as market-neutral strategies became a "hedge fund killing field" and "there is no doubt that we are in the first innings of a washout in hedge funds and certain strategies."