Agathon to discuss Apple's stock price

[Asher]

Originally posted by vovan


Clearly. The fact that MS is down ~10% since mid-December is simply due to some idiots undervaluing it.

Why mid-December? It's up since mid-November.

Yes, when the market freaks out about a recession it's normal for most stocks to dip. My point -- quite obvious, I'd have hoped -- was Apple exceeds that dip by a massive amount.

Apple is down again today, BTW.

The other point I discussed is how forecasts affected it. MS has raised its forecast, Apple reduced theirs. The main reason Apple tanked was a forecast reduction, and any time that happens it's bad. Good companies can keep a positive forecast even when the economy isn't ideal.

[Saras]

P/E is a rather poor metric for valuing stocks.

[Asher]

Originally posted by Saras
P/E is a rather poor metric for valuing stocks.

What do you prefer? FP/E? Voodoo?

[vovan]

Originally posted by Asher
Why mid-December? It's up since mid-November.

'Cause I had to find a high point since when it's down significantly.

Originally posted by Asher
Yes, when the market freaks out about a recession it's normal for most stocks to dip.

Which is exactly what I assume people mean when they say "the whole market is suffering," yet in the post I quoted above, you were arguing with that.

EDIT: I guess to clarify. I'm not sure what the heck you people are arguing about. I can see the underlying motive, of course: Asher says Apple sucks, others say it's awesome. But as for the supporting arguments, all I see is a bunch of vague generalisms that don't really say much. Asher says Apple's stocks are down more than Microsoft stocks, therefore MS > AAPL. Everybody else says the conclusion does not follow from the argument because of the general market beat-down. Is that an accurate summary of the two pages of discussion so far? Because if so, it seems to me it's kind of a pointless argument, since both sides are fundamentally arguing the same thing: that stock price does not accurately reflect a company's worth. Asher says they were overpriced before, and the other side says they are underpriced now. Or something.

[Asher]

Originally posted by vovan

Which is exactly what I assume people mean when they say "the whole market is suffering," yet in the post I quoted above, you were arguing with that.

They were saying that's an excuse for a 35% point dip. My point, repeatedly made, was all of their contemporaries lost significantly less, which indicates the cause of this massive dip isn't general market woes. Those affect everyone, not just Apple, and the effect on everyone else is far more subdued.

[Imran Siddiqui]

Asher says Apple's stocks are down more than Microsoft stocks

Not necessarily. He's saying Apple's stocks are down far more than other tech companies.

[vovan]

Originally posted by Asher
My point, repeatedly made, was all of their contemporaries lost significantly less, which indicates the cause of this massive dip isn't general market woes. Those affect everyone, not just Apple, and the effect on everyone else is far more subdued.

Seems like a sensible argument to me.

Except I think the problem with that is that comparing Apple with MS is somewhat unfair (to Apple). What's apple got? Overpriced desktops, laptops and mp3 players. That's basically it. (Oh, also, iPhone -- an overpriced, glorified PDA. ) OTOH, Microsoft has huge business clients, basically a monopoly on commercial OS and Office apps, and now a profitable entertainment industry presence.

So, I think it's also a valid argument to say, look, when a part of the Apple business is suffering due to general economic woes, they really have nothing much to fall back on, whereas MS does.

[vovan]

Originally posted by Imran Siddiqui

Asher says Apple's stocks are down more than Microsoft stocks

Not necessarily. He's saying Apple's stocks are down far more than other tech companies.

Originally posted by vovan
Asher says Apple's stocks are down more than Microsoft other tech stocks, therefore MS other tech > AAPL.

Fixed. Sorry, didn't meant to misrepresent Asher's position -- just to figure out what's going, since it seems like a pretty exciting discussion to me right here.

[Japher]

Meh, I don't think I'll ever buy AAPL. MSFT is much more attractive, but I still won't buy it unless they start paying a regular dividend. I personally like growth stocks though, mainly because I'm greedy.

[snoopy369]

Originally posted by Asher
And despite general market woes, recession fears, etc -- MS has raised its forecasts. Yet Drogue and Agathon insist the whole market is suffering, when clearly this is false...

Any complaints about MS aside, they are simply wonderful at managing expectations. They have an almost uncanny ability to set expectations - not the forecast, but the real expectation - such that their forecast beats that, and their ultimate numbers beat that (as well as the analyst expectations there as well). They could write quite a few books on their ability to do this...

[Drogue]

Originally posted by VetLegion
You do seem to have funny definitions. What is a "fair value" if not the current market price?

It is, if you believe the market is efficient. By fair value, I mean correct value, as in "given all available information, what should this company be valued at". If you believe at least the semi-strong version of market efficiency, that means the market price.

[Drogue]

Originally posted by Asher
Hello. That "information" is speculation and guesses.

No, by information I mean that other stocks are now worth less, meaning people have less money. I also mean people having expectations of low growth, meaning they cut back purchases. And most of all, I mea

Originally posted by Asher
I consider a stock overvalued if a huge portion of its value is simply because some idiots predict future successes.

The same way some idiots predicted the future success of Google when it wasn't making a profit, thus the stock price shot up to an amount far less than it's now worth. Future success is a quite big factor in the value of a company.

Originally posted by Asher
That's the situation Apple was in at $200, and the situation Google is in now. The stock's value isn't in its current performance, nor even it's short-term performance. At that point it becomes a speculative bubble. Such idiocy is what screwed up the markets so much in 00-01, and people still have not learned their lessons.

There's a difference between massive exhuberance and pouring money into worthless stocks and pricing in estimates of future cashflows.

Originally posted by Asher
Your comments are in stark contrast with most talking head economists and economic publications, which argue Apple is among the least sensitive to recessions due to their consumerbase being among the least price sensitive. Further to shatter this, you seem to ignore the fact that all of Apple's contemporaries -- and the market as a whole -- are doing much better. Stop blaming this on general market woes, it's simply not.

This post could be significantly improved by the citing of sources. Apple doesn't have contemporaries, it's why the iPod sells despite being so much more expensive than similar players. Apple makes electronic fashion accessories. In general conditions, it's consumerbase are prince insensitive, true, since they tend to be wealthy. But in turbulence and recession, it's the wealthy that cut back, since a) they can, and b) their wages are more dependent on the market.

Perhaps it was overvalued, but it wouldn't have fallen without the sudden market downturn. It's fall was caused by the economic downturn. Unless people suddenly realised it was overvalued and devalued it, and this happened to coincide with a load of new information that the economic outlook was very bleak.

Stocks move on news, or the speculation of news. There was some, and Apple moved. Whether or not it was overvalued, you haven't shown as such because it went south during a mini-crash.

[Asher]

Originally posted by Drogue
This post could be significantly improved by the citing of sources. Apple doesn't have contemporaries, it's why the iPod sells despite being so much more expensive than similar players.

You serious? Apple has many contemporaries. It makes consumer electronics and it makes computers and it makes software. Nothing Apple makes is unique. What a bizarre position to take...

PS: It's not even "much more expensive" than similar players. Last I checked, the Zune and iPod were identical in price for comparable players.

Perhaps it was overvalued, but it wouldn't have fallen without the sudden market downturn. It's fall was caused by the economic downturn. Unless people suddenly realised it was overvalued and devalued it

Uhhh...that's exactly the point.

iPod sales stall, people realize Apple isnt unstoppable.
Forecasts fall, expected future earnings fall.
iPhone isn't selling as well in Europe as expected.
Apple didn't divulge MacBook Air early sales as they often do. That spooked investors.
Early reviews are lukewarm at best to the MacBook Air.
Apple didn't unveil a 3G iPhone like many expected.

There are all kinds of factors that came into play in the past month that would have direct impacts on investors' stance of the stock. You ignore all of them, and instead blame a mysterious market downturn and the one and only reason the stock went down.

Seriously -- you're some kind of economist?

[-Jrabbit]

I thought the most recent AAPL drop initiated within an hour of Jobs' Macworld keynote. Dunno, maybe that was apocryphal...

[Asher]

Originally posted by Agathon
I suggest that people who want to make a real contribution to this debate go look at what happened in November 2007. The markets had a bad time, and AAPL tanked. When things seemed to straighten out again AAPL went over $200 a share.

It keeps going and going and going...

It's at $119 now.