It's somewhat amusing to see Apple throw away market leadership now, just like it did in the 80s

[Kuciwalker]

I'm not an idiot, but it's mighty clear you are.

You've mentioned being heavily exposed to technology stocks like I am (I've mentioned I do own stocks by my own company, a tech company). I don't think it's clear why you would invest in more tech-heavy mutual funds than anyone else, so your comment is bizarre at best.

Yep, you're an idiot. You and I are exposed to tech stocks because we both have a huge amount of human capital invested in software development (probably a few million dollars' worth at least). This isn't even the first time we've had this conversation on this forum...

You also said you would lose money if you took my AAPL advice. If you didn't own any AAPL stock and you never would invest in stocks, that statement is equally bizarre...

It's called a short sale...

[Asher]

While I 100% agree with you that Kuciwalker is often pedantic to the point of absurdity, nothing he's said here is pedantic in the slightest...you should save that particular epithet for when it is actually appropriate.

It's entirely appropriate here. The foundation of his argument is I'm wrong about thinking a stock is overvalued because no one can know the true value of a stock.

You're telling me this is not being pedantic...?

[Hauldren Collider]

OF COURSE no one can definitively, conclusively state the precise value of a stock. WE ALL, as investors, estimate the value of the stock and buy things we believe are below the value, and sell things we believe are above. That is how the stock market works.

OF COURSE no one can definitively, conclusively state the precise value of apples. WE ALL, as consumers, estimate the value of apples and buy the ones we believe are the appropriate value. Then we eat them. The whole point of the market is that it accumulates all of these decisions and produces a single value which is the best possible approximation of what the apple is truly worth.

The same is true for stocks except that the people who are really good at guessing the values of stocks tend to get a lot of money, which allows them to buy more stocks, which quickly accelerates them into the position of having lots of control over the valuation of the stock.

[Asher]

Yep, you're an idiot. You and I are exposed to tech stocks because we both have a huge amount of human capital invested in software development (probably a few million dollars' worth at least).

Oh christ, you continue to get worse...

It's called a short sale...

A short for a stock is still investing in stocks...

[Kuciwalker]

It's entirely appropriate here. The foundation of his argument is I'm wrong about thinking a stock is overvalued because no one can know the true value of a stock.

No, it's because no one can know the true value of a stock better than the market. The market price incorporates all of the information and analysis available to you, and more besides.

[Hauldren Collider]

It's entirely appropriate here. The foundation of his argument is I'm wrong about thinking a stock is overvalued because no one can know the true value of a stock.

You're telling me this is not being pedantic...?

You're wrong about thinking a stock is overvalued because the market, which is an accumulation of the opinions of everyone who is involved in the trading of the stock with a heavy weighting towards the opinions of the people who are most informed, believes you are wrong. It is possible, but extremely unlikely, that you are right, and that particular concept is known as risk, something the market is also clever enough to adjust for.

[Kuciwalker]

Oh christ, you continue to get worse...

It's not my fault you don't understand the first thing about investment. Why include assets in your portfolio (e.g., AAPL) that are strongly positively correlated with your future income stream? It's the opposite of diversification, taking on unneeded additional risk for no improvement in expected return.

A short for a stock is still investing in stocks...

Now who is being pedantic?

[Asher]

OF COURSE no one can definitively, conclusively state the precise value of apples. WE ALL, as consumers, estimate the value of apples and buy the ones we believe are the appropriate value. Then we eat them. The whole point of the market is that it accumulates all of these decisions and produces a single value which is the best possible approximation of what the apple is truly worth.

Right on, stocks are consumables and commodities now. It's totally the same thing!

The same is true for stocks except that the people who are really good at guessing the values of stocks tend to get a lot of money, which allows them to buy more stocks, which quickly accelerates them into the position of having lots of control over the valuation of the stock.

Only a pedantic ****** would state the market price is always correct. Kuci is obviously one of those people, and so are you.

You guys are just thinking too shallow.

The reason AAPL's value on the market is high is because many people believe it will continue growing at around its current pace. So by the eye of the market, the price is absolutely correct. We agree on this, but THIS IS A POINTLESS DISCUSSION.

I'm thinking deeper -- I'm looking at Apple as a company, not the superficial beliefs of "the market" (which I think is far dumber than Kuci will ever want to admit). I think investors investing in AAPL right now are wrong. We are both predicting AAPL's future behaviour -- they think it'll continue growing, and thus the price is justified. I do not, so I think it's not justified. Because I don't believe the growth will continue at its current pace, the current price for AAPL does not reflect the true value of what will be provided to me. A huge portion of the price for AAPL stock is in future speculation. It was the exact same with the dot-com stocks. And when the future speculation grows dim, that's when the chaos begins.

[Asher]

No, it's because no one can know the true value of a stock better than the market. The market price incorporates all of the information and analysis available to you, and more besides.

A consensus of idiots can still lead to a stupid decision. That's what the market is -- just the consensus of many people. It's not an oracle and it's not infallible.

In the case of AAPL, the consensus is that the growth will continue. That's why the market prices the stock high. I dissent there, so I dissent with the market price and will not invest.

[Kuciwalker]

Asher, you keep trying to use the tech bubble to prove your point, but you haven't actually justified how it shows that the market is inefficient. You'd have to show that some people bet against the market price and win more than would be expected by chance. And even that doesn't actually demonstrate that the market is inefficient; you have to show that the total number of people who manage to do better than chance is larger than we would expect.

If no one were better than the market, than at 95% confidence we would still expect 5% of people to look smarter than it.

Note that this experiment is precisely the one that Fama did, and his results indicate that we should NOT reject the null hypothesis that the markets are efficient.

[Asher]

You're wrong about thinking a stock is overvalued because the market, which is an accumulation of the opinions of everyone who is involved in the trading of the stock with a heavy weighting towards the opinions of the people who are most informed, believes you are wrong. It is possible, but extremely unlikely, that you are right, and that particular concept is known as risk, something the market is also clever enough to adjust for.

As someone who dealt primarily with CDS trades for a couple years, I find your statement extremely amusing. The market was clearly very clever in 2009, wasn't it?

[Hauldren Collider]

Only a pedantic ****** would state the market price is always correct. Kuci is obviously one of those people, and so are you.

You can adjust for the chance that the market is incorrect. That's what hedging risks is all about, it's part of financial risk, something Kuciwalker knows a lot more about than me of course.

You guys are just thinking too shallow.

I'm thinking deeper -- I'm looking at Apple as a company

Do you think you're the only one?

, not the superficial beliefs of "the market" (which I think is far dumber than Kuci will ever want to admit).

If you are participating in the investment, you are part of the market.

[Kuciwalker]

I'm thinking deeper -- I'm looking at Apple as a company, not the superficial beliefs of "the market"

The fact that you think this shows that you still know nothing about economics or finance. The market in the aggregate, and many of the individuals in it, know as much and more about Apple "as a company" than you do.

[Asher]

Asher, you keep trying to use the tech bubble to prove your point, but you haven't actually justified how it shows that the market is inefficient.

Grep this thread for "efficient" and you'll see you're the only one making any claim about market efficiency. Please read the thread.

You'd have to show that some people bet against the market price and win more than would be expected by chance. And even that doesn't actually demonstrate that the market is inefficient; you have to show that the total number of people who manage to do better than chance is larger than we would expect.

I don't have to do any such thing. It's somewhat alarming that you and HC don't understand that when investing in growth stocks like AAPL you (and the market) are simply gambling on the future of a company's balance sheet. That's ultimately what it is.

[Hauldren Collider]

As someone who dealt primarily with CDS trades for a couple years, I find your statement extremely amusing. The market was clearly very clever in 2009, wasn't it?

Housing bubbles created by government-backed bad loans is not the fault of the market. If anything, it is a demonstration of the fact that the government needs to stay the **** out of investment.