Most of the HNers don't, but a lot of folks do. They buy certain technology because it's cool or everyone else is doing it, even though they would be the same off with something half the price.
Another day, another imaginary profit using 20/20 hindsight. Yes, stock trading is easy using a time machine. Do you have a time machine? I didn't think so. Next!
Based on this table, it looks like if you buy the equivalent amount of stock every time you buy a new Apple production, you'll get a free upgrade within 2-3 years?
My current machine is:
Apple MacBook Pro "Core 2 Duo" 2.8 15" (SD) 2009-06-08 $2299 $4,328
and it's about time to upgrade.
And I could really use an iPhone 4 upgrade from my 3GS:
Apple iPhone 3GS 16, 32 GB 2009-06-08 $199 $375
The Mac Mini sitting under my TV could more than replace my whole entertainment center:
How were companies like APPL, GOOG, and MSFT perceived in the time before their stocks took off?
Was it obvious to people in the industry that these companies would be successful? Was it seen more of a hit or miss? Were people betting against their success?
Apple was a complete and total mess back in 1997. Let me count the ways.
- Windows 95 eradicated most of their "ease-of-use" advantage, which destroyed their profit margins
- They had a string of serious hardware and software quality problems, leading people to wonder if
- Their computers were seriously overpriced. (Not mildly expensive like today, but like half the specs for 150% of the price.)
- Their cloning strategy had totally flopped and eradicated their margins even further.
- The Newton, which was pitched as a "save the company" thing, had flopped
- Apple was trying to sell itself to anyone interested, and nobody would buy
- The Wall Street Journal thought there were serious accounting shenanigans going on
- And unlike today, they had no consumer electronic products to fall back on.
The Mac business was so fucked, it took them about 10 years before they really "fixed" it. And I don't think anyone at the time really could have predicted that Apple would become a consumer electronics juggernaut.
Still their stock was considered a steal at $15 a share or whatever, and it's depressing to think you missed an opportunity of a lifetime.
Amongst the people I knew (young people with no money), MSFT was seen as a sure thing from about 1990 until 2000. I dissuaded them by explaining that Linux was just around the corner to mess up that sure thing...
It used to be a cliché in tech journalism that every Apple story described them as "beleaguered". They were regarded as circling the drain for years, and the stock returns here were a lot less enticing back when they were trying to survive in the computer industry.
I was very dismissive of GOOG. Floating an IT company at this time when their only product is a search engine that will be replaced by the first better engine to come along? Stay away from that!
In retrospect I should have gone into as much debt as possible and put all that money into Google shares, but figuring out how to make money when you have access to time travel is pretty easy :-)
Annoyingly, over the years I have told myself that I should be buying AAPL instead of the products. Never took my own advice.
Although it'd be more interesting to see the differential between AAPL and the SP500 in the same time (because you probably actually did buy that via a 401k or whatever)
I wonder if this would work as an investment strategy:
A month after I buy a product, if I still love what I bought, buy the same amount in stock of that company (or a fixed multiple/divisor of the amount spent).
of course, if everyone followed the above advice the stock would not have gone up (at each snapshot in time) since the reduction in purchased products and profits would not have moved the stock. That is, unless you subscribe to the tragedy of the commons, and let the commons write their own tragedy as you raked in the stock uptick / gains.
http://en.wikipedia.org/wiki/Tragedy_of_the_commons
Of course, the flaw here is that if you take this to it's logical extreme, a world in which everybody instead spent money on Apple stock instead of buying Apple products, then Apple's revenue over that period would have become zero, and then almost inevitably the stock would become zero too.
Yeah, I built myself a (non-mac) computer in 2003 for about $1,000, and am using it as I write this. I wouldn't have set aside that money to buy Apple stock, and I have no idea the stock value of the various component vendors (the intel components were a few hundred at most).
If you're going to buy a computer anyway, you'd be measuring the Apple anyway, not the entire product cost. That is, if an equivalent Apple machine cost $1,500, then the money I could have spent on Apple stock by building my own is $500, not $1,500.
In June of 2007 I bought a MacBook Pro for $1,999 to run my startup off of. (The chart says that if I had bought stock instead, it'd be worth $4,413.)
The ROI on the MacBook Pro has been the better investment in my opinion.