Coffeehouse Thread

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Unreasonable expectations

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  • User profile image
    giovanni

    I just read this NY Times article saying that 28% increase of iPhones sales was lower than what was expected by analists and therefore hurt Apple.

    Are those poeple insane? After a few years in the market, the iPhone is still growing 28% and analysts are not happy? What do they expect, that during the worst recession in decades people buy a new iPhone every year? Are we going crazy? Infinite growth does not exist.

  • User profile image
    JohnAskew

    Infinite growth does not exist? I didn't like the big bang theory anyway...

    Wall Street has come to demand automatic profits. They'll cheat and collude to fix interest rates if that's what it takes to insure their regular profit - regardless if the profits actually exist.

    Blame Wall Street for pushing the idea of ever increasing wealth from investments. It is a lie, but they've hypnotized us all with greed and lies.

  • User profile image
    Dr Herbie

    Drives me insane every time a company posts record profits and their share price drops because it wasn't as record-breaking as everyone speculated it might be.  Or a company posts a loss and it's shares go up because it wasn't as big a loss as people speculated.

    Wish people would stop speculating and just wait ... but that's not the nature of shares.

    Herbie

  • User profile image
    spivonious

    @Dr Herbie: Agreed. Apple just made $8,800,000,000 in PROFIT in THREE MONTHS and their share price drops. They made $97,777,777.78 PER DAY.

    I will never understand the stock market.

  • User profile image
    davewill

    The price of a share is coorelated to the price that share could be sold for and/or the amount of dollars it earns in corporate payout.  The market for various reasons buys in anticipation of a certain future value and/or earnings.  If that value isn't being realized then the share price drops as share holders cut their losses (or lack of anticipated profits).  In Apple's case the hugely anticipated value turned out to be flatter and thus the share price is simply correcting to that reality.  It isn't really a negative.

  • User profile image
    Dr Herbie

    @davewill: I understand that, but the degree of speculation is getting silly -- no one seems to buy for the long term anymore, so they all make desperate attempts to predict the immediate future which skews the short-term valuations that they're trying to make profits from.  I think this 'arms race' has destabilised short-term share prices.

    As Buffett stated "In the short term it's a popularity contest, in the long term its a weighing machine".  The popularity contest is getting out of hand.

    Herbie

  • User profile image
    magicalclick

     The stock reacts as expected. I see nothing strange about it.

    Leaving WM on 5/2018 if no apps, no dedicated billboards where I drive, no Store name.
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  • User profile image
    magicalclick

    @Dr Herbie:

    yes popularity contest is not for Buffett. I don't recall him investing in Apple.

    Leaving WM on 5/2018 if no apps, no dedicated billboards where I drive, no Store name.
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  • User profile image
    Richard.Hein

    I guess some investors see that as a slow down in the growth, and therefore time to get out.  I agree, it's pretty nuts.

  • User profile image
    davewill

    @Dr Herbie: Yep.

  • User profile image
    cbae

    , spivonious wrote

    @Dr Herbie: Agreed. Apple just made $8,800,000,000 in PROFIT in THREE MONTHS and their share price drops. They made $97,777,777.78 PER DAY.

    I will never understand the stock market.

    Stock prices are predicated on growth rate. If the rate of growth goes down, then the stock price should follow. IOW, stock prices are based on acceleration--not the velocity.

  • User profile image
    giovanni

    @cbae: Stock prices should reflect the value of a company. Defining value as infinite growth is nonsense.

  • User profile image
    Proton2

    Some other possible explanations of a falling Apple stock price:

    "One of the biggest risks to Apple's stock price and profit growth, ironically,  stems from one of the company's most amazing strengths:

     

    Its shockingly high profit margin."

    Read more: http://www.businessinsider.com/apple-profit-margin-2012-7#ixzz21oMKq24C"

  • User profile image
    Dr Herbie

    , cbae wrote

    *snip*

    Stock prices are predicated on growth rate. If the rate of growth goes down, then the stock price should follow. IOW, stock prices are based on acceleration--not the velocity.

    The point I'm making is that the stock in the short-term is not based on the companies actual worth, but on it's  predicted worth.  This is because of the cumulative effect of generations of traders trying to 'get in first' to get an edge on trading.  The end result is that the value of stock is affected by the predictions, but the predictions are affected by the value of the stock -- the whole thing is unstable and making life harder for everyone.

    Herbie

  • User profile image
    Ray7

    , Dr Herbie wrote

    *snip*

    The point I'm making is that the stock in the short-term is not based on the companies actual worth, but on it's  predicted worth.  This is because of the cumulative effect of generations of traders trying to 'get in first' to get an edge on trading.  The end result is that the value of stock is affected by the predictions, but the predictions are affected by the value of the stock -- the whole thing is unstable and making life harder for everyone.

    Herbie

    Pretty much sums it up. 

    In the next quarter, Apple will have to contend with analyst (and I use the term loosely) disappointment when they don't deliver an 7.85inch tablet powered by pixie dust and 60-inch Retina TV priced at $99

     

     

  • User profile image
    Richard.Hein

    , Ray7 wrote

    *snip*

    Pretty much sums it up. 

    In the next quarter, Apple will have to contend with analyst (and I use the term loosely) disappointment when they don't deliver an 7.85inch tablet powered by pixie dust and 60-inch Retina TV priced at $99

     

    I think that's why they stockpiled so much cash ... they'll need the money to buy back the stock as investors wail that Apple is going down.

  • User profile image
    Dr Herbie

    @Richard.Hein: Unless someone manages to convince the board (or acquires enough stock to force them) to make a payout to the shareholders (who theoretically own the assets) which might make people value the shares themselves rather than the predicted growth of the shares.  But either way the stocks got to drop in value eventually.

    Herbie

  • User profile image
    magicalclick

    @Dr Herbie:

    It is always based on predicted value. Why would you invest in something when you know it is going down? If you know MS is going down in the next 10 years, why bother to buy/keep it?

    Well, actually I invested something for at least 10 years, so yeah, some people would still consider the investment. My current investment is looking at 30 years of local mimima and local maxima. But obviously most people have much shorter window for this.

    Your Buffett is analogy is more suitable. It is your choice to see celebrity Justin Bieber concert with bunch of screaming teenagers. Or you can choose to attend an orcastra with less comfortable, more serious attire.

    What people are annoying is, they went to Justin Bieber's concert and then, few months later, they bad mouth how fast he lost fame, and complain his concert ticket was overpriced. Such shallow loyalty.

    Leaving WM on 5/2018 if no apps, no dedicated billboards where I drive, no Store name.
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