Apple is Officially Worth More than Microsoft

On the other hand Microsoft is in a position where they can deliver the best integration of your web, desktop, mobile and living-room devices and has the resources and skill to do so.

They probably don't do it because they are such conservative douche-bags and don't want to threaten their cash-cows, but I wouldn't bet against them in case the money from Windows / Office stop flowing and they end up in a position where they either compete or die.

I'm not sure how the asking price for a share is substantially different than the concept of "value" I mentioned before. Both are fictitious concepts that have very little to do with the actual price something should have (I'll use the term "worth" here to describe that more precise measure, but feel free to substitute average cost or some other term that means "the objectively calculable price for something").

A share price can be both under and over valued right? Under or over what? Worth.

One way to measure is revenue/outstanding shares (though secondary factors like P/E, private investments, etc. figure into this to define more precise measures) another way is based on a softer metric like "valuation" which is typically some multiplier of revenue/yr (notice the root word of valuation is "value" which is precisely what I'm talking about -- and we both know that valuations can have very little to do with reality (see Facebook for a case study in how valuations can be broken).

Share prices are merely a representation of the subjective "value" of a share vs. the actual price for some % of a company. If the market thinks something is hot, it doesn't matter if a share is actually worth only $2 or $3 from a pure revenue/yr perspective, demand for those shares can drive shares up to ridiculous levels -- hundreds of percent above what they should be. If a company is not "hot" (based on the very subjective moods of the market) those shares might even sell for less than they are worth because people see the value as less.

The market does a very efficient job of obscuring the worth of a share in some company by only feeding investors value signals.

There is nothing different from this concept than the concept of value at the microeconomic level. If I see an item for sale. I have a pretty good idea what it's worth is based on materials, construction techniques and various other factors that contribute to the manufacturing cost of a product. But again, just like in the market, all of the signals I receive about a product are value signals not worth signals. So I compare that mental model to the asking price to determine if I'm getting a good value for my purchase. Value here being how close to the average per unit cost I'm able to estimate. A pair of shoes might be priced to sell at $150. The next week it goes on sale for $100. That increases the perceived value I get from the purchase. But I might still skip it if I have a good idea that the average cost per unit-pair of shoes is only $10. But companies seek to increase the value of their products at higher prices by various means like brand building.

This is the logic that good investors use when deciding to buy and hold or sell shares. If a stock's value is perceived to be too high compared to the average worth of a share, investors expect that the share price will more likely go down than up. Companies seek to influence this by keeping investors interested with positive statements about the company. "new product!", "big contract!", "how new business concept!", "change in leadership!", "increase in business efficiency!" so that a share of XYZ company, that may only be worth $10 on a revenue/shares matter is valued at $150 by the market.

Please explain.

I never said it helps Google only that it hurts Apple. The fact that google can hurt Apple so much without a large direct profit motive is pretty telling about Apple's weakness IMHO.

If you spend $100M buying back stock at the top of the market and then the next year, the bubble pops and your stock is down 50% was that really good capital allocation?

For every dollar you spent, you have effectively lost 50 cents. Sears admitted as much back in 2007 when they were buying back stock at $180 only to watch it drop to $90 a few months later. Remember, the idea with buybacks is to reduce overall share count so that you boost EPS and in turn your share price.

The amount you can retire might double if you simply wait out a bubble period. That's why dividends and buybacks need to be looked at relative to where the stock valuation is. When your stock is trading at a peak valuation, if you want to release value to shareholders, you are much better off using a dividend than a buyback.