Apple Is Not The Most Valuable Company In The History Of The World

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#51

Post by JumpCrisscross » Tue, Aug 21, 2012, 10:09 AM UTC

stickfigure wrote: post #12

How about this alternative way of measuring the 'value' of a company: Net asset value (including retained earnings) plus the sum of all dividends ever issued, minus total investment capital.

Most companies don't trade at book value because net asset value is a bad measure of market value. Getting a mark-to-market assessment on a firm's entire balance sheet is very expensive and still resorts to estimating market value rather than directly sampling it.

One could do equity value + discounted payouts - discounted invested capital. This includes payments on debt and possibly taxes.

This measure would not be a "value" in an economic sense as valuation is in present terms, incorporating future potential and using the past only to inform assumptions. This measure catalogs a company's time-integrated capital productivity. This could inform a valuation, but taking an extreme case, it would value dearly a shell company that just paid its assets out in a dividend.

With the subjectivity complexities like cross-border activity or M&A introduce the exercise has little value beyond the pedagogical.

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#52

Post by rauljara » Tue, Aug 21, 2012, 10:11 AM UTC

jcampbell1 wrote: post #31

The article has wrong facts. The columbia journalism review author double counted inflation. The NYTimes piece he cites has already adjusted for inflation in the 1967 IBM Market cap.

This is by far the most important comment on the page. Very frustrating that, when I read it, it was nowhere near the top.

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#53

Post by Jabbles » Tue, Aug 21, 2012, 10:20 AM UTC

reitzensteinm wrote: post #5

>.... [Apple] would have a value of more than $3 trillion by 2020. As the Times points out, that is bigger than the 2011 gross domestic product of France or Brazil. Comparing an outlandish guess for a 2020 market cap versus a 2012 gross domestic product (a flow of money, not a store) is hand waving, not analysis.

Surely if the journalist actually thought Apple stock would increase in value 6 fold in the next 8 years they'd buy it. (And then put a disclaimer on the article.) If the market shared their opinion then it wouldn't be available to buy at such a low price.

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#54

Post by nitrogen » Tue, Aug 21, 2012, 10:39 AM UTC

ekianjo wrote: post #44

nitrogen wrote: post #39

Earlier quoted context omitted.

Some people buying branded t-shirts may simply prefer the fit and price of a shirt, and don't care what it says on it.

Somehow I find it very hard to believe. Remove the logo on the lacoste polo shirt and the Nike shoes and see if they would buy it still.

I'll use myself as a proof by counterexample. When I was buying my t-shirts from places I actually wanted to support, like ThinkGeek, or buying solid colored t-shirts with no logos, I found that the poor fit of the t-shirts was making me look bad and feel uncomfortable.

Eventually I was talked into going "shopping" by a couple of female friends (actually, I talked them into being my guide), and found that the only t-shirts I could find that made me look and feel good, with a wide range of prices, also happened to have well-designed corporate logos on them.

So, until it becomes technically possible and socially acceptable to have custom-tailored t-shirts that fit perfectly, have the right fabric, pattern, and seam/collar/hem, and are emblazoned with my family crest or personal corporate logo, I will continue to buy whatever looks and fits the best within my price range.

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#55

Post by confluence » Tue, Aug 21, 2012, 10:47 AM UTC

monkeypizza wrote: post #49

confluence wrote: post #40

Let me get this out right now: Valuations mean jack shit (companies/houses/startups/humans - whatever). Especially "market caps". Understand this: 21.91 million shares of Apple were traded yesterday. That is $14,460,600,000 moving around. [1] Now you must adjust down for HFT traders, market makers, option hedgers, futures guys and anyone else who trades massive amounts of stock each and every day. My rule of thumb is…

I'm not so sure that temporarily changing the market cap of apple really would count as controlling it. It's like saying: I can jump on the field at a Yankee game and "control" 50k spectators and 50m viewers. You may influence them for about a second, but the farther you try to bring the situation from the market's desire, the quicker you'll be corrected. Sinking 1b into selling apple short would make a small, tempor…

You ignore the effect of feedback loops. You are also making the fallacy of reification (market doesn't want anything).

They key part to this lesson is that valuations are essentially arbitrary (not about market manipulation - although market dynamics are an interesting subject). Take no stock in them (pun intended) - just like you should ignore the predictions of pundits.

The following examples exemplify the meaninglessness of valuations:

If I had a kid, he/she would be worth more to me than anything else in this world. But as much as I'd adore him/her - he/she ain't worth jack to anyone else. If I'm dying of dehydration - the next cup of water is worth most of my future earnings. If I just had a glass - it's worth next to nothing. Dying because a fire is burning and you're running out of air? Oxygen tank would be pretty handy right about now. Got enough oxygen? Pfft don't need your tank.

Valuations are and will continue to be meaningless.

> try to bring the situation from the market's desire

I doubt it - you need regulatory agents to rein it in (security). Also - you are making the fallacy of reification right here.

Otherwise - it's a free for all.

Audiences love that stuff.

PS: Shorting a billion in Apple would seriously depress its price as feedback pulls in (stop losses and latent short orders) - and if you hook it up to another one - like say a debt crisis - well now you have some fun on your hands.

Also your name reminds me of that dancing monkey problem I must write about some day.

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#56

Post by maxerickson » Tue, Aug 21, 2012, 11:22 AM UTC

D_Alex wrote: post #32

Rockefeller's Standard Oil was possibly even more valuable - at the time of it's anti-trust mandated breakup it produced around 90% of USA's oil. The companies it split into became Exxon, Mobil, Chevron, Amoco, Conoco, Unilever (!) and a whole bunch of others.

I'm playing wiki-facts here, but Unilever bought one of the breakup companies in 1987. The Unilever conglomerate established itself very much without being part of Standard Oil.

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#57

Post by rmc » Tue, Aug 21, 2012, 11:59 AM UTC

reitzensteinm wrote: post #5

>.... [Apple] would have a value of more than $3 trillion by 2020. As the Times points out, that is bigger than the 2011 gross domestic product of France or Brazil. Comparing an outlandish guess for a 2020 market cap versus a 2012 gross domestic product (a flow of money, not a store) is hand waving, not analysis.

Apples and Oranges. The GDP is the income of a country (roughly), the market cap is more than the current annual income of a company. Not at all comparable.

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#58

Post by Dn_Ab » Tue, Aug 21, 2012, 12:04 PM UTC

reitzensteinm wrote: post #5

>.... [Apple] would have a value of more than $3 trillion by 2020. As the Times points out, that is bigger than the 2011 gross domestic product of France or Brazil. Comparing an outlandish guess for a 2020 market cap versus a 2012 gross domestic product (a flow of money, not a store) is hand waving, not analysis.

This is worse than hand waving. It is the kind of static typing error one gets when using Astrology to reason about money.

You just cannot compare the value of a projection/guess that doesn't account for inflation with the current instantaneous GDP value (thus completely ignoring the fact that money today is worth more than in 2020) while at the same time not projecting Brazil's current value.

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#59

Post by giorgiofontana » Tue, Aug 21, 2012, 12:05 PM UTC

rauljara wrote: post #52

jcampbell1 wrote: post #31

The article has wrong facts. The columbia journalism review author double counted inflation. The NYTimes piece he cites has already adjusted for inflation in the 1967 IBM Market cap.

This is by far the most important comment on the page. Very frustrating that, when I read it, it was nowhere near the top.

I totally agree.

Re: Apple Is Not The Most Valuable Company In The History Of The World — IBM Is

#60

Post by artursapek » Tue, Aug 21, 2012, 12:05 PM UTC

enneff wrote: post #6

It's gross how much of the article is spent postulating on what Steve Jobs would think. He's gone. It's both irrelevant and disrespectful to put thoughts in his head.

Well, it's Techcrunch.