Tuesday, April 23, 2013

Why All The Crazy Reporting On Apple (AAPL)?

The purpose of a business organization is to create value by serving customers which Apple is doing just fine.

Stock markets on the other hand are a form of legalized gambling based on forecasting and manipulating the future perceived value of a stock investment. Investors can be ill informed, fickle, and impatient. The more popular a stock becomes, the bigger the opportunity to profit by manipulating its perceived value.

This is why we keep seeing a stream of ridiculous and often conflicting reports predicting tough times ahead for Apple. It has little to do with Apple's actual financial results or management which have been exemplary. There are powerful financial interests seeking to move the stock price up and down. To profit by trading such a stock, you only need to predict its future perceived value better than your trading partner.

Maximizing shareholder value in the short run has very little to do with running a successful business unless management has been so corrupted by drinking the Wall Street Kool Aid that they actually put maximizing their own short term gain ahead of serving their customers. If this ever happens, the original visionary purpose of the company has been lost.

Jack Welch the iconic CEO of GE described "maximizing shareholder value" as the dumbest idea in the world. The reason he used such strong language is because there are a lot of sheep who actually believe this nonsense.

Don't buy it. The purpose of our economy is to provide the goods and services people want, not to enrich Wall Street cronies. Apple is doing just fine at the former. The later is not Apple's job.

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