Instead, we get the misinformation superhighway where fake news and distorted realities rule, while common sense and insightful analysis are quaint ideas from yesteryear. How can you tell?
Look at the stock market.
Would you not expect publicly traded companies to be well run companies with growing revenue and profits that have positive impact on their market segments? Uh huh. Makes sense, right? If you thought that you would be wrong.
Any consideration that Apple is not a well run company– especially when compared to competitors (and few of them are direct competitors; Apple is special)– is a moronic mindset. Yet, this is an example of Apple’s recent woes from Michael Sheetz:
Apple has lost $452 billion in market capitalization since Oct
No, Apple Inc. did not lose $452-billion in value. APPL did. They are not the same. One is the company. The other is the value of stock, as ascertained by shareholders and the stock market. APPL has fallen about 40-percent since the record high of a trillion dollars or so a few months ago.
Yet, Apple CEO Tim Cook, facing a market crash in China– thanks mostly to monkeys who invaded 1600 Pennsylvania Avenue in Washington, D.C.– announced that Apple’s revenue would be less than expected. By less than 6-percent, and most of that coming from market turmoil in China. Gross margins and operating expenses remain the same as predicted. Tax rate, too.
Apple’s financial problem is not iPhones or Macs or iPads with crazy high prices. Apple has always been the premium product. The problem is turmoil in China and some of the blame for that can be laid on the front lawn of 1600 Pennsylvania Avenue.
Yet, the stock market– owners of APPL, not Apple Inc.– shed $452-billion in value over a few months. Yet, Apple’s financials are stellar; what you would want in a well run company of great value.
Emotion. Not insightful analysis of the situation. Not even common sense. Too much of Wall Street and the stock market in general is herd mentality and the herd was spooked by crazy-assed news that makes little sense when you look at Apple numbers.
Apple’s price-to-earnings ratio– a key metric to determine a company’s health– is excellent, especially when compared to market competitors– Microsoft, Google, Amazon, et al. Look at what the market did to HP. The P/E is excellent at just over 6 (Apple is 12, Microsoft is 26, Google is 35, Amazon is an atrocious 347) but the stock market rewards the company with a ridiculously undervalued market cap of barely $32-billion.
The stock market itself is little more than legal gambling outside of Las Vegas, and stock value has little bearing on whether a company is valuable and well run.
It’s all about the direction of the herd. That means someone is controlling where the herd goes. Every share of APPL or GOOG or HP sold means somebody is buying the stock. Why? Market axioms still work.
Buy low, sell high.
To do that requires that a few specific tips be employed in the process. Peter Lynch has the best.
- Get a solid foundation of business and stock market knowledge
- Invest only in companies you thoroughly understand
- Diversify your portfolio
- Don’t ignore smaller companies that Wall Street is overlooking
- Do extensive research
- Invest with a long-term mind-set