The power of the market

September 21st, 2012 at 7:00 am by David Farrar

The Herald reports that in August 2008 the share price for RIM was $132.40 and for $176.03. Fairly close.

Today the price for Apple is $701.91 and RIM is $7.25.

So four years ago $100,000 would get you 568 Apple shares or 755 RIM shares.

If you had invested in RIM you would now have $5,475 left – you would have lost 95% of your $100,000.

If you had invested in Apple you would now have $398,744 and would have 299% of your $100,000.

Now it is very sad for all the RIM staff who have lost their jobs, and all the RIM investors who have lost 95% of their investment.

But this is how the market works. Some companies succeed, and some fail. Some people get rich, and some become poorer. Yes, you have massive income and asset inequality.

I’m not surprised by the fall off in value for RIM. Three years ago almost everyone in business had a . Now I see one about as often as Haley’s comet. Quite simply Apple produced a much better product, and customers voted with their feet.

Tags: , ,

24 Responses to “The power of the market”

  1. MT_Tinman (3,043 comments) says:

    Better product or better marketing?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. freedom101 (479 comments) says:

    Meanwhile the NZ Labour Party has called on the Canadian government to step in and save RIM. “The skills which will be lost are irreplaceable and smartphones are strategically important to the economy” said a spokesperson.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. George Patton (350 comments) says:

    Don’t forget Nokia. A USD $100,000 investment in Sept 2007 would now be worth $8100.

    http://finance.yahoo.com/q/bc?s=NOK&t=5y&l=on&z=l&q=l&c=

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. berend (1,673 comments) says:

    The only thing the market may not decide is what banks should fail!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. berend (1,673 comments) says:

    MT_Tinman: Better product or better marketing?

    I spend less than 1 minute per year watching the MSM, and I surf with adblock. Haven’t seen an Apple ad in years. So is Apple marketing very prevalent? I knew that when I saw an ipod 5, I wanted one. Also when I saw an Asus Eee Pad Transformer, I wanted one too.

    So does Apple do much marketing? I think most people bought an iphone because they saw one. Not because they saw an ad.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. MT_Tinman (3,043 comments) says:

    Berend, television advertising is but one form of marketing.

    Apple are very good at getting their products into public vision.

    The question however was legitimate.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. berend (1,673 comments) says:

    I’m not an Apple fan boy, so from a technical perspective I can assure you that at least certain Apple products are superior to their competitors in many ways. I don’t like Apple, because they’re a closed system, but they deliver a very high quality product.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. frankflintstone (70 comments) says:

    berend

    advertising does not equal marketing

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. Patrick Starr (3,675 comments) says:

    “So does Apple do much marketing? I think most people bought an iphone because they saw one. ”

    You may have answered your own question

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  10. Peter (1,662 comments) says:

    Apple are very good at marketing, advertising AND product.

    It really comes down to what you want, as all phones are an exercise in trade-offs. Personally, I place high value on interfaces, less on technical specifications I will never use. If some phone can do spec XYZ better than Apple, and I’m sure there are, then that is fine, put to me the Apple package just works very well.

    I haven’t seen any other phone that does what the iPhone does near as well. For me.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  11. scrubone (3,081 comments) says:

    I await the bill to give blackberrys equal status with iPhones before the law – equality and all that you know!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. davidp (3,555 comments) says:

    If Labour were in charge, Apple would have been forced to hire RIM’s employees.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  13. Bed Rater (239 comments) says:

    Of course, that’s discounting the fact that apple’s share price is probably derived from crazy speculation, rather than the NPV of expected earnings and growth. i.e. Apple’s share price is overvalued compared to it’s performance, but so long as the fashion keeps going, it will be OK..

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. PaulL (5,977 comments) says:

    I had a strong belief a few years back that RIM were destined for failure. They ran a very closed system with high backend costs for the organisations that used them. They were profitable at the time, but push e-mail (Apple and others) killed them.

    On how good Apple are, the thing that makes the difference for me is that it just works all the time. There are features missing (the missus has an Android device, it has more functions), but the iPhone does 90% of what I need, and does it seamlessly. I upgrade it when new updates come out, it’s never broken. iTunes, however, is a piece of crap, but you don’t need to use that much any more.

    On Nokia – that one would have caught me out, they were doing really well for a while. Although again it was blatantly obvious that Symbian was a dead duck.

    On whether Apple are overvalued. In my opinion, yes. I’d never buy their shares at the current prices, they must crash (and yes, it may take a couple of years, but I think it will definitely happen, basically the price includes an assumption that they make no mistakes in the next few years)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  15. seanmaitland (470 comments) says:

    Its not just marketing, they had Steve Jobs behind them who was an enigma – when he said stuff and released products, a lot of people listened in awe. Add that on to the fact that they release products with so much more flair and style than their competitors and you can see why they have been so successful.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  16. Rich Prick (1,624 comments) says:

    As some one who has both, I can unreservedly confirm that “better product” is the answer. In every single respect – from typing, scrolling, browsing, to reading pdf files (and looking at porn ;) ).

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  17. KiwiGreg (3,211 comments) says:

    Apple’s P/E is 16, it trades at 11x LTM EBITDA, it’s certainly a little ritzy but not a lot given its market position and growth history. For a diversified portfolio its a little hard not to hold it given its size.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  18. rangitoto (218 comments) says:

    Apple make very good products but i don’t like their penchant for litigation. Their actions have now led to retaliation from Google via their Motorola Mobility subsidiary. Motorola Mobility hold a large collection of serious patents on Mobile tech (unlike bullshit such as rectangle with rounded corners).

    http://arstechnica.com/apple/2012/09/motorola-asks-itc-to-ban-every-mac-ipad-and-most-iphones/

    None of this stuff does any good for the consumer or the tech co’s themselves. Lawyers are happy though.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  19. Dave Stringer (185 comments) says:

    You’d have 399% as your original $100,000 would still be there too!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  20. KiwiGreg (3,211 comments) says:

    “but i don’t like their penchant for litigation”

    You dont think they should (succesfully) defend their intellectual property?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  21. wreck1080 (3,794 comments) says:

    Business failure is the most important ingredient for business success.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  22. dime (9,634 comments) says:

    apple stock is still quite cheap actually socialist.

    bed rater, yearning for a govt owned company who produce one type of cellphone. the model never changes and barely works but goddam no scumbag is investing money in the company and pulling a profit.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  23. gump (1,541 comments) says:

    When Apple shares reached $50 for the first time, I wrote long-winded posts on online message boards that passionately argued why they were over-valued.

    Now that the shares have reached $700 I feel pretty dumb.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  24. KH (693 comments) says:

    I’ve got a Samsung SIII
    Conclusion – dump the Apple shares quick.
    Take your profit and run.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.