Pray, The Sequel
M.G. Siegler

The problem isn’t with Apple, it’s with Wall Street and the assumptions Wall Street operates under.

Actually, let’s take it a step further: the problem is with the fixation on share price as opposed to share dividends. Since share prices have increased faster in the last 20 or so years than the dividends paid (which is the norm any time there’s a state of flux in an industry), investors have made their money from increases in perceived value rather than from value earned.

And growth is the simplest measure of perceived value. It’s what every Jane and Joe Blow can see. One simple metric that says whether stock prices will go up or down. And as long as enough people believe in it, it’s a self-fulfilling prophecy.

Unfortunately, growth can’t go on forever. Once you’ve sold your gizmo to everyone on the planet, once everyone is using your service, growth is zero.

Which is what’s happening to Apple. And it’s fine, as long as the balance sheet is positive. Except it’s not fine for investors who require ever increasing stock prices. And thus Apple’s in trouble even though it’s as far from trouble as can be.

Of course, if Apple’s management would ever put it this way they’d get sued under the stockholder’s interest laws. Meaning that Wall Street’s got Apple by the apples.