The stock market is little more than legalized gambling. Like Las Vegas, it’s a good way to make money without much effort, but it’s also a good way to lose more money if you choose the wrong stocks at the wrong time.
Let’s take AAPL as an example. By most financial measurements, Apple Inc. is a well run company with vast resources, solid and dependable revenue and profits, and has rewarded shareholders well in recent years. Why the 40-point AAPL drop in the past month or so?
Stock prices go up and down for many reasons and few of them make much sense thanks to the herd mentality on Wall Street where any negative rumor– fact or fiction– can send a stock on a catastrophic dive or a ride to the outer atmosphere. Rational? Or, irrational?
It isn’t as if savvy investors or smart Apple executives did not see the handwriting on the wall. Or, handwringing. Take your pick. The end result is the same. The world has reached peak smartphone. Apple reached peak iPhone a few years ago. Peak Mac, too. Peak iPad as well. But not peak revenue or profits as both continue to climb northward thanks to Apple’s ability to jack up prices and gross margins to gross levels.
Al Root on the Apple Recession:
The iPhone has matured. It’s 11 years old and it isn’t growing like it used to.
That’s old news used to justify a few of Apple’s component suppliers who anticipate a downward spiral on their revenue and earnings. iPhone hasn’t been growing in any substantial way in unit sales for a few years. So, why all the fear mongering now?
Apple knows iPhone unit sales are going to drop over the next few years and decided not to share numbers in future financial statements. That’s not much of a big deal because Apple was about the only technology gadget maker to share such sales numbers and perhaps it would have made more sense to stop and get off that number train a few years ago instead of now when unit sales will decline.
Add that to a bunch of supply side rumors and the stock market has Apple indigestion.
Analysts seem to be tacitly endorsing the idea that iPhone sales will now be more cyclical.
Yeah, I know. That’s what amounts to astute market analysis in the 21st century. iPhone sales have always been cyclical, but the peak was a few years ago, even though sales are on a plateau while competitor smartphone sales are down.
It also doesn’t appear that tech investors were ready for slower iPhone growth.
Why the hell not?
This handwriting and handwringing has been on the wall for a few years already. Worse, we’re not talking about slower growth. iPhone sales are down from 2016. Down. Down is not growth. Revenue and profits going up on going down sales can be reconstituted growth juice as Apple squeezes more money from the same number of customers, but how is all this a surprise for supposedly smart and well educated market analysts who watch AAPL, Apple, and the industry for a living?
What do I see over the horizon?
Lunch. Pizza. Maybe a cold beer. My fear is a gadget industry apocalypse triggered by Apple, AAPL, and the smartphone industry. Why? We have enough gadgets already, and since iPhone, nobody– including Apple– has come up with the next great thing. Not Google. Not Samsung. Not Amazon. Not all those Chinese knockoff makers. Whatever that next great growth engine will be, it begins to look more like Mulder’s search for the truth.
It’s out there. Believe. But nobody knows exactly what it is.
Otherwise, get ready for the technology apocalypse because it won’t be pretty and only the rich will survive.