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Businesses The Almighty Buck Apple

Apple Too Big For the Dow Jones Industrial Average 218

An anonymous reader writes "Apple is clearly the hottest tech stock on the market right now and the company is clearly at the vanguard of technological innovation. Consequently, many have wondered why Apple isn't part of the Dow Jones Industrial Average (DJIA). As it turns out, Apple's astronomical share price effectively prohibits the company from joining the DJIA as it would disproportionately influence the index."
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Apple Too Big For the Dow Jones Industrial Average

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  • by cosm ( 1072588 ) <> on Wednesday September 21, 2011 @06:59PM (#37473978)
    It is white collar gambling and no more about company valuations than Full Tilt was about legit poker playing. Sure you can make money if you're smart/lucky/know the right people/have the right fiber connection/have the best and brightest market manipulation master from the major STEM universities, but other than that the house is stacked against you. The distribution of wealth in the country (and world for that matter) among individuals is reflective of those at the top of the game rigging it to their advantage, politically, technologically, and otherwise.

    Or am I just another FUD spewing pinko-commie?
  • Re:one other reason (Score:5, Interesting)

    by Oxford_Comma_Lover ( 1679530 ) on Wednesday September 21, 2011 @07:01PM (#37473998)

    They have $69 Billion in equity, $23 billion in annual income (generously taking the four most recent quarters), and market cap of 382 Billion. That means it would take 13.6 years of income, at present rates (which are MUCH higher than historical rates) to break even. Around 207-230 Billion would be a fairly safe price, assuming they can keep up this level of income--and is a tad under 60% of their current market value.

    They're not overvalued by 30x -- that would imply they were worth $12 billion, and their equity alone is better than five times that. But they are overvalued by at least 20-30% from the standpoint of a prudent investor.

  • Re:That seems dumb. (Score:4, Interesting)

    by TWX ( 665546 ) on Wednesday September 21, 2011 @07:01PM (#37474000)

    There's something to be said for having a high share price if the company is big and successful- those who tend to buy tend to hold on to it for a long period of time, and the day to day operations of the company are directed toward a long-term profit mindset. When a company is traded constantly and when shareholders are only buying it to look for a short to medium term profit (like a year or two) then they don't are how the company performs down the road, and the board will reflect that, making decisions that make money now but could cost the company everything long term as they didn't invest in the long term.

    As much as I dislike Apple sometimes, they do seem to have the development cycle down and they don't rest on their laurels as far as trying to make each product line last as long as possible before being forced to replace it. Many companies won't change unless they're forced to by consumer-driven market choices. Apple changes faster than just about everyone else, and enough people buy into the hype with it that they keep selling products for the long term.

    It'll be interesting to see how this plays out in the next decade or so, as Jobs becomes less and less relevant.

  • by mattack2 ( 1165421 ) on Wednesday September 21, 2011 @08:50PM (#37474904)

    If you believe that, short it and make money.

Garbage In -- Gospel Out.