Tuesday, August 21, 2012

Apple Now The Most Valuable U.S. Company Ever


From The Wall Street Journal:

Apple Inc. surpassed Microsoft Corp. Monday as the largest U.S. company ever, measured by stock-market value.
Apple hit the new milestone—$623.52 billion—at a time when its influence on the economy, on the stock market and on popular culture rivals that of some of the most powerful companies in U.S. history: General Motors Co., whose Corvette and Impala typified a confident postwar manufacturing giant; Microsoft, whose technology heralded the arrival of the personal computer and the early Internet age; and International Business Machines Corp., whose buttoned-down rigor inspired rivals to reach for greatness.
That's an awful lot of iPhones and iPads and Macbooks.  But it tells us something about how the U.S. has changed in the past few decades.

50-years ago, people bought cars for more than transportation.  Cars were a statement about personal wealth and conferred status commensurate with the cost of the vehicle.  Cars were customized and coddled.  Sure, some of that goes on today... mostly with pickup trucks and small cars that make buzzing sounds... but most cars are now purely functional and functional is not sexy or demanding of a premium price.

30-years ago personal computers were new and made a statement about personal wealth and conferred status commensurate with the cost of the computer.  Microsoft and IBM were computers... except for those odd Apple computers that the oddballs bought.  If you were in business, you wanted IBM and Microsoft and you wanted them big and loaded so that everyone could be in awe of your computing prowess.  Sure, some of that goes on today, but computers are now purely functional and function is not sexy or demanding of a premium price.

A few years ago, "smart phones" began to appear.  There were a few who grasped the significance of this technology... the world at your fingertips anytime and anyplace.  There were many manufacturers who made them functional and a great convenience, but being purely functional was not sexy or demanding a premium price over every other smart phone.

But Apple had a different vision of this so-called smart phone.  It would be whatever you wanted it to be.  If you wanted it to be a game board, it became one.  If you wanted it to be a GPS unit, presto it was.  If you wanted it to be any of thousands of things, Apple made it possible... by letting others do the work creating "apps" and make a little money and make the iPhone an unbeatable, sexy product by becoming thousands of products in one that, presto, demanded a premium price.  And then they made it bigger and took away the phone feature and called it an iPad and, presto, they had a sexy new "tablet" that demanded a premium price.  And sexy sells a lot of phones and tablets... it makes statements and that makes a lot of money.

In 20 years will Apple be the next General Motors or IBM?  Hey, those corporations are still big, but not so sexy.  They are functional.  Maybe that's just the way of the world.  We've gone from cars, to large computers, to small, powerful iEverythings.  We've downsized our world to the palms of our hands.  Maybe the next big thing is the removal of the real world to be replaced by a virtual world where we are not limited to things that can hold us or that we can hold.  Maybe the next Apple is integrated with us, but makes everything sexy and lets anything be a statement that only we can perceive... and that will be the only thing we care about.  Our own personal Matrix?

Everything else will be purely functional... and functional just isn't sexy or demanding a premium price.

2012 IS HERE


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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)