The Macalope Daily: McHistory lesson

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The contrarians are at it again over at Seeking Alpha.

Stephen Samuel provides a dire warning about why Why History Should Worry Apple:

“The four most dangerous words in investing are: ‘this time it’s different.’”

So goes the sage advice of legendary investor Sir John Templeton.

Those are the four most dangerous words in investing? Not “too big to fail” or “just a liquidity problem” or “Martha Stewart acted alone” or “Henry Blodget recommended it”?

Sir John Templeton, by the way, also favored fundamental analysis of stocks, and it’s pretty hard to argue that Apple’s fundamentals are anything but sound.

Cast your mind back to 1994.

Ugh. Do we have to? So much flannel.

Samuel takes us on a Dickensian journey through the past, which supposedly provides valuable object lessons because, you see, other companies that were once on top of the cell phone business… no longer are!


Why should this history lesson worry Apple, the world’s largest company by capitalization, with an incredible record of beating estimates time and time again? The reason is simple - no company can stay ahead of the curve forever.

Well, if it’s just fate, then why should the company worry about it? This is effectively Samuel’s argument. Whether Apple stays in Corinth or goes to Thebes, the iPhone will one day fall from its throne as king of cell phones.

One day. None of the commentators who keep bringing up the “gravity” theory of Apple’s impending doom can tell you when exactly this inevitable free-fall is supposed to start.

In a race of ten sprinters, the front runner has to stay ahead of nine other runners. The rest are focusing purely on beating that single runner.

Hey, guess what else, Stephen. The front runner has a head start.

Apple’s iPhone tapped into the small, but keen, base of Mac users.

Apple sold 37 million iPhones last quarter, which is ten times the number of Macs it sold. Apparently Samuel thinks every Mac user bought ten iPhones.

Samuel might want to get himself a tetanus shot because he’s leaning pretty hard on that rusty old saw about Apple’s success being due to its loyal fan base.

This is not to say that Apple is not a great company. It is without doubt the greatest innovator of recent years in the mobile sphere with an incredibly loyal fan base and an aura of “cool” unrivaled, in this author’s opinion, by any other brand in any other industry.

While Samuel discusses such positives as Apple’s fan base and its “cool” factor, he never mentions the company’s financial results or its profit share. Such is the state of modern stock analysis.

One killer release from Samsung, HTC or another hitherto unknown Asian manufacturer, or a lackluster future iPhone release and the seismic shifts that have happened so often in the mobile industry could occur again.

Ah, the David and Goliath theory of stock valuation! All it takes is one rock! The problem is, Apple’s most recent quarterly results make a mockery of Samuel’s supposed Davids. Apple gained market share on Android; the iPhone is more popular than ever. Samsung, meanwhile, just released a gigantic belly flop of a phone.

So, long story short, your theory is so vague as to be useless and your indicators aren’t indicating what you think they are.

Thanks for the warning, though.

(Disclosure: the Macalope holds an insignificant number of Apple shares.)

[Editors’ Note: In addition to being a mythical beast, the Macalope is not an employee of Macworld. As a result, the Macalope is always free to criticize any media organization. Even ours.]

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