What if you had bought Apple stock instead of that iPod?

http://www.kyleconroy.com/apple-stock.php

by Derferman • 16 years ago

161 85 16 years ago

exspiro• 16 years ago

super cool.

Derferman2• 16 years ago

Thanks. I'm glad you like it. I am thinking about possibly updating the code base so that the prices are generated in real-time, based off Apple's current stock price.

siculars• 16 years ago

http://www.google.com/finance?q=aapl&output=json

I believe it is item "l"

philwelch4• 16 years ago

This is almost depressing. As a freshman in college, I bought a PowerBook. If only I had bought the equivalent value of Apple stock, I could have afforded my entire college education.

baxter• 16 years ago

But I imagine at the time you would have still needed a computer?

jaytee_clone• 16 years ago

Yeah, but it's always easy to do this kind of number crunching assuming you know exactly when you will sell the stock.

Of course, that's never the case in real life. Imagine the time you would spend worrying about your investment and analyzing when it will go out or go down or when to exit, etc. If you convert that into money say $20/hr, is it still worth it to invest as suppose to buy the PowerBook?

Better yet compare it to the efficiency you have gained by having a PowerBook, or if you are a hacker, how much more you'd have learned by having a computer then. How would you even go about quantifying that?

philwelch4• 16 years ago

Thought experiment: Imagine a stock market with active participation by time travelers. Would surprises and risk be eliminated?

n8agrin• 16 years ago

This line of thinking is dangerous. Investing in the stock market is always a _risk_. I doubt you find yourself thinking "Oh if only I had bought 2,500 lottery tickets instead of that Powerbook, I'd might of afforded my entire college education." Of course not, because we've been taught that thinking like that is ludicrous.

Now before I get blasted for that comparison, obviously the lottery which is meant to be random is not exactly equivalent to an open market where information flows can mitigate some of the risk and provide indicators of good potential investments. But, investments are always a risk regardless especially as you are just getting out of school, have loans, and don't have much money you can afford to loose in bad investments.

Having graduated from grad school two years ago myself I've been doing the following: 1) In general I've been paying off my loans as quickly as possible as their interest rates are higher than the rates of returns I would see from putting money into the market. 2) Because the market was in a special place after grad school, I've temporarily violated my #1 rule and put about half of my spare money into retirement funds tied to the market as it was fairly obvious that the market would probably rebound strongly (which it did, yay!). 3) As the market's rebound levels off I'm redirecting more and more money back to my loans. 4) If you're going the route of retirement funds, invest in Roth IRAs before you're making too much to not be able to invest in them.

Once you have reduced your debts then take your money and go play in the market, but only with money you're willing to loose.

BTW - I realize that my current investment strategy is pretty conservative, as I'm attempting to experiment with living nearly debt free. I would love to hear alternative theories if there are any.

ianium• 16 years ago

Would be really neat if there were a few of the earlier models too, for comparison

pyre2• 16 years ago

The cost of an Apple IIe in inflation-adjusted terms vs the same amount of stock back in the day... vs the price of an original working Apple IIe on ebay now?

FreeRadical• 16 years ago

Can you also include transaction costs to give a truer picture. This will be more relevant for the smaller gains. Also remember these are pre tax.

awa2• 16 years ago

what about sales tax?

arch_hunter2• 16 years ago

Considering all of those, you might as well also include capital gains tax.

philk• 16 years ago

I'm still optimistic about my conservative, iPad-based portfolio.

arch_hunter2• 16 years ago

You may want to unlaod those iPads sometime soon. As soon as Apple announces the next generation they are going to go down significantly in value.

cloudkj• 16 years ago

I think he means a portfolio of investments in companies involved in the manufacturing and production of iPads, i.e. http://en.wikipedia.org/wiki/Ipad#Manufacture

It sounds like it would be a good idea, but you'd actually have to take a look at each of the companies, and figure out exactly how much each contract with Apple is going to bring in relative to their current revenue streams.

martythemaniak• 16 years ago

I hoping that was a reference to this classic Zoidbergism: http://www.youtube.com/watch?v=e3QRTToTLzI

andr• 16 years ago

Adjust for inflation (2.8% mean for 1997 to now [1]) and the $330k value of a PowerBook goes down to $230k in 1997 dollars.

[1] http://www.wolframalpha.com/input/?i=US+inflation+from+1997+...

phil• 16 years ago

Yeah, but you wouldn't have those dollars in 1997, you would have them now, after the stock has appreciated. Inflation is rolled in to the stock price in this comparison.

aaronbrethorst• 16 years ago

On the other hand, if you opted for the Nomad back in 2001, you definitely made the right choice vs. buying stock in Creative Labs.

endtime• 16 years ago

Ha - I replaced my 32MB Diamond Rio with the whopping 64MB Creative Nomad as soon as it came out. I remember trying to solve the knapsack problem manually, just to squeeze as many total seconds of music onto the thing as possible. On reflection, I was probably a slightly strange 13-year-old.

gojomo• 16 years ago

Nicely done! If you were inspired by this thread -- http://news.ycombinator.com/item?id=1291809 -- a shout-out would be nice. Glad to see the detailed implementation, either by inspiration or independent-invention, in any case.

But: only back to 1997?

What if I hadn't bought that Powerbook Duo 230 in late 1992? (~$2200 from Whole Earth Access in Berkeley, if I remember correctly.)

Derferman2• 16 years ago

Thanks, that comment actually was the inspiration behind my post. I am adding a shout-out right now.

CRASCH• 16 years ago

I wish they had the original Mac 128k I bought in the fall of 1984. I painted all summer to be able to buy that.

brg• 16 years ago

How much did Microsoft lose by divesting itself of Apple stock prematurely?

markbao4• 16 years ago

Microsoft invested $150 million into Apple on August 5, 1997 (convertible preferred nonvoting stock which ultimately converted into 18.2 million shares of common stock). Bill himself appeared on satellite link at Macworld (1997!). 18.2 million shares today is $4.9 billion (split-adjusted).

I can't find when exactly Microsoft sold their shares, but it was sometime during 2003. Wolfram Alpha calculated the mean price of AAPL in 2003 was 9.26 (max 12.41 min 6.56), which is split-adjusted. The real price then would be 18.52 (mean). One split would have happened, so 36.4 million shares were owned by MSFT at the time of sale, so they sold for a mean of $674 million.

Someone check my math? It's 5am. It's difficult because a lot of the sources I used don't denote whether a price is split-adjusted or not, and Microsoft converted portions of stock at different times. It's a mess.

kprobst• 16 years ago

Great analysis. I will note that however much money MS lost or made on the deal, the value of maintaining a customer platform (for Office) and keeping a competitor alive (at a time when the antitrust thing loomed) was probably priceless.

Maybe at the time Microsoft saw Apple as a dying company that would never recover from their early to mid-90s blunders, so throwing it a bone would have seemed like a no brainer at the time.

losvedir• 16 years ago

I may be misunderstanding, but it looks like you're giving them both the post-split number of shares and pre-split price, which would double the value of the investment? Great number sleuthing, though, thanks!

Oh, on reread - perhaps the stock split in 2003 would have been the second time?

mlongo• 16 years ago

If too many had done that then perhaps the stock wouldn't be so valuable today. :-)

dutchflyboy• 16 years ago

No, it would have been more valuable: the more people buy, the higher the price is.

TotlolRon• 16 years ago

True. But ironic.

nopassrecover2• 16 years ago

Wait I would have made 10% on my money just by putting it in Apple shares and not the bank for the last week or two?

markbao4• 16 years ago

Yeah. The catch is you could have also lost 10%. or 20%. or more.

nopassrecover2• 16 years ago

Doesn't seem a bad risk going on these figures though. I had no idea solid companies had decent share return rates.

nkassis• 16 years ago

Or Jobs health situation could have been worse, the company could have died, the iPod could have ended up blowing up in peoples pockets.

What if's are always interesting in retrospect. I invested in apple last year at around the same time, made a small chunk of cash after a month, got out and never looked back. Had I left it there I'd be driving a bmw, assuming history would have unfolded exactly as it did.

prog2• 16 years ago

Thats the reason I tend to avoid tech stocks. Its not possible to say if a product will work. Yahoo was doing so well till Google came along. I wouldn't invest in Google though (for the same reason) even though its a great company and I love the innovations they have brought in. I tend to stick to boring stocks like soaps, car batteries, paints etc. Its worked well (with buy-and-hold) so far.

adrianwaj4• 16 years ago

Just as an idea: what if YC companies all offered stock to HN users as a complete, or portion of their next investment round. So if 15 users put in $5000 each, that's $75000 - enough for another 6 months runway at least, and they could probably set the valuation higher than they would with a VC. Also, these could well be value-added investors because of the skills, feedback and experience presented.

oliveoil• 16 years ago

Yes! Why we haven't done this yet?

markbao4• 16 years ago

Because most Hacker News users aren't accredited investors (in the US, $1 million net worth, or $200,000+ annual income for 2 years running.) I imagine it'd somehow be possible, but it's legally messy.

On the other hand, I imagine it'd be possible to put together a well-sanctioned group of accredited angel investors that would be able to do like a "YC round two financing" if need be. It'd be pretty interesting.

adrianwaj4• 16 years ago

For argument's sake, giving 15-25 hackers my business plan for their perusal is a risk in itself. There'd have to be some thought put into how much is revealed, and under what circumstances.

You could get around accredited investor rule by having the founder form a contract with each investor. "Whatever profit and earnings I make from startup A, you have xx% up until the year 20xx." In this way, there is no interference in the startup's balance sheet, although there should be some indication of a cash injection by the founder due to their relationship with the hackers.

philwelch4• 16 years ago

Offering stock to members of the public is an "initial public offering", which in itself costs millions of dollars just in regulatory costs. Yes, we're still members of the public, except for the millionaires among us.

tzury• 16 years ago

See, if you and me and all of us would have buying Apple's shares instead of its products, Apple's shares would have never being making this tremendous performance.

I think it is a paradox every shareholder face from time to time.

ErrantX4• 16 years ago

The thing you learn in stock trading is that you never rue missed/mistaken investments. Otherwise you will spend all the time doing this :)

scotty795• 16 years ago

I guess the point of this comparison is showing what's smarter: investing or buying junk.

alextgordon• 16 years ago

Buying junk, clearly. I'm guaranteed to get considerable value out of a computer, whereas $2000 of Apple shares could well have been worthless.

arihant• 16 years ago

Reminds me of a 'Rich dad - Poor dad' seminar I attended on my trip to Philippines.

In my case, I would have saved just a few hundred dollars, I got free AppleCare with my MacBook in 2008 and Apple has already replaced too many things, from my battery to fan to what not.

mosca_t• 16 years ago

If I hadn't bought that iPod zillion years ago, I would not read the question today^^ All kudos go to iPad buyers, all money to Apple designers.

dthakur• 16 years ago

Can you add annualized return for each entry?

c00p3r• 16 years ago

Time to sell AAPL? =)

ImFatYoureFat• 16 years ago

don't know if you are serious in this question, but I would be interested in people's honest opinion.

Is apple over valued(or i guess i should say over priced) at its current market value. would you expect apple's value to go down relative to the market over the next year or so?

matwood2• 16 years ago

It's a tough question. The problem is that AAPL makes a lot of their money off hype/fad products (and don't flame me on this, they make some nice products, but the AAPL marketing machine is genius and could sell the Brooklyn Bridge right now). Not that this is a bad thing, but fads can change on a dime. Remember how cool the RAZR used to be?

Rightly or wrongly AAPL is seen as a personal extension of SJs will. What happens when he leaves?

AAPL has also just had a HUGE run up. I'm not saying it's going to drop anytime soon, but you don't want to be the last one on the train.

AAPL makes premium products at premium prices. Has the overall market (jobs, financials, housing) really recovered enough that people in general are okay with spending again? Some statistics say no, but recent earnings say possibly.

All these are questions you need to answer for yourself. I would be a little gun shy today (either buying or shorting) because I think there are easier/less risky investments to be in right now.

joshu3• 16 years ago

One trading "strategy" that I use is that I buy the stock of companies whose products I find myself buying or using a lot. AAPL, AMZN, etc.

prog2• 16 years ago

By trading do you mean investment (as in long term buy-and-hold, 5-10years)?

The strategy is sound (and have a similar approach) but it makes sense only for a buy-and-hold approach. For the short term the quality of the company product doesn't really matter too much.

joshu3• 16 years ago

Of course. Short-term trading is way too hard.

jakarta• 16 years ago

Using a service often does not always translate into that service generating spectacular, analyst beating results.

Looking at businesses that you are familiar with is a good starting point, but is -no substitute- for analyzing the numbers generated by the business. It's better for scuttlebutting, that is, visiting the stores and seeing how customer levels fluctuate. Are there more people visiting the Apple Store this year than last? That kind of thing.

A good case in point - I visited a hamburger chain, tasted the food and hated it. I thought the food was mediocre and the prices were too high. But, I decided to keep the stock anyway. Why? They had a new 32 year old investor who fought his way onto the board of directors, fired members of the old management team, made himself CEO, and cut expenditures to the bone. The result? They company steered clear of bankruptcy, became debt free, generated a 10% free cash flow yield, and has so far generated me an 80% return.

The thing is - had I just visited the restaurant, I probably wouldn't have noticed this. Red dots being removed from styrofoam cups (cost cutting), a picture of the new CEO in the restaurant (change in management), and sliced rather than cherry tomatoes in the salad (cost cutting) may have been indication of some change; but not enough to tell me about the big behind the scenes changes without the company's financials.

joshu3• 16 years ago

Actually, it's paying attention to the choices you make (for example, continuing to buy Macs over PCs) in domains that you are knowledgeable.

I actually know a great deal about trading, having done it professionally for a while. I only occasionally trade stocks now; I prefer angel investing...

keven• 16 years ago

What if you had bought Apple call options instead of AAPL stock?

If you bought AAPL April $200 Call on Feb. 1 (at $10.20), you would made around 370% return. But obviously trading options is more risky, because you have to get both the direction and timing right.

pcestrada• 16 years ago

What current tech company (other than Apple) has this kind of potential?

awa2• 16 years ago

Palm had this potential a few years back. Netflix is one, you could have bout one of their shares instead of the monthly subscription and would have had 10 times that now. IMAX is another, so will be Facebook when and if they go public.

leibman101• 16 years ago

I only wish this chart reflected reality. I'm looking at my Fidelity statement for the AAPL stock I bought in 1999 and 2000. In actual dollars, my original investment is now worth 11x what it was back then. Your chart shows stock bought nine years ago is worth 35 times the original investment. Maybe I should ask Fidelity if they've made a mistake...

MikeGi2• 16 years ago

The table takes splits into account incorrectly, so some of the numbers (pre 2000) split show up 4x too high and pre 2005 split show up 2x too high.

MikeGi2• 16 years ago

This is very cool to see. However, you shouldn't have accounted for the splits like you did (I think you had it right the first time you did it). Prices you find in databases/charts for stock prices are already split adjusted.

For example, Apple PowerBook G3 250 (Original/Kanga/3500): Price stated at $5700 released on 11/10/97. On 11/10/97 AAPL closed at $18.37/share. If you spent all $5700 you would have 310.3 shares (assume you can buy partial shares). On/around 6/5/2000 the stock split so you would now have 620ish shares. On/Around 3/28/05 stock split and you would have 1240ish shares. Multiple this by the stock price ~$270/share and you have ~$330,000. As someone already pointed out, you should not take into account inflation because the $330k is the amount you have have in the bank TODAY if you had bought the stock back on 11/10/97.

If you look at the stock chart you will see the price reports on 11/10/97 for AAPL is $4.59/share, this accounts for the split (It was actually $18.37 on that day, but divide by 4 because of the splits and you get $4.59). You can see http://finance.yahoo.com/q/hp?s=AAPL&a=10&b=1&c=... for details about this (You will notice a "close" column and "adjusted close" column. The "adjusted close" is what you will see on all the charts, but "close" was the actual close that day. This is done to avoid massive jumps on the charts that would make them less useful.

Hope that helps, and once again, this was a really cool thing to see, it really puts some things in perspective.

What if you had bought Apple stock instead of that iPod?

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