An emotional investment in Apple


A friend of mine, a weatherman for a local TV station, always greets me the same way: “Time to sell my Apple stock?”

And I always offer the same response: Do you still like the company?


Then don’t sell it.

Investors were wringing their hands Thursday over Apple’s prospects, even though the company reported record quarterly profit of $13.1 billion and said it sold 28% more iPhones and 48% more iPads.


Despite what for any other business would be regarded as a stellar performance, Apple’s shares fell $63.51, or 12.4%, to $450.50.

This is what happens when our relationship with a company turns emotional. As in all relationships, we try to be understanding and reasonable, but it’s hard to mask our disappointment when expectations aren’t met.

And, ultimately, investors and consumers can be very fickle.

“A minor chink in your armor and out you go,” said Brad Barber, a professor of finance at UC Davis who specializes in investor psychology.

He described the sell-off of Apple’s stock as “awfully dramatic” but not surprising, given that people have such a visceral relationship with this company.

“Is this a rational response?” Barber asked. “That’s hard to say.”

Hard because it’s difficult to gauge whether Apple’s stock is fairly priced. If the company has more blockbuster products in the pipeline and if its market dominance is secure, then, yes, Apple probably is worth its $423.8-billion market valuation.

But what if, you know, there’s someone handsomer or prettier waiting in the wings? Do you really want to tie yourself down?

American consumers generally keep the business world at a healthy distance, understanding that commerce isn’t the same as personal commitment. If a company provides a bad experience, we don’t hesitate to take our business elsewhere.

But from time to time, exceptional companies rise to a higher level in our esteem. In a 1953 congressional hearing, the former head of General Motors, Charles E. Wilson, made a statement that has long been taken out of context this way: “What’s good for General Motors is good for the country.”

What he actually said was that “for years I thought what was good for our country was good for General Motors and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country.”

What’s interesting, though, is that the misquoted sentiment went generally unchallenged at the time. GM was America. It was Chevrolet and Buick and Cadillac. As GM said of its 1955 Chevy Bel Air Sport Coupe, it “exuded American optimism.”

In more recent years, think of Sony in the 1980s. Was there a more innovative company anywhere? The best VCR was a Betamax, the best TV was the Trinitron. Remember your first reaction to the Walkman, the notion of carrying a stereo in your pocket?

These days, Sony would be lucky to get a passing glance on eHarmony.

Remember when Microsoft unveiled Windows 95? The company spent about $300 million on a global party for its new operating system, and people lined up for hours outside retail shops to get their hands on the software.

Hard to imagine anyone lining up for a Microsoft product these days, let alone such hullabaloo for a computer program. Microsoft still dominates the market for operating systems. It has a market valuation of $232.6 billion.

But you probably wouldn’t ask the company to dance at a crowded nightclub.

Google, Facebook, Twitter -- they all are attractive. Then again, you used to go out with Yahoo, MySpace and Friendster, and look where that got you.

I understand there are legions of Apple fanatics out there for whom the company can do no wrong. They’re determined to make the relationship work, no matter what.

I never drank the Apple Kool-Aid. They make cool products, no question. Steve Jobs was a compelling figure.

But any company that shrouds itself in more secrecy than the CIA is a little weird by my reckoning. Competitive instincts notwithstanding, Apple always seems as if it’s trying to hide something. That doesn’t make for a healthy relationship.

More to the point, what has Wall Street so spooked is the realization that Apple may not continue posting stratospheric growth numbers.

“Apple can be the greatest company in the world, but there’s some price where it’s a lousy stock purchase,” said Kent Daniel, a professor of finance at Columbia University in New York.

He agrees with people who long have said that Apple’s stock was overpriced, yet Apple has continued pulling high-tech rabbits out of its hat.

“So far,” Daniel said, “the naysayers have been wrong.”

Is Apple a good investment? Well, like I tell my weatherman friend, if you think the iPad is impressive and you think Apple still has plenty of mojo, stick with them. If not, maybe it’s time to move on.

Human relationships are tricky enough. You don’t want to get too involved with a corporation.


David Lazarus’ columns runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to



Apple then and now