
What if you had bought Apple stock instead of that iPod? - Derferman
http://www.kyleconroy.com/apple-stock.php
======
nkassis
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.

~~~
prog
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.

------
andr
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+...](http://www.wolframalpha.com/input/?i=US+inflation+from+1997+to+2010)

~~~
phil
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.

------
adrianwaj
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
Yes! Why we haven't done this yet?

~~~
philwelch
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.

~~~
adrianwaj
No, it's bootstrapping from friends and acquaintances who are known within
this online community, both in readership and interaction.

It really does make sense for hackers to support each other in this way.

~~~
SwellJoe
No, it isn't. As others have mentioned, most HN readers and YC founders are
not (yet) wealthy enough to be accredited investors. If you were to try to
treat it simply, you would wind up in serious legal trouble, and possibly in
prison. Selling shares to any non-accredited investor, who is not a founder,
requires dealing with a lot of legal issues, and potentially opening yourself
up to significant liability.

The side effect of this law intended to protect people is that the average
person can no longer participate in the highest growth sectors of the market.
The rich get richer, and the poor don't have as much choice in their
investments (and once a company has gone public, its astronomical growth is
probably over; it's very rare for a company to be as successful as GOOG or
AAPL, and even those, if you'd owned stock pre-IPO, you'd be incredibly
wealthy today).

I would _love_ to be able to invest in some of the YC companies, other than my
own, but I don't have that ability yet. But, the first few rounds of YC
companies have produced some accredited investors already, so the circle of
available investors who "get YC" is getting wider.

You _could_ get a personal loan from friends and family, and then roll the
money into the business, but you can't sell shares without dealing with the
extra paperwork and liability.

~~~
adrianwaj
Being an accredited investor to invest less than $10,000 in a small web
startup sounds ridiculous to me, especially if one has good knowledge of the
startup's business environment and a rapport with the founders. If it's the
law, so be it, but there'd have to be a legal workaround for hackers to
connect with another hacker's startup financially.

This must be Deja Vu, I remember having a conversation with you about Barack
Obama after his election win in a thread where I lost over 60 points.

\-- I wonder how bpick is able to invest legally in this case, because I don't
think he fits with the accredited status but is still looking for investments.

~~~
SwellJoe
Yes, it is ridiculous that you and I can't invest in our friend's companies
without significant enough hassle that no small company would be interested in
such investment (I wouldn't take money from non-accredited investors, even if
we really needed money). I'm _sure_ I'd do better investing in Dropbox and
Weebly and Wufoo than I would investing in the stock market in general.

I don't recall a conversation about Barack Obama, but I talk a lot, and I
don't remember everything I say, so it could have happened. Anyway, I think
it'd be a great reform of our investment law, if normal people _could_ buy
stock in small companies, without all the hoops and craziness required. This
is particularly true now that IPOs are so much less common; it takes years
before normal folks have the right to invest in a new company. SOX has eaten
up even more of the extremely rapid growth curve of new companies, from the
perspective of regular people.

------
aaronbrethorst
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
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.

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

~~~
scotty79
I guess the point of this comparison is showing what's smarter: investing or
buying junk.

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

~~~
scotty79
Try squeezing considerable value out of your iPod. It's much more likely that
it will squeeze value out of you. You are still better off with 0 dollars in
worthless stock.

~~~
ErrantX
I think that's disingenuous; and is the same point pg makes when he explains
that wealth != money.

Take me for example; my nano has barely left my side for the last 2 and a bit
years - I work best with music around :) it's _worth_ a lot.

~~~
scotty79
And the beer I drink also improves my coding skills, and the coffee and the
nicotine.

Stop trying to pass your costly and possibly damaging addiction as something
that improves your life and brings you value.

I guess I'm asking to get heavily down-voted but I'm not all that into music.
I know some coders that can't work without radio but radio is a torture for me
when I try to concentrate. I even read about one guy that thinks that he codes
best when he has TV on (spidweb guy, you have to give it to him that he makes
amazing stuff all by himself, but I personally think he would have no problem
concentrating with pack of buffaloes running over his body). I tried once
coding with TV on and I lasted a minute before It drove me nuts. I can bear
songs if they are in language I don't understand.

I know that some people have better or worse resistance for distractions but I
can't believe that some people concentrate better with distractions than
without them.

~~~
Tuna-Fish
You are generalizing from one example -- because this is how you are, this is
how everyone else must be. This is fallacious, for obvious reasons.

> I know that some people have better or worse resistance for distractions but
> I can't believe that some people concentrate better with distractions than
> without them.

Why can't you believe that? I personally find myself completely incapable of
concentrating in silence. You think the music, or tv, or whatever is a
distraction, yet for me it's sorely needed to drown out my own diverging
thoughts. I need the constant distraction, or I will very soon find myself
thinking about or designing something completely different from what I was
supposed to be doing.

What kind of environment you need to be able to work is, however, is not
really that important. Much more important is learning not to generalize from
yourself. I am utterly dumbfounded that this is not taught in schools at an
early age -- I find understanding that you are not me to be one of the crucial
life lessons needed to turn people into decent human beings.

Please read at least the 10 first paragraphs of
<http://lesswrong.com/lw/dr/generalizing_from_one_example/> , it won't take
that long, and for a lot of people I know reading it has been a real life-
changing experience.

~~~
scotty79
I agree that generalization from one instance is wrong. But you can't assume
that every case is different because if you did that then science could not
exists. If you would assume that each subsequent item would fall different way
there would be no point in searching any universal law of falling.

You construct theory about something with the data you have, and try to gather
more data and see how it fits. Especially you look for the data that doesn't
fit.

As I live my life I gather data and construct theories. I shared with you with
one of my theories that seems to check up so far.

Namely: Music helps you the same way that glass of whiskey helps some doctor,
cop or worker of printing press to deal with dull and stressful job.

In my opinion it creates an illusion that it's beneficial for you, same way as
you feel better after drinking coffee or alcohol.

You get accustomed to music, listening to it makes your brain addicted to such
stimuli and when you abstain from it you have trouble concentrating. That's
why you have such trouble concentrating without music.Music gives you value.
It only satisfies your addiction. You can argue same way that nicotine gives
you value.

~~~
Tuna-Fish
> I agree that generalization from one instance is wrong. But you can't assume
> that every case is different because if you did that then science could not
> exists. If you would assume that each subsequent item would fall different
> way there would be no point in searching any universal law of falling.

Yes. But plural of anecdote is not data. How you use music is simply not good
enough to base such a huge "theory" on.

> Namely: Music helps you the same way that glass of whiskey helps some
> doctor, cop or worker of printing press to deal with dull and stressful job.
> In my opinion it creates an illusion that it's beneficial for you, same way
> as you feel better after drinking coffee or alcohol.

This would assume that I need the constant distraction because my job is
particularly dull or stressful, and I need the pleasure derived from music to
be able to bear it. But how does it compute into your theory that 1) I don't
need it to be music, or in any way pleasurable. Anything that contains more
parseable data than the A/C hum is good enough -- when I still worked in an
office, the constant background "chatter" was good enough to keep me sane. 2)
This does not apply to me just at work, but on anything and everything I do.
To take a very extreme example, I am not able to derive pleasure from sex
without something keeping me distracted enough to stay in my mind.

> You get accustomed to music, listening to it makes your brain addicted to
> such stimuli and when you abstain from it you have trouble concentrating.
> That's why you have such trouble concentrating without music.Music gives you
> value. It only satisfies your addiction. You can argue same way that
> nicotine gives you value.

This assumes that what I want is music -- but this is not just true. I'm fine
with anything I need to spend some thought on parsing. A lot of the
distractions I commonly use to keep myself grounded are in fact in no way
pleasurable.

Now you have been provided with more data, please update your theory. :)

------
philwelch
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.

~~~
jaytee_clone
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?

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

~~~
nathos
would the observer [participator?] effect make a time traveler's stock market
even more vulnerable to manipulation?

------
joshu
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.

~~~
jakarta
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.

~~~
joshu
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...

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

~~~
arch_hunter
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
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.

~~~
pyre
I think that he may also just be joking that an 'iPad-based portfolio' is not
exactly 'conservative.' (I mean it's a brand-new product, it's still risky no
matter how hot it looks to be in the market)

------
gojomo
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.)

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

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

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

~~~
TotlolRon
True. But ironic.

~~~
borism
I seriously doubt tens of thousands of geeks buying AAPL stock instead of
their products would have changed the valuation.

------
MikeGi
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=...](http://finance.yahoo.com/q/hp?s=AAPL&a=10&b=1&c=1997&d=11&e=26&f=1997&g=d)
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.

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

~~~
markbao
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
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.

~~~
markbao
Absolutely. And now Microsoft MacBU makes a killing from developing Mac
software (some estimates put it at $350 million
[[http://www.appleinsider.com/articles/08/06/24/microsoft_expa...](http://www.appleinsider.com/articles/08/06/24/microsoft_expanding_mac_team_ahead_of_new_products.html)
]). (Thanks, by the way!)

------
CRASCH
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.

------
keven
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.

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

~~~
pyre
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?

------
tzury
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.

------
FreeRadical
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.

~~~
awa
what about sales tax?

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

------
leibman101
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...

~~~
MikeGi
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.

------
arihant
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
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
Can you add annualized return for each entry?

------
nopassrecover
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?

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

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

~~~
philwelch
But look at what could go wrong. Steve Jobs' health for one--one skinny guy
with a history of cancer and a used liver gets another life threatening
illness and your investment is worth bananas. (As in, you would have been
better off buying banana futures.)

~~~
jacoblyles
October $210 puts are $4 a share. A bit pricy, but that would protect you from
the catastrophic downside.

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

~~~
awa
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.

------
exspiro
super cool.

~~~
Derferman
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
[http://www.google.com/finance?q=aapl&output=json](http://www.google.com/finance?q=aapl&output=json)

I believe it is item "l"

------
c00p3r
Time to sell AAPL? =)

~~~
ImFatYoureFat
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?

~~~
matwood
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.

