
Apple Is Not The Most Valuable Company In The History Of The World — IBM Is - irunbackwards
http://techcrunch.com/2012/08/20/apple-is-not-the-most-valuable-company-in-the-history-of-the-world-ibm-won-the-prize-in-1967-with-a-value-of-1-3-trillion/
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jcampbell1
The article has wrong facts. The columbia journalism review author double
counted inflation. The NYTimes piece he cites has already adjusted for
inflation in the 1967 IBM Market cap.

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rauljara
This is by far the most important comment on the page. Very frustrating that,
when I read it, it was nowhere near the top.

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giorgiofontana
I totally agree.

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nasmorn
Actually to really compare the weight the company had in its days it is more
meaningful to compare its market cap to GDP. Wolfram Alpha gives me 852
billion for 1967 so IBMs market cap was approx. 22.5% of that. 2012's
estimated GPD is 15.6 trillion thus Apple has a mere 4.2% of that. That was
how big IBM really felt back then.

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hollerith
Am curious why someone downvoted this.

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huxley
It's because the linked article double counted inflation: "IBM’s 1967 market
cap was not $1.3 trillion in real dollars, it was $192.3 billion"

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hollerith
Then why not downvote the dozens of other comments that missed the double
count?

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reitzensteinm
>.... [Apple] would have a value of more than $3 trillion by 2020. As the
Times points out, that is bigger than the 2011 gross domestic product of
France or Brazil.

Comparing an outlandish guess for a 2020 market cap versus a 2012 gross
domestic product (a flow of money, not a store) is hand waving, not analysis.

~~~
lloeki
Also, extrapolating without much explanation means squat.

<http://xkcd.com/605/>

~~~
confluence
Applies to teenage prodigies too.

I should write about the dancing monkey problem sometime.

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enneff
It's gross how much of the article is spent postulating on what Steve Jobs
would think. He's gone. It's both irrelevant and disrespectful to put thoughts
in his head.

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artursapek
Well, it's Techcrunch.

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CurtHagenlocher
Why do people even care? Has consumer culture so overtaken our minds that we
identify personally with the things that we buy?

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ekianjo
When you see people BUYING t-shirts which are blatant advertising of popular
brands, then you reach that point where people identify themselves to a brand
before all.

That has been the case for a LONG time already.

~~~
nitrogen
Some people buying branded t-shirts may simply prefer the fit and price of a
shirt, and don't care what it says on it.

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ekianjo
Somehow I find it very hard to believe. Remove the logo on the lacoste polo
shirt and the Nike shoes and see if they would buy it still.

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nitrogen
I'll use myself as a proof by counterexample. When I was buying my t-shirts
from places I actually wanted to support, like ThinkGeek, or buying solid
colored t-shirts with no logos, I found that the poor fit of the t-shirts was
making me look bad and feel uncomfortable.

Eventually I was talked into going "shopping" by a couple of female friends
(actually, I talked them into being my guide), and found that the only
t-shirts I could find that made me look and feel good, with a wide range of
prices, also happened to have well-designed corporate logos on them.

So, until it becomes technically possible and socially acceptable to have
custom-tailored t-shirts that fit perfectly, have the right fabric, pattern,
and seam/collar/hem, and are emblazoned with my family crest or personal
corporate logo, I will continue to buy whatever looks and fits the best within
my price range.

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akgerber
ThinkGeek apparently uses Gildan shirts, which are cheap, baggy shirts made
out of thick cotton; you were probably buying shirts of similar quality when
you bought plain shirts.

Since it seems you're spending more on shirts now, you're probably getting a
better quality product. Plenty of stores from Target to Gap to American
Apparel and so on have better-fitting shirts made out of lighter-weight
material with no visible logos, likewise in a range of prices.

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ximeng
Most valuable publicly traded company perhaps, see Saudi Aramco:

[http://blogs.mccombs.utexas.edu/titman/2010/03/01/more-
thoug...](http://blogs.mccombs.utexas.edu/titman/2010/03/01/more-thoughts-on-
the-value-of-saudi-aramco/)

~~~
mpd
I'm curious where Standard Oil would stand had it not been broken up.

~~~
chmars
PetroChina was actually worth more than one billion USD a few years ago when
a-shares became available at the Shanghai Stock Exchange.

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ximeng
You mean trillion I think.

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Luc
A long-scale billion is a short-scale trillion. How I hate this confusion!
<http://en.wikipedia.org/wiki/Long_and_short_scales>

~~~
chmars
Thanks, I never know which one to use if a use English with a mixed audience.

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tedunangst
When are these numbers ever inflation adjusted? Biggest grossing movie of all
time inflation adjusted is still Gone With the Wind, but that didn't really
stop people from talking about Titanic or Avatar.

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tolmasky
Well, funny enough, if you look at the hacker news thread about Avatar hitting
1B, it is in fact discussed (one of the people mentioning it is me).

I stand by this, just as with movies: it matters. If not these numbers are
completely arbitrary and meaningless. It is equivalent to comparing,
numerically, the price of one company in Pesos vs the price of another in
Dollars, it would make no sense unless they are both converted into the same
unit. In this case, we don't even have to go that far back: even Microsoft's
market cap in 1999 (adjusted for inflation) was more.

Edit: link <http://news.ycombinator.com/item?id=1079716>

~~~
tedunangst
Oh, I kind of agree, but this just seems like "neener, neener, not the
biggest."

To take a different angle, computers and electronics have only gotten cheaper
since 1967. So maybe Apple should be compared to a _deflation_ adjusted IBM
market cap. How would those numbers stack up?

~~~
aik
I think the main point is that any time value in a monetary unit is measured
over time, it is naturally adjusted for inflation. This is done with basically
everything. So it's not necessarily a "neener neener" situation, it's applying
standard process.

I think the real question that is trying to be answered is which company is
worth more, period. How do you measure worth? In dollars is one way, making
use of the market cap. Which has/has made a larger (positive) impact in the
world is another. Which metrics should you use to get to the answer is the
question...

Adjusting for change of price in goods (your suggestion) is a little shaky of
any idea in my mind, as 1. inflation affects all goods instead of a subset,
which means there's more choice. 2. IBM must've had it harder since the cost
was higher and they still managed such a large market cap, ie. took more value
output to create the market cap.

Just some thoughts.

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D_Alex
Rockefeller's Standard Oil was possibly even more valuable - at the time of
it's anti-trust mandated breakup it produced around 90% of USA's oil. The
companies it split into became Exxon, Mobil, Chevron, Amoco, Conoco, Unilever
(!) and a whole bunch of others.

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maxerickson
I'm playing wiki-facts here, but Unilever bought one of the breakup companies
in 1987. The Unilever conglomerate established itself very much without being
part of Standard Oil.

~~~
D_Alex
I checked up and you are quite correct. Unilever bought Ponds which in turn
grew out of a vaseline manufacturer previously owned by Standard Oil.

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sown
What about what ever entities that went after the Spice islands? Or east india
company? I guess they were commissioned from the monarchies or parliment
themselves so perhaps they don't count.

Perhaps the oil companies of today?

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Blara
either way it would be interesting to know, if records still exists about
their worth.

~~~
sown
From what I understand, it was the oil, sugar, or gold of its day. Controlling
the spice islands was akin to controlling international trade.

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mmariani
For anyone who wanrs the original story here's the link.

[http://www.cjr.org/the_audit/misleading_and_incomplete_cove....](http://www.cjr.org/the_audit/misleading_and_incomplete_cove.php)

PS: TechCrunch is somewhat pushy on they iPad app. I wonder if it is because
the UX on mobile Safari is not that great.

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confluence
Let me get this out right now: Valuations mean jack shit
(companies/houses/startups/humans - whatever). Especially "market caps".

Understand this:

21.91 million shares of Apple were traded yesterday. That is $14,460,600,000
moving around. [1]

Now you must adjust down for HFT traders, market makers, option hedgers,
futures guys and anyone else who trades massive amounts of stock each and
every day. My rule of thumb is ~10% actually moves hands (rather than just
being moved around).

So now we are at $1,460,600,000. Only $1.5 billion dollars actually moved
around yesterday. If you had $1.5 billion dollars yesterday you could've
controlled the "market cap/valuation" of 1 billion shares and half a trillion
in value.

You can control the market cap of anything utilising the fact that valuation
uses multiplicative leverage on stuff that doesn't exist yet. [2][3] Indeed -
all those teengers you see in college at age 11? Way overvalued - come and
check back in 10 years. Fallacy of exponential growth runs rampant through
most of finance, and teenage "prodigies". [4]

Basically with only $1.5 billion you could control the value of $500 billion
dollars worth of assets - on any one day - that's it. This is how you get
bubbles. This is how you can have stock market booms and busts.

Valuation leverage allows you to bid up prices for any stock using less than
2% in actual value, selling to the next tulip buyer whenever they come in
trading. [5] If you had to use 100% cash - well there just ain't enough to go
around my friends!

Startups?

Invest $20K just like YC does, valuing a company at $1 million - pre-product
and sometimes even pre-team! The million dollars just ain't there yet - but
everybody - look yonder - valuation and investor interest over the horizon!

Venture Funds?

Instagram received a $50 million cash injection which valued it at a cool
$500+ million - pre-revenue. $500 million in cash wasn't actually in the
coffers (or on the horizon) but Facebook look - just look - at our
valuation/predicted growth - you gotta buy us out (with cash of course). And
double the price while you're at it.

~2% of the world's value actually exchanged hands yesterday on the world
markets.

~0.5% of market participants actually moved the prices that the rest of the
world was priced at.

Hold ~2% of the world - and control it all.

Valuation is bullshit - it's like leverage without the cost of capital.

Sources:

[1] -
[https://www.google.com/finance?client=ob&q=NASDAQ:AAPL](https://www.google.com/finance?client=ob&q=NASDAQ:AAPL)

[2] - <https://en.wikipedia.org/wiki/Valuation_(finance)>

[3] - <https://en.wikipedia.org/wiki/Leverage_(finance)>

[4] - <http://xkcd.com/605/>

[5] - <https://en.wikipedia.org/wiki/Market_capitalization>

~~~
monkeypizza
I'm not so sure that temporarily changing the market cap of apple really would
count as controlling it.

It's like saying: I can jump on the field at a Yankee game and "control" 50k
spectators and 50m viewers. You may influence them for about a second, but the
farther you try to bring the situation from the market's desire, the quicker
you'll be corrected.

Sinking 1b into selling apple short would make a small, temporary dent in
their market cap.

If you think something is overvalued, you should sell it short. If you think
ycombinator companies are overvalued, you should contact the investors and
give them odds against the ycombinator startups successes, and it would be in
their best interest to take you up on it as a hedge.

In general terms, if you claim to have knowledge of a mispriced asset, there
always is an implied economic action you should take to make money off of your
unique knowledge.

~~~
confluence
You ignore the effect of feedback loops. You are also making the fallacy of
reification (market doesn't want anything).

They key part to this lesson is that valuations are essentially arbitrary (not
about market manipulation - although market dynamics are an interesting
subject). Take no stock in them (pun intended) - just like you should ignore
the predictions of pundits.

The following examples exemplify the meaninglessness of valuations:

If I had a kid, he/she would be worth more to me than anything else in this
world. But as much as I'd adore him/her - he/she ain't worth jack to anyone
else. If I'm dying of dehydration - the next cup of water is worth most of my
future earnings. If I just had a glass - it's worth next to nothing. Dying
because a fire is burning and you're running out of air? Oxygen tank would be
pretty handy right about now. Got enough oxygen? Pfft don't need your tank.

Valuations are and will continue to be meaningless.

> try to bring the situation from the market's desire

I doubt it - you need regulatory agents to rein it in (security). Also - you
are making the fallacy of reification right here.

Otherwise - it's a free for all.

Audiences love that stuff.

PS: Shorting a billion in Apple would seriously depress its price as feedback
pulls in (stop losses and latent short orders) - and if you hook it up to
another one - like say a debt crisis - well now you have some fun on your
hands.

Also your name reminds me of that dancing monkey problem I must write about
some day.

~~~
hythloday
_If I'm dying of dehydration - the next cup of water is worth most of my
future earnings. If I just had a glass - it's worth next to nothing. Dying
because a fire is burning and you're running out of air? Oxygen tank would be
pretty handy right about now. Got enough oxygen? Pfft don't need your tank._

These are examples of arbitrageable opportunities. The wealth you can create
by moving a glass of water from a lake to a desert is a real thing. Valuations
aren't "meaningless" in that way unless you take the extreme nihilist position
of everything being meaningless because it would change in a different
situation. That's not meaninglessness, it's just context-sensitivity.

The fallacy of reification only occurs if you assign value to the existence of
things (like "we should reduce regulation because the market wants it"). It's
perfectly useful and common to say things like "the market wants" to mean "the
market acts in a way such that were it a sentient being it would act this way
because of a conscious desire" without actually holding the view that the
market is a sentient being. That's just how English works (see, I did it right
there).

~~~
confluence
People conflict agency with representation all the time.

This is not a good thing for every situation - especially abstract concepts
such markets and governments.

I never said statistical arbitrage was not possible. I merely indicated that
another's valuation is meaningless to your decision about future profits
generated by an entity.

I'm probably a nihilist then aren't I. Why bother arguing with me at all then?
:-)

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mp99e99
This is a ridiculous article. Its obvious the world is becoming more
competitive (ie there are no modern day John Rockefellers adjusted for
inflation). What Apple has accomplished is amazing, and I'm not even an Apple
fanboy. Credit where credit is due, and Apple hasn't topped -- yet!

If you're the top market capitalization company, you're doing something right
(especially from where Apple came from). Its like winning gold and saying well
you didn't beat the world record so you're gold doesn't count.

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afterburner
Keep in mind there are other metrics for comparing how "big" a company is:

<http://en.wikipedia.org/wiki/List_of_companies_by_revenue>

[http://en.wikipedia.org/wiki/List_of_largest_employers#2012_...](http://en.wikipedia.org/wiki/List_of_largest_employers#2012_Fortune)

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chmars
A few years ago, PetroChina was worth more than one trillion USD at the
Shanghai stock exchange:

[http://www.marketwatch.com/news/story/story.aspx?guid=%7BA16...](http://www.marketwatch.com/news/story/story.aspx?guid=%7BA1669F28%2DA9C7%2D43C1%2DAE36%2D61053AD40DE5%7D)

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stickfigure
How about this alternative way of measuring the 'value' of a company: Net
asset value (including retained earnings) plus the sum of all dividends ever
issued, minus total investment capital.

~~~
zhoutong
The dividends issued historically are gone, entirely separate from the
company. Assets and liabilities can exist in different forms, including tricky
ones like depreciation and intangible assets. If such 'value' is accounted for
important uses, manipulating it will be much cheaper and easier than
manipulating market cap anyway.

~~~
stickfigure
Sure, it's hard to measure the value of assets. But look at it this way: In
the long run, every company dies, so assets always go to zero. What investors
(in aggregate) are left with is the net sum of dividends paid out.

To answer "what is the most valuable company in history" I would look for the
company which paid out the most in dividends before it expired. Stock price is
largely a measure of which company has managed to attract the most suckers.

~~~
Kroem3r
Don't know why people would downvote this. It's a pretty good idea of how to
measure the value of a company. It's somewhat shy of the true metric which
would be along the lines of 'how much better it made the world'. Market cap is
appealing because it's trivial.

These definitions would also allow comparing non-standard corporations, like
churches and states. It seems like this is a natural comparison - it's
inevitable that big companies are ranked among comparable countries.

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rogcg
"Big Blue still reigns supreme." but.. whatever.. =/

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googoobaby
"But I don’t think Jobs would see much pleasure in winning by such means. I’d
instead expect he’d want to win the prize based upon the performance of the
company and beat the rest without an asterisk next to the record."

What a load of crap. I fully remember when Jobs tried to define NeXT as a if
not the leading workstation company by twiddling the definition of workstation
to exclude Sun and HP/Apollo.

