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Is Apple A Good Barometer For Broad Economy?

8 March 2012 4 Comments

Apple (AAPL) unveiled yet another iPad version yesterday along with a few other product refreshes like the Apple TV. They didn’t announce anything revolutionary but it’s yet another step in Apple’s outstanding execution. With each product refresh, they put more and more pressure on competitors to bring their “A-Game.” Clearly, the tablet space is no exception.

As I watch Apple’s stock head north of $500 – justifiable so – I ask myself whether or not Apple is even connected to the real economy anymore?

Sure, Apple is driven by consumer spending, but is their gain just someone else’s loss? I tend to think so.

Apple is simply beating their competition handily by producing much better products. While their revenues and earnings jump, it’s not necessarily because the economy is improving. Rather, consumers are pulling money from other areas to buy the latest Apple gadget.

Consider young people who are some of Apple’s best customers. Unemployment for college age kids and recent graduates is very high. For those employed, many work low-paying service jobs. The young 20-somethings today would rather live at home with mom and dad but have the latest iPad. Not exactly a beacon of economic might.

I used to discuss on this blog at length about how we had two economies. The political/Wall St economy and the main street economy. Well, it looks like we also have an Apple economy these days.

Apple is such a well run company that it is distancing itself from competition. Consumers are spending more of their money on Apple products. But this isn’t a sign of economic health. It’s a sign of Apple health.

Perhaps, you should buy Apple stock and short the broad market? Just an idea…

4 Comments »

  • Rejoice Dwight said:

    For me my answer to this may be yes because it does not cause huge problem from it. This really is one of the best topics that I have seen for today. VZ 58

  • HexColor said:

    Until Cook splits the stock, this ain’t going NOWHERE!

  • Wealthy said:

    I don't love Apple products (except for the iPhone), but I love their work as a company. I agree that they seem to be unaffected by broad economic changes.

  • concrete saw cutting said:

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