Another old post written sometime in 2008, before the global recession kicked in.

January 2007 and the rumours are finally confirmed. Apple CEO Steve Jobs announces the long awaited iPhone and Apple TV. Meanwhile (and as a result) their stock price jumps from $US90 to $US96. Apple fanboys all over the US are drooling and can’t wait until June when they can go down to the local Apple store and get themselves one. Many are commenting that iPhone will take the mobile market by storm.

Come June 2007 and the iPhone is released with queues of people lining up in case they sell out. The Apple stock price has risen above $140 in anticipation of the release.

Think about it. If you were an Apple fanboy and strongly felt that the iPhone (and the MacBook etc) meant that Apple were going to do well, wouldn’t it make sense to buy shares in Apple? If you had put aside the $US600 purchase price of an iPhone into Apple stock when it was announced in January, by June your $600 would have grown to around $1000!

If you think the products or services produced by company are seriously great and hence that company should do really well, maybe you should buy some stock in that company?

You may think that share markets are boring or hard or risky. Leave it to the “experts”. I disagree. At a basic level, companies are in the business of making money. They do that by providing a product or service. If that service does well, they make more money. If they make more money than in the past, their share price ordinarily would be higher than in the past. Of course it's not this simple but this principle is probably a better indicator than financials etc of the medium (and often short term) prospective value of a company.

I get the impression so-called “experts” are likely to be focussing shallow, external appearances and financial data. I don’t take too much stock (pun unintended) in all that. Sure, I will check basic financial figures such as the PE (price to earnings) ratio. What I am more interested in is how “smart” the company is and how well I believe they will do with the products they have currently released and are going to release in the future. Do their philosophies tend to match up with the philosophies I believe will do well?

I base my investing on the industries and products or services I have a special interest in. Things I feel like I am more of an “expert” in. I don’t consider myself an investment expert. But I do find watching the technology sector interesting and I like to predict trends. If my trend predictions are right such as “the iPhone is going to do well, especially later releases” or “Google is going to do well and their competitors just don’t get it so Google’s advertising revenue should keep growing at about the pace the internet grows” then what? Do I just feel smug if and when my prediction proves to be right? What if I had decided to put some money on it when I made the prediction? If it was right, then I profit financially from it as well.

But share market investing is time consuming right? I disagree. If I am already watching a companies out of interest then maybe I am already keeping up enough to roughly decide whether to buy, hold or sell shares in that company. I might have to do some basic due diligence homework such as checking financial figures and price history but only when I am considering whether to buy or sell based on real events I was already aware of.