Jun

1

I am compelled to share the following article because I noticed today that Apple shares are up nearly 1000% over the last 5 years, while the NASDAQ is approximately 50% of where it was 5 years ago. What is the key to Apple's success over that of the NASDAQ in general? The obvious answer is their Captain, Steve Jobs.

The Secret of Superior Stocks.

The essence of the article originally posted on The Motley Fool website, is consistency of management. In other words, having the right CEO on board to navigate the ship is critical to the success of a company and it's long term performance. ….. The results were astounding. Sixty-six of the best had founders or a CEO who had more than five years of experience at the helm of the company 10 years ago, and who had stayed ever since. An additional 18 had the same CEO at the helm throughout the company's years of incredible performance. Chico's — the second best-performing stock of the past 10 years — is a great example. Chairman Marvin Gralnick founded the company in 1983 and served as CEO until 1993. He returned to lead his company in 1994 when the new CEO resigned. This is a leader who would not let his business down, and the returns for long-time shareholders have been simply mind-blowing…….

Great stocks have great leaders. [Read More at Motley Fool]

Riz Din comments:

Just under 5 years ago I participated in a presentation on why everyone should buy Apple shares (I've uploaded the slides here). At the time, Apple was trading at $14.72 with a conservative liquidation value of $12 cash per share, so the brand and products were valued at next to nothing. This was an extremely rare opportunity — the stock stood up well on value grounds and with the ipod just around the corner, it had the potential to flower into a good growth stock, which is just what happened. I bought a few thousand pounds worth of shares but eventually sold them to invest the money in a small property. A few days later the stock started to rise.

James Lackey mentions:

The remarkable thing to me is that people pay a premium for ease of use, aesthetics and branding. People will flock to Walmart or Costco for the lowest price on a gross of paper products, yet when it comes to electronic devices, some will pay a huge premium for various intangibles. I've used the hand held mp3 players for years, and I've always bought the cheapest system that actually worked, a sandisk. I looked a the device as disposable, as I am certain to break or lose the device in a mud puddle at the BMX track.

Ease of use, branding and the payment of premiums is in the stock market. It's fine to buy the cheapest stocks and treat them as disposable. After all these years, I have no idea why at times we are surprised people pay a premium for aesthetic markets.


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