3 ms·

I dislike market cap as a measure of a company, as clearly a company can be wildly overvalued or undervalued. It is a not as if the "wisdom of crowds" has calcu

by Isamu 8y ago

I dislike market cap as a measure of a company, as clearly a company can be wildly overvalued or undervalued. It is a not as if the "wisdom of crowds" has calculated the true value of a company. During some of the pre-crash days early in the century, publications would trot out companies ranked by market cap, as if that really meant something. All I remember is various of these companies going under in the crash, despite their pre-crash valuation. Revenue is a big deal. And profit too, although Amazon has shown you can keep that close to zero by reinvesting in growth, and that can work too.

coryfklein 8y ago
How much is my desk worth on the market? However much somebody is willing to pay for it. As the article states, Apple's "value" as a company comes from, in part, the fact that it's a good investment. Some may argue that "the fundamentals" of the balance sheets and whatnot doesn't justify a $1T valuation, but they would be missing the intangible parts of the business which cause it to be worth exactly that much.
- Isamu 8y ago
  I'm not saying Apple isn't worth a $1T market cap. I'm just saying you wouldn't use market cap to calculate if a company were a sound long-term investment. You'd look at the fundamentals, then make a determination of what you think the long-term value of the business is, then you could look at the current market cap and determine if it is under- or overvalued. Breathless reporting on the market cap of companies is sloppy, I think. The market cap kinda floats around, and worst case may be completely unrelated to the true long term value of a company. Warren Buffet for some time said that he thought Apple was undervalued. I have no idea what he currently thinks, but it is probably still a reasonable value.
  - Allvitende 8y ago
    >Warren Buffet for some time said that he thought Apple was undervalued. I have no idea what he currently thinks, but it is probably still a reasonable value. He currently owns ~5% of the company.

by Isamu 8y ago

coryfklein 8y ago

How much is my desk worth on the market? However much somebody is willing to pay for it. As the article states, Apple's "value" as a company comes from, in part, the fact that it's a good investment. Some may argue that "the fundamentals" of the balance sheets and whatnot doesn't justify a $1T valuation, but they would be missing the intangible parts of the business which cause it to be worth exactly that much.

Isamu 8y ago
I'm not saying Apple isn't worth a $1T market cap. I'm just saying you wouldn't use market cap to calculate if a company were a sound long-term investment. You'd look at the fundamentals, then make a determination of what you think the long-term value of the business is, then you could look at the current market cap and determine if it is under- or overvalued. Breathless reporting on the market cap of companies is sloppy, I think. The market cap kinda floats around, and worst case may be completely unrelated to the true long term value of a company. Warren Buffet for some time said that he thought Apple was undervalued. I have no idea what he currently thinks, but it is probably still a reasonable value.
- Allvitende 8y ago
  >Warren Buffet for some time said that he thought Apple was undervalued. I have no idea what he currently thinks, but it is probably still a reasonable value. He currently owns ~5% of the company.