November 5th, 2006

apple

(no subject)

Neglected to post yesterday. Whoops.

Played WoW in the morning, then Lori and I (mostly Lori) finally got together and started the housecleaning that we've been meaning to do for months. The kitchen table is now clean and usable again, and it really makes me happy that it is.

The evening was one of culinary exploration. First, we went to the Trader Joe's that has recently opened in East Liberty. A much smaller grocery store than I was expecting, but plenty of nice things.

Then we went to Abay, for our first exploration of Ethiopian food. It was pretty nifty. I got some nicely spicy things; Lori was able to get things that didn't offend her palate. I had some trouble using the bread as the eating utensil conservatively, and I had to get a fork to finish. For dessert, I had the pumpkin sambussas with ginger sorbet; both were nice individually, but they didn't particularly rejoice at being together.
apple

Stock

I don't really understand stock pricing for companies that don't pay dividends.

I sort of understand stock pricing for companies that do pay dividends. You try to predict the rate of return, look at the going price for that rate of return, apply a discount for the risk factor... I'm not claiming that I can do those numbers easily myself, but I can follow an explanation and feel that it makes sense.

The other model of valuing a stock is what A Random Walk Down Wall Street called the "greater fool theory"--X is a good price, because someday someone will be willing to pay Y > X. I don't deny that this sometimes happens, but I'm wary of betting on that. It feels like a financial game of Hot Potato. (Except that the financial term for "Hot Potato" is "bubble economy".)

So consider Apple. Apple has never payed dividends (as far as I know). There's no particular reason to believe that Apple ever will pay dividends. So what basis is there for choosing a price for Apple other than the greater fool theory?