Over the past few weeks, oil and the Chinese market have been blamed for the recent downturn in domestic markets. While these are obviously major causes, my article points to a simple cause that earns much less attention. That cause is the horrendous performance of Apple shares in the past year.
While it may seem far-fetched at first, my article shares some interesting facts that point to a deep correlation between the performance of Apple shares, and the overall performance of the S&P 500. Apple shares have dropped by 20.4 points since May of 2015. This has closely reflected the average performance of the S&P 500. In fact, it was found that Apple shares and the S&P 500 have a correlation coefficient of .7, while crude oil and the Shanghai composite only have correlation coefficients of .4 and .3 respectively.
If Apple were to slowly lose their largest revenue generator (the iPhone), could it drag down the US markets? The answer is yes, but not by a large margin. I believe that the correlation between Apple and the performance of US markets is nothing more than a relationship between any large company and the market that they operate in. Obviously when a large company struggles, the markets will take a slight hit. Inversely, when the S&P 500 is down, Apple will likely feel the impact of it as well. While this article is interesting and points out a peculiar relationship between Apple and domestic markets, I think that it reaches a little too far in its conclusion that Apple is one of the major causes of growth and recession.
Link: http://www.bloomberg.com/gadfly/articles/2016-01-26/apple-not-china-or-oil-is-biggest-drag-on-the-stock-market
Very interesting considering Apple hasn't really came out with anything recently after the Apple watch. I wonder if people get skeptical because they haven't came out with anything recently, and if that they have to come up with new creative things to get people to invest in them.
ReplyDeleteWhile the apple watch may be the only entirely new product that Apple has came out with recently, Apple has been very successful because of their unique operating system and will continue to obtain the best "user-friendly" products. Until they are beat in their own market in that aspect, they will continue to be successful. I agree with this articles conclusion being blown out of proportion and Apple is not one of the major causes of growth and recession.
ReplyDeleteRecent products from Apple have failed to capture the excitement and imagination that older products did. Maybe this is because Apple are still trying to navigate out of the Steve Jobs Era and while products like the iPad Pro and iWatch haven't quite delivered the rich rewards expected initially, historically speaking, some of Apple's products like the iPod took some time to engulf the portable MP3 industry, but it eventually did. I think Apple's new line of products plus expected new products will lead to an improvement in the company's fortunes given past experiences.
ReplyDeleteAs stated above, the Apple Watch has really been the only new and innovative product Apple has came out with in recent years. However, the Apple Watch has not be incredibly well received by consumers. This could be due to the fact as my articles have pointed out, consumers did not ask for a watch or show any interest in having one. While it is true that businesses cannot rely on their customers to know what they want if it has not been done before, there is an element that a business must attend to as it serves the consumer. Apple recently in my opinion has not done well with that with its recent product releases. I agree that this article is reaching too far to say that it is responsible for growth and development of the economy, but on a smaller level Apple needs to get back to its roots and begin to create new and innovative products that customers want so that they do not continue to lose their customer base.
ReplyDeleteI think that Apple has become more predictable and has made less dramatic changes to its iPhone line which has caused a great reduction in the amount of iPhone sales (what the stock is most reliant on). This is especially true because it's most recent product offering was the iPhone 6s, which had very little changes to the iPhone 6. Apple has stayed with it's same structure of offering a new iPhone with dramatic changes, followed by one with small tweaks (and adds an "S" to the number). I don't think that the decline in sales mean a decline in interest of Apple's product offerings, but rather many consumers are waiting for more dramatic changes that will be seen in the next rendition of the iPhone. I'm fairly confident that Apple's stock will recover in the near future.
ReplyDelete