Wednesday, June 18, 2008

Please, Tell Me Another Cool Story About Your AAPL Stock

A comment I read today claimed that Research in Motion (maker of the Blackberry mobiles) stock (RIMM) has outperformed Apple's over any conceivable period you might want to look at. (Yes, I checked it out, it's true, and I have some numbers for you later if you don't want to go try it yourself.)

Here's what I find really interesting: Apple doesn't just have product fanboys, it has stock fanboys too. I've personally met dozens of people who -- entirely unprompted -- insisted on telling me about their AAPL stock adventures, successes, questions about timing and the future ... I haven't met a single RIMM investor who has spontaneously felt the need to chat me up about the stock.

Now there's no mystery about RIMM: Anyone who understands fundamentals could analyze RIMM as easily as AAPL. Or if they want to really get into it, RIMM's products, plans, sales channels, and management are arguably more transparent, simpler, and easier to crack than AAPL's. (Most investors love leaks and hate surprises.) So it's not like these AAPL investors stuck with the company they could understand and analyze.

Instead, I'd venture the opposite: I bet they know little to nothing about either company under the hood, but they love the drama and the theater of an Apple product announcement, whether it's really good or bad for the stock. They think that press coverage somehow equals investing success.

As for the numbers, I checked Google Finance and observed that ... yes ... in all the time that these two companies have been public, RIMM has outperformed AAPL over all reasonable intervals. In fact, even if you had, say, sold your AAPL to buy RIMM at the worst conceivable moment, when RIMM peaked relative to AAPL, within a few years your RIMM holdings would already be worth much more than the AAPL shares.

I'm not bringing this up to recommend one stock over the other. They have actually trended together, and if this sector is your thing (I count them together today, because of the iPod/iPhone contribution to Apple's success), then you might want to invest in both of them ... and some of their other competitors too ... to diversify, at the expense of trying to make the most money on a single horse.

But what cracks me up is how people so often want to believe a story they know over a story they don't know; a simple story over a complex story; and a story (narrative construct in general) over the tricky realities that motivate and underlie all of our constructs.

And if you're one of those people so in love with a romanticized Apple story that you don't mind having half the returns (in the last 5 years), 40% of the returns (last 2 years), or even just 30% of the returns (1 year) of a RIMM investor ... I'm not saying sell Apple, but diversify, diversify, diversify!

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