Stocks today are definitely trying to put a price on the impact of the loss of Steve Jobs to Apple (who recently ascended to the most valuable company in the world). While not every idea that came out of Steve Jobs’ head was brilliant, there were always *enough* of the *right* ideas working in his brain that *eventually* Apple shareholders profited.
Steve Jobs Is Not Dead Yet
Apple stock performance has suffered greatly in each and every instance in which he has either voluntarily left the company or been forced to withdraw due to health. Unfortunately for those of us who understand market psychology and fragility, Jobs’ latest (and perhaps last) attempts to step aside from Apple leadership couldn’t come at a worse time for the economy. Thankfully he still intends to serve on the board of directors as Chairman.
We don’t know how long Steve Jobs has left, and we know from his announcement his ability to perform at the level we’ve been accustomed to seeing him perform is no longer available. We can hope that he can still offer some measure of vision, leadership, or encouragement to the new Apple honcho (Tom Cook) and his team. Jobs has been a technology icon for my entire lifetime, and the new management team simply won’t have the credibility of the Jobs name. It is my hope that Jobs can continue to perform as Chairman at least as a face to occasionally show up and lend some credibility to the continued vision of the Apple brand.
Initial Market Reaction Negative to the Announcement
Apple stock is trading lower by about 1.7% +/- in mid-day trading on Thursday. It has come up fairly strongly after the initial sell-off (down about 3%), perhaps some short covering or dip-buying. Apple continues to be the leading innovator in the computer/electronics space – and there really isn’t a relevant competitor to be found when it comes to technological leadership and vision. Most of the competitors in the space are fast followers and copycats, so the thought here is Apple continues on for some time before a new entrant with a better vision comes along.
Overall the market was pulled down by the sheer weight of Apple stock in the most relevant indexes, although forex markets appear to be showing fairly modest “riskon” forex trading signals.
Buffett Announces Strategic Investment in Bank of America
Elsewhere markets are reacting favorably to the investment of around $5 billion into Bank of America by Warren Buffett. I have to say this is definitely good news for the market as a whole. While many investors and funds sit with cash on the sidelines, Buffett has the ability (and cash on hand) to negotiate deals favorable to himself and the companies he invests in. This most recent Bank of America deal is one of them.
Not to be a whiner but it’s unfortunate that average investors can’t get deals like this unless we buy Berkshire Hathaway. I wonder why more mutual funds and pension funds don’t use their scale to more strategic advantage the way Buffett has recently on multiple occasions – GE, Goldman Sachs, BoA. I guess those funds managers aren’t quite as good as the Oracle of Omaha.