With all the talk yesterday morning on CNBC (thankfully without Cramer) about Warren Buffett and his illness. It reminds me of a time when Steve Jobs was headlining the news and investor concerns about Apple ran rampant. We all know that Steve Jobs was an innovator, one of a kind, a revolutionary. The same can be said about Warren Buffett in his own right, for he has impacted the investing world tremendously. This lends me to wonder, after a great company like Apple or Berkshire Hathaway looses its icon, how should the share price react?
We have seen a tremendous run as of late in Apple. Is the huge Apple run warranted? I have been listening to the arguments for months about valuation and potential in the stock. I see the bull case, but I wonder about the bear case. When a company loses its visionary, should it be on a tear? Does the concern about the unknown, the losing of an icon, relate to lower value when the visionary is alive, to only rally after his or her loss? This is obvious through the massive move in the Apple equity. Though people that talk of Berkshire Hathaway claim that the company would never be the same without Buffett. This leaves me wondering, how important is an icon? To be honest I don’t know the answer. I usually have some devious conclusion that gives me an edge on the market, but in this case I would have expected the exact opposite reaction of the Apple stock with the loss of its father. Only time will give us the answer we seek. In the coming year one should watch the equity to see if the initial enthusiasm was overstated, because CEO’s can be replaced, visionaries cannot.
Posted on April 19, 2012 by
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