THE WAY INVESTORS think about the stock market may be entirely wrong. Intuition tells us, and academic research confirms, that a company’s stock price should respondTHE WAY INVESTORS think about the stock market may be entirely wrong. Intuition tells us, and academic research confirms, that a company’s stock price should respond
Pricing the Future
이 콘텐츠에 대한 의견이나 우려 사항이 있으시면 crypto.news@mexc.com으로 연락주시기 바랍니다
THE WAY INVESTORS think about the stock market may be entirely wrong. Intuition tells us, and academic research confirms, that a company’s stock price should respond to important news and information. When a company announces a new product, for example, its stock should go up. And when results fall short of expectations, it should decline. But a new paper titled “The Inefficient Pricing of News” calls this idea into question. The authors found that investors respond much more slowly and inconsistently to market news than previously thought. In some cases, it took a year or more for a stock price to respond. Why would that be the case? Tony Fadell is often referred to as “the father of the iPod.” For years, he worked side-by-side with Steve Jobs, first developing the iPod, then the iPhone. In a recent interview, Fadell shared details of what the product development process looked like inside Apple, and how the reality on the inside often differed from the way it appeared on the outside. Fadell’s comments can help us understand why stock prices often miss the mark. The nature of competition. Investors, Fadell argued, often have a one-dimensional understanding of companies. As an example, he told the story of the development of the iPhone. When it was first released, many observers dismissed it as an overpriced toy. Unlike the BlackBerry, the dominant mobile device for corporate users at the time, the first iPhone lacked key security features and didn’t have a physical keyboard. As a result, it was perceived as a niche product with narrow appeal. Fadell explained, though, that Apple looked at the market differently. Yes, BlackBerry had a very high market share among business users, but it had only a small share of the overall mobile phone market—just 1% or 2%. Apple was interested in the rest of the market: “What about the other 98% of the people? What would they want?” That was the question Apple was asking internally. Observers on the outside, though, underestimated the iPhone’s potential because they assumed they understood Apple’s competitive objectives. The definition of success. Investors often make another mistake, Fadell said. They use the wrong yardstick in measuring successes and failures. He notes that early versions of both the iPod and the iPhone had significant shortcomings. The first iPod worked only with Apple computers. The first iPhone was underpowered and wasn’t open to outside app developers. The App Store didn’t debut until a year after the iPhone’s release. For all these reasons, early critics continued to underestimate the iPhone’s potential even as it gained market share. But inside Apple, the potential was clear. They knew that all of the core components would get better each year and that cell phone networks would get faster. Fadell, who also invented the Nest thermostat, made this observation: “Everything needs three generations. I’ve never seen anyone get it right the first time.” Wall Street, however, tends to not be that patient, and that can lead to a disconnect between perception and reality in stock prices. Fadell notes that even when a product fails, it can be valuable. Apple learned a lot from the Newton, its first attempt at a mobile device. Similarly, Amazon had a short-lived mobile phone called the Fire. From the outside it was deemed a costly mistake, but Jeff Bezos saw it differently. “You can’t, for one minute, feel bad,” he said. The voice recognition technology Amazon developed for the Fire ultimately turned into Alexa. The bottom line: Wall Street’s obsession with quarterly results can cause investors to use the wrong scorecard, and that’s another reason stock prices can move in the wrong direction. The timeline to profits. Fadell noted that the first iPhone was unprofitable but that this wasn’t a concern. Because sales were increasing, Apple would be able to lower production costs. Together with technology advances, management knew that the product would eventually yield profit. “You make the product, you fix the product, then you fix the business,” Fadell explained. Companies pursuing a new idea are often underestimated because they’re judged prematurely. Consider Amazon. It was unprofitable for almost 10 years after its founding. Why? During that decade, the company was growing quickly, but it reinvested as much as it could into warehouses. The result is that it can now deliver packages to many customers the same day. That may have been Jeff Bezos’s vision from early on, but outside observers couldn’t see the roadmap he had in his desk drawer, and for that reason, Amazon was regularly criticized for its lack of profits. The most notable misjudgment: In 1999, Barron’s magazine ran a cover story with the headline “Amazon.bomb.” How did Barron’s editors get it wrong? They had no idea where the company was headed, and for competitive reasons, Bezos certainly wasn’t going to tip his hand. This pattern repeats frequently, and it’s a key reason why stock prices often end up out of line with a company’s true long-term value. "All overnight success takes about 10 years,” Bezos later commented. Timeline to bankruptcy. Sometimes, Wall Street makes the opposite mistake, failing to see when a company is headed into decline. The most famous example in this category may be Kodak, which was the dominant maker of film for traditional cameras. Remarkably, it was a Kodak engineer who invented the first digital camera all the way back in the 1970s. But recognizing the threat it represented, the company shelved the project. Over the course of the 1980s and 1990s, other companies introduced digital cameras, with the result that, between 1990 and 1997, Kodak’s revenue dropped almost 25%. And yet, throughout that period, its stock kept rising, hitting an all-time high in 1997. Investors just couldn’t appreciate the reality of what was happening. But then, just five years later, Kodak filed for bankruptcy. In general, and on average, stock prices do reflect the value of public companies. But for all the reasons Fadell cites, that relationship is often imperfect. This is a fundamental reason why, in my view, investors are best served by choosing diversified index funds rather than trying to pick individual stocks. 
Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
The post Pricing the Future appeared first on HumbleDollar.
면책 조항: 본 사이트에 재게시된 글들은 공개 플랫폼에서 가져온 것으로 정보 제공 목적으로만 제공됩니다. 이는 반드시 MEXC의 견해를 반영하는 것은 아닙니다. 모든 권리는 원저자에게 있습니다. 제3자의 권리를 침해하는 콘텐츠가 있다고 판단될 경우, crypto.news@mexc.com으로 연락하여 삭제 요청을 해주시기 바랍니다. MEXC는 콘텐츠의 정확성, 완전성 또는 시의적절성에 대해 어떠한 보증도 하지 않으며, 제공된 정보에 기반하여 취해진 어떠한 조치에 대해서도 책임을 지지 않습니다. 본 콘텐츠는 금융, 법률 또는 기타 전문적인 조언을 구성하지 않으며, MEXC의 추천이나 보증으로 간주되어서는 안 됩니다.
추천 콘텐츠
Ox-drawn carts used to carry US aid in fuel-starved Cuba
Catholic NGO continues to send relief to Hurricane Melissa victims amid a more-than-six-decade US trade embargo.
공유하기
Free Malaysia Today2026/06/20 13:41
OpenVPP accused of falsely advertising cooperation with the US government; SEC commissioner clarifies no involvement
PANews reported on September 17th that on-chain sleuth ZachXBT tweeted that OpenVPP ( $OVPP ) announced this week that it was collaborating with the US government to advance energy tokenization. SEC Commissioner Hester Peirce subsequently responded, stating that the company does not collaborate with or endorse any private crypto projects. The OpenVPP team subsequently hid the response. Several crypto influencers have participated in promoting the project, and the accounts involved have been questioned as typical influencer accounts.
공유하기
PANews2025/09/17 23:58
Litecoin Foundation announced $1 million investment in LiteVM, price hovers below key resistance
🚀 The Litecoin Foundation confirmed a $1 million investment in LiteVM, aiming to boost zero-knowledge Layer 2 innovation in $LTC. 💡 Despite this major step, price
공유하기
COINTURK EN2026/06/20 13:05
인기 뉴스
더보기
