Big day for Apple

Apple’s $242 billion market cap surpasses Microsoft
[Via AppleInsider]

Apple’s market cap hit $242 billion Thursday, making it the second-largest company on the S&P 500 and pushing it ahead of Microsoft, which finished the day with a $239 billion market cap.

[More]

Who would have predicted this 10 years ago? Certainly not MS. About 10 years ago, Bill Gates said that Jobs could not win.

Yet the market place made the final decision and, at least for now, Apple has won. Let’s look at the stock prices since 1998.


apple vs ms
A little hard to see but the blue line is Apple and the red is Microsoft. Here is a zoom of the right side of the graph:


201004221542.jpg
Now, MS looks really bad compared to Apple but it doubled in price in 12 years, giving it an annualized return of about 6% (using the rule of 72). Not bad through the worst economy in a generation.

Apple, on the other hand, went up almost 8000% or 80-fold. This represents 6.32 doublings (okay, I used my Mac calculator. Sue me). So 6.32 doublings in 12 years is 0.52 doublings a year or 1.9 years per doubling. The rule of 72 would give us an annual percentage return of about 38%!!

This fits with the rates shown in the table at Wikipedia. However, the table also shows that the rule of 72 overestimates the actual interest rate when doublings are low and becomes more inaccurate as doubling times become more rapid. The table actual suggests that the rule of 69.3 is a better estimate.

So 69.3 divided by 12 yields a rate of about 5.8%. Still not too bad. And Apple’s becomes almost 37%. Annually. Wow.

Apple’s price surely can not keep on this trend. To double again by 2012? Reach over $500? Well, I might not bet against that, as long as Steve continues be a winner.