Apple’s renaissance began with the iPod. This was not evident right away however. The product was unveiled on October 23, 2001 at a time when Apple’s share price had just fallen 70% from year-earlier levels. It was perhaps a good point from which one could expect a recovery to begin.
It was not to be. One year after the iPod’s launch the stock price had fallen another 20%. Indeed during 2001 the company was in the throes of a “bear market” in its shares. If we measure a time of persistent share price reduction as a bear market, then the one in 2001 was significant. For 154 days, between April 27 and September 28, 2001 the shares fell 38%. This represents the first bar in the following graph showing all the Apple bear markets since then.
An interesting examination of why Apple’s stock falls so precipitously sometimes. And then so dramatically rises. Essentially, when a disruptive company comes up with a innovation, it clouds the future for the market. They do not know how to judge it. It usually is very worried.
So the market gets wary and drops. But when sales figures come out, it then skyrockets. I so like this:
In other words, the paradoxical observation in the chart above of “the more drama in the market, the more success in the marketplace” makes sense when inverted.
For disruptive companies, it should be “the more success in the marketplace, the more drama in the market.”
In fact, his data suggest that the larger the fall, the greater the rebound.
I like this so much that my scientific training kicks in an I become skeptical because I like it. The biggest step to epistemic closure is liking a story so much that yu ignore other things.