When I was a kid, I would sometimes breathlessly recount rumors and stories to my parents. I’d tell them that a friend’s parents were letting him get a BB gun – and he’s younger than me! Or that the principal of my elementary school was getting fired – it’s true!
Their response was invariably some version of this: “Wes, believe none of what you hear, and half of what you see.”
I was reminded of that bit of parental wisdom as I read recent reports that Apple is planning to cancel its current flagship product, the iPhone X.
That rumor has been around for months. But on Friday, analyst Neil Campling went all-in during a CNBC, interview declaring, “The iPhone X is dead.” Campling, a tech analyst at Mirabaud Securities, based his blunt assessment on the current record-high inventory of semiconductor chips.
Campling argues this over-supply would not exist if Apple was cranking out new iPhone Xs to meet future demand. So, he concludes, the device is winding down to die. The device’s high price tag ($999) is the reason for its supposed imminent demise, according to Campling.
OK, everybody relax.
It’s critical to consider the source when assessing any analysis – financial or otherwise – that appears in the media.
Specifically, we need to weigh what the analyst (or political commentator) has to gain or lose by making such a radical pronouncement. Here’s that calculus for Neil Campling; if he’s right, he becomes the hot new tech stock analyst, if he’s wrong, well, you won’t see him on CNBC for a few months. My guess is that Campling carefully weighed that risk/reward math, and decided it was worth going out on a limb.
If Campling is wrong, and I believe he is, he will be in fine company. There should be a Hall of Fame for the incorrect calls made by economists and analysts. Seven days before the Crash of 1929, famous economist Irving Fisher declared that stocks had reached “a permanently high plateau.” Four months before scandal-ridden Enron collapsed, 16 analysts still included the company on their “buy” lists. In 2004, an analyst loudly declared that Google would be “a disappoint” to investors. Analyst Marc Faber went on TV in 2012 to declare that President Obama’s reelection would prompt a minimum 50% drop in stock prices.
Such utterances are easy to dismiss today. But widely-spread misinformation can have a real impact on markets. Apple was down 7% last week, a dip that might have been caused, in part, by the iPhone X speculation. That hiccup impacted more than just Apple shareholders. Because of its $850 billion market capitalization, the company has a significant impact on both the Dow and S&P 500 indices. It’s a wonder we didn’t see more overall market damage from Apple’s stumble.
In my opinion, most of the talking heads in the financial media are little more than a distraction.
Successful investment decisions are made on solid, reliable data tracked over time.
Such information is often boring, and doesn’t make for good TV, or spawn viral internet posts. If you enjoy watching or reading financial commentary, do so carefully. Think critically. Before you act on any one analyst’s opinion, scour the media and internet for information that supports or corroborates that opinion.
As for the fate of the iPhone X, I suspect it has a long and healthy run ahead of it. Remember, just three months ago, Apple CEO Tim Cook publically declared that iPhone X had the best-selling start of any of Apple phone. Indeed, the device gave Apple its biggest-ever revenue jump from a new phone.
I find it very difficult to believe that no one wants an iPhone X anymore, or that it’s too expensive. I own one, and I love it. There is nothing this phone can’t do. I think Apple’s biggest challenge will be topping the X, not figuring out how to retreat from it. But, hey, that’s just my opinion. You should totally see what other people think, right?