Bucking the Trend

Three consecutive days of sell-offs, triggered by interest-rate and inflation fears, have degraded most equity portfolios but two stocks that I follow, Apple (which I own) and Google (which I do not), have bucked the trend. Unlike other tech one-trick ponies, AAPL and GOOG churn out transformational products on a regular basis. Creative organizations are rare, and those that can generate profitable products quickly while maintaining creativity over an extended period are the rarest of them all.

A few characteristics that Apple and Google share:

They pay lip service to the transparency of the Internet while zealously guarding the secrets of their proprietary technology.

The obfuscate their strategies. Mission slogans such as “think different” and “organizing the world’s information” are too broad to enable outsiders to decipher the companies’ next moves.

Many of their products are cheap, or even free.

Products are easy to use; the iPod startup menu and the Google home page have a simple, clean appearance.

Quality is sufficiently high—although far from perfect—so as not to dissipate each company’s coolness quotient.

They introduce so many products (Google Earth, Google Street View, AppleTV, iPhone) over a short period of time that the competition doesn’t have time to adapt.

History teaches that Google and Apple can’t keep up the pace. Talent moves on, competition catches up, and governments interfere. Witness how last decade’s tech darlings (Dell, Intel, Microsoft, Cisco--hat tip: Jim Cramer), while still leaders in their respective markets, now appear a step slow. Meanwhile, speaking as a user, fan, and investor, it’s fun to be along for the ride. © 2007 Stephen Yuen

Stock prices for passé-tech are off from their pre-2001 highs.