A few weeks ago, this email appeared in my inbox:
On first glance, I thought nothing of it – ‘just another piece of direct marketing fluff’. But, on reflection, I saw significance in it.
Apple usually doesn’t give stuff away for free. It has been sufficiently successful to charge quite a hefty premium for its products, which in turn has allowed it to become one of the largest companies in the world, by stock-market capitalisation.
So, this advertisement indicated to me that either the company’s sales were slowing, or regardless of the health of its sales it needed cash quickly.
Then today, while doing my round of morning reading to keep a tab on the pulse of the financial markets, I discovered this para, written in a post from the clever people at The Automatic Earth:
As nice example is the very disappointing sales of iPhones in the country, prompting this comment from Apple CEO Tim Cook today: “We’re seeing extreme conditions unlike anything we’ve experienced before just about everywhere we look.”
This statement adds to the information derived from this report on Zerohedge, about weak sales of Apple products in China spurring heavy discounting.
These pieces of information are tactical indicators pointing to a serious weakening of demand for Apple products, and also a weakening in demand all around the world. Which is consistent with my hypothesis that growth in economic activity is likely to soften so long as the US Federal Reserve is not engaged in Quantitative Easing – and especially now that it has raised interest rates and has indicated that it will continue these increases.
Educating oneself creates the context and the strategic assumptions against which one can interpret tactical indicators. This done, the trick is not to allow oneself to become so wedded to one’s strategic assumptions that one ignores any tactical indicators which disagree with them.
Interestingly, the Automatic Earth piece is in a similar vein: the author has noted several tactical indicators pointing to the Chinese government’s preparing the ground for a devaluation of its currency. I encourage you to read the whole thing, as an educative piece in how to draw significance from random pieces of information.
UPDATE: February 5 – received another sales promotion from Apple in my inbox this morning.