WOW! It’s been a busy day of news in the financial world today. Sadly, most of it not good. Possibly the biggest announcement came from Apple. (Click on this link) http://news.yahoo.com/s/nm/20090115/bs_nm/us_apple_4″. It is reported that Steve Jobs, CEO of Apple announced that his health concerns are more complicated than originally thought and that he is taking a leave of absence. Of course health is more important than money and we wish him the best as he recovers from his constant battle with pancreatic cancer. That aside, this announcement is going to rock the financial world tomorrow especially since the market has already taken a beating as of late. Let’s take a look at why this is a big deal.
First, like every industry Wall St. has it’s anchor companies. When these anchors announce anything, it will move the market as well as be the talk of Wall St. (you will hear the term “the street” when listening to financial reports. “The street” is simply referring to the Wall St. rumor mill) Apple is one of those companies and Steve Jobs is considered to be one of the most brilliant CEOs anywhere. He holds sole credit for taking Apple from a struggling company to the standard by which all tech. companies are measured. Over the past year there have been rumors that Jobs’ cancer has returned and just those rumors have hurt the company’s stock. Those of us who hold a position in Apple (remember that a position means we own an investment of some sort in the company) are very nervous right now because it’s widely known that when Jobs leaves, the stock is expected to lose a significant amount of value.
What can we as average up and coming financial people learn from this? Some of you are itching to find your financial niche and join in on the fun of investing. Some of you want to learn a little bit more so you can do something more with your money that will set you up for financial security in the future. The lesson is the same: For any investment, you have to be a student of that investment. Jim Cramer, one of the most respect financial minds out there says that you have to invest at least an hour of research per week in to each investment you own. Those of us who own shares of Apple are shocked by this announcement but we did our research and we knew that sooner rather than later, we were going to hear it and we were as ready as we could be. We were “hedged” for the announcement. (Hedging simply means that we invested in other products that provide us insurance for problems like this.)
How can you make money from this? You can’t but you can learn a valuable lesson that will allow you to make money later. YOU have to know about your investment. A financial advisor doesn’t care about your money the way you do so you must know what you are invested in.
Talk Back: How do you think the Wall St. rumor mill affects market prices?
DISCLOSURE: At the time of this article, I had a long position in Apple.