Digital Audio Insider -- the economics of music and other digital content

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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

My personal website has links to my LinkedIn and Google+ pages and you can send e-mail to david [at] thelayaways [dot] com.

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July 27, 2011

Is Apple's Stock a Buy? Either Way, You Probably Already Own It
by David Harrell

Apple's stock has had quite the run over the past few years -- it's up more than 290% since the beginning of 2009 and it closed yesterday at more than $400 a share. Even though Apple (AAPL) is only about the 35th largest company in the U.S. when measured by total revenue, in terms of total market capitalization (the total value of all of its shares), it's now the second biggest public company in the U.S.

Some stock analysts, including those at Morningstar (my employer) argue that Apple has established some unique competitive advantages over its rivals. Others are more pessimistic, pointing to concerns such as the health issues of CEO Steve Jobs, the potential vulnerability of having such large percentage of revenue coming from the iPhone line, and that relatively expensive products put Apple at a disadvantage in some markets.

Yet whatever your opinion of the prospects of Apple, and even if you've never considered purchasing the stock, you probably already own some of it. Apple is the second-largest component of the S&P 500 index and most retirement plans include index funds that seek to mimic the performance of the S&P by holding most (if not all) of its underlying components. So if you invest in such a fund via a 401(k) or 403(b) retirement plan, you currently own approximately $3 of Apple stock for every $100 invested in that fund. And some actively-managed stock funds have an even larger percentage of their assets invested in Apple. (In interest of full disclosure, I own exactly three shares of Apple directly and have additional exposure to the stock via my mutual fund holdings.)

You can, of course, say the same thing about most large public companies. That is, if you hold stock mutual funds, you own, indirectly, most well known firms, including other tech giants such as Google, Microsoft, and IBM. But if you're a fan of Apple products, perhaps it's some consolation to know that a portion of the money you've spent on your iPod, iPad, or iPhone might -- in theory -- make its way back to you if it helps increase the price of Apple's stock.

tags: digital music Apple AAPL

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THE LAYAWAYS

Out Now -- "Maybe Next Year" -- The New Holiday Album:

"This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium

"Perfect listening to accompany whatever holiday preparations you may be making today." -- Bag of Songs

O Christmas Tree - free mp3 lyrics and song details
Away In A Manger - free mp3

Download from eMusic, iTunes, Amazon MP3, or Bandcamp. Listen to free streams at Last.fm.

"...about as melodic and hooky as indie pop can get." -- Absolute Powerpop

"Their laid-back, '60s era sounds are absolutely delightening." -- 3hive

"...melodic, garage-influenced shoegaze." -- RCRD LBL

Where The Conversation Ends - free mp3
January - free mp3
Keep It To Yourself - free mp3

Download from eMusic, iTunes, Amazon MP3, or CD Baby, stream it at Last.fm or Napster.

"The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music

"Catchy Guided by Voices-like rockers who lay it on sweetly and sincerely, just like Lionel Richie." -- WRUV Radio

Silence - free mp3 lyrics and song details
The Long Night - free mp3

Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.

"These are songs that you want to take home with you, curl up with, hold them close -- and pray that they are still with you when you wake up." -- The Big Takeover

Let Me In - free mp3
Ocean Blue - free mp3

Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.

More Layaways downloads:

the layaways website