Apple’s Ripple Effect on Chemical and Big Oil
Margie is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Today all of Wall Street sits behind their Bloomberg terminals, tracking stories and information in real time, generally reducing the lead time one might have on any such info to near zero. This is especially true of the most widely followed companies, as investors look at the actions being undertaken and try to figure out where they might lead.
The question, as investor, I try to ponder, is not how this will affect just the company in question, but taking it a step further, and see how the ripple might affect other companies. Let’s take a look at a recent example.
As I have written, Apple (NASDAQ: AAPL) might be creating a cheaper version of the iPhone in order to gain market share and initiate more customers into their eco-system. One of the ways it’s been rumored they’ll do this (again, just rumors) is to use plastic in the body of the phone and make the screen smaller (the screen being a large component in the cost of a phone)
So, some Apple monitoring Wall Street snoops/ fans came across the following job posting on Apple’s website, as reported by ICreateMagazine.com, who I quote-
“The job listing itself, titled Manufacturing Design Engineer (MDE) – Advanced Plastic Tooling and Process, asks for someone to, “Identify, develop and launch new tooling and process capabilities in support of new Apple product developments.”
The beauty of living in the information age, people are scrutinizing the company’s every move, every listing, trying to gain a few minute inside track.
Now, what I try to do as investor is step back a bit, and ask, not only what does this mean for Apple, but what the possible “Ripple Effect” might be. Will this increase demand for plastic? Will other companies follow Apple’s lead? Who might this be good for?
Plastic makers like Dow Chemical (NYSE: DOW)? What about petroleum producers and big oil, which supply the raw materials for plastics. Now, even for a company with as much weight as Apple, this might be quite literally a drop in the bucket for big oil, and have little effect on profits. If Dow Chemical were to win the order, it might have a bigger impact, but my suggestion as an investor is not only to look at immediate effects that such a move might have for company X, but what The Ripple Effect might be of such an action elsewhere.
Too many times investors look only narrowly at their target investment, rather than a more macro view. I like to ask how one action might beget another, and who benefits downstream. As most investors don’t explore these possibilities, there is still money to made by being able to predict and interpret The Ripple. Put this in your arsenal as an investor and hopefully let it work for you.
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margiecfl has a long position in Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!