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Apple, Time Travel and Shoes

Seeing as how there is a lot of Dr. Who fandom around the Internet, I thought I would pass along a little advice to time travelers. If you find yourself travelling back to today’s date 32 years ago (December 12, 1980), you’ll find yourself presented with the IPO of Apple Computer. In that situation, you should scrape together some cash and buy as many shares as you can of…a shoe maker and discount retail store?

Apple sold shares to the public for the first time in December 1980. Investors purchased $110 million worth of stock at $22 per share, becoming co-owners of the business with Steve Jobs and Steve Wozniak. They watched as Apple grew through the 1980s. By the summer of 1987 the California-based computer company begin paying dividends. The good times were not to last, and Apple soon found itself relegated to a role as a niche computer provider. Dividends were canceled in 1995, and would not return again until 2012.

If you had purchased 100 shares of Apple in the IPO, you would have paid $2,200 to own what is now the most valuable business in the United States. Through several stock splits your 100 shares grew to 800 shares. If you reinvested dividend payments, you added an additional 86 shares to your holdings. At today’s price of $541.39, your shares would now be worth $480,074.

Despite reaching the highest market value for any publicly traded company this year, Apple was not the best performing stock since its IPO in 1980. One does not have to even scour obscure technology and pharmaceutical stock listings of the time to find a business whose stock has outperformed Apple.

Just ten days prior to Apple’s IPO, investment banks brought another young company public. Shares of shoe maker Nike were just beginning to trade at the time of Apple’s debut. The exploding popularity of its shoes, coupled with the development of its brand led to large profits for the northwestern company. Investors who purchased $2,200 worth of Nike instead of Apple on December 12, 1980 and reinvested dividends today find themselves with 5,777 shares valued at $574,291.

Wal-Mart Stores had been publicly traded for nearly a decade when Apple went public. A hypothetical investor who purchased $2,200 worth of Wal-Mart at its December 12, 1980 closing price of $51.25 and reinvested dividends would now have 14,545 shares valued at $1,031,095.

There is a common thread among these companies. Apple, Wal-Mart and Nike where all small companies that consistently turned their industries upside down. Each one systematically dismantled and outmaneuvered entrenched competition that had overlooked some aspect of its business. Look at the businesses around you today. Generations from now, many of the leaders in various business categories will have been supplanted by companies that are right now young upstarts. Find the businesses that are thriving in the face of the old guard and watch them closely.