The Worst Article EVER – Why Apple Stock Is Better Investment Than a House

While the mainstream media never passes an opportunity to peddle the most vapid stupidity capable of snagging a click, this one takes that cake. CNBC had on their front page an article touting why you would have been better off investing in Apple stock compared to buying a home 10 years ago. Aside from the sheer stupidity of the idea of even analyzing this, let’s consider the gaps in this logic realistically speaking:

• Bad Assumptions: One of the dumbest parts of this story, aside from the idea itself, is that this dopey author uses $228,000 as the starting investment since that was the “typical American home cost” in 2002. Well, that’s a dumb analysis because virtually nobody was buying homes in cash back then. Realistically, people were putting either 0% down, 5% down or maybe 10% down. So, really, the investment is a full order of magnitude smaller than stated for a “typical American” since that’s the brilliant benchmark being batted about.  People bought homes with leverage whereas this assessment assumes Apple shares were bought with the full home amount.  So, to take it to another absurd degree, why not assume Apple stock was purchased with leverage?  Or perhaps even stock options – LEAPS.  Sure, rather than buying a home, people went out and bought perfectly placed out of the money call options on Apple stock.  And they lived in a tent knowing they’d become rich.

• Survivorship Bias: I’ve written about survivorship bias before in the lionization of winning mutual fund managers or successful CEOs in that you ONLY hear about the winners and don’t consider the losers. i.e. Gates, Jobs and Zuckerberg are all college dropouts, therefore, by dropping out of college, you’ll be a billionaire, right? Duh. Well, same here.

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