Apple (AAPL) shareholders, consider buying insurance on Steve Jobs

By: ispeculatornew
Date posted: 08.31.2010 (4:00 am) | Write a Comment  (2 Comments)

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Hedging any investment, when it is not too expensive is certainly a very attractive proposition. There are conventional ways of doing so, through options for example, but also less conventional ways.

In case you did not follow this news, HP (HPQ), the giant pc/printer company suffered a huge loss in recent weeks when the board fired Mark Huard because of a sexual harassment complaint. The board has been accused of acting too quickly without putting enough effort into finding out what had really happened. To this day, many aspects of the dismissal remain unclear but what is clear is that:

-Both Huard and the board made important mistakes
-Shareholders are the ones that assumed the biggest loss

Just take a look at the chart of HPQ in the days following Huard’s firing:

Why did the stock suffer so much after losing just one guy? Because Huard had been at the head of HP during a great turnaround and has been seen as crucial in the recovery of the tech company. Now, can you tell me of the one company where the CEO stepping down would draw a major loss for shareholders? Steve Jobs from Apple comes out heads and shoulders above everyone else. Not only is he seen as the man who rescued the company a decade or so ago. Jobs also did have major involvment in the launch of huge hits such as the Ipod, Iphone and the recent launch of the Ipad. If you recall,  the stock became very volatile 1-2 years ago when rumors surfaced that Jobs was still suffering from health problems and might not be able to continue his work at Apple.

Can you imagine if Steve Jobs did have to quit his job at Apple?

No matter what the reason, it’s easy to imagine several billions of market cap being wiped out in the hours following such an announcement and if you have a portion of your retirement fund stacked with Apple shares, it might be something you should consider protecting from… but how?

Insurance?

I was wondering if buying life insurance on Steve Jobs would be possible for the average shareholder. Wikipedia seems to indicate that it’s a possibility. Turns out it’s not. You can read about it and a funny story regarding life insurance bought on strangers here. There might be some local laws that permit such a purchase? If so, please let me know.

Another option might be looking into making such a wager through event trading on a site like InTrade.

Any other ideas?

Of course, this article is a bit of an exageration as it’s probably not worthwhile to actually get insurance on such an event from non-conventional sources but I thought it was an interesting idea and could certainly

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2 Comments

  1. Comment by Craig — August 31, 2010 @ 7:27 am

    Here’s the problem with taking insurance out on other people – it gives one an incentive to see the person not exist, if you get what I mean.

    Perhaps the best insurance is owning stocks in similar companies that are doing well? Maybe now is a good time for HP since the shares dropped due to the CEO but the products are still the same?

  2. Comment by Lex — August 31, 2010 @ 10:10 pm

    Jobs is even more of an asset to Apple. he’s one of the most famous CEOs in the world and he’s considered almost synonymous with the company. Without him, I think AAPL would take an even bigger dive.

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