Now to Apple. If it's going to do $25 billion in share purchases in the coming year, let's assume it does that at an average price of $400. That means it'll retire 62.5 million shares. There are about 240 trading days in the year and Apple trades about 15 million shares a day. This means Apple's purchases in the open market will account for about 1.7% of the overall trading volume each year. Yahoo!'s stock has gone up 60% in the past six months. A lot of this is due to the fact that it was trading very cheaply for a long time and its valuation is now "catching up" to the inherent value of its stakes in Alibaba Group (which will soon IPO) and Yahoo! Japan. However, it's undeniable that a positive floor on the stock was created with knowledge that Yahoo! is often in the market providing a floor to the stock price with its incremental purchases. On days around when Yahoo! reports earnings -- and when Yahoo! cannot be in the market buying stock -- Yahoo!'s stock is much more volatile. When stock purchases resume, you can see the strength in the bids on the stock.
By magnitude, Yahoo!'s purchases are about three times the size of the average daily volume as Apple's will be. So, Apple's purchases will certainly have a more muted effect than with Yahoo!, despite the fact that it is "the largest corporate buyback in history." However, the question is: Will the market know that, every day, Apple is going to be in the market buying back about 2% of the daily volume provide a floor on the stock and confidence that will help it rise from here. I think it's unquestionably a positive. So, let's talk about why this is no panacea for the stock. David Einhorn basically provoked Apple into action on this large cash pile and using it more effectively than it was before. So, I'm sure many other investors are happy about it. But the lukewarm reaction in terms of the stock price today also points to what investors really want from Apple -- growth. They're not going to get growth until Apple unveils new products.