Everything you've mentioned is subjective, so it is difficult to properly discuss something as rigid as the future success of APPL or MSFT without bringing about the facts.
I simply disagree that marketing and media are what makes a company based on the fact that without proper funding, it doesn't matter how much marketing and media you want to do, you simply cannot do it without funds.
APPL received a great deal of money before it was able to kick off a large "campaign" and Steve Jobs delivered the first Macintosh computer in 1984; that would not have been possible if he had not convinced his investors (and even self-funded) the project and company.
I do agree that APPL is closer
to being a fashion brand than a tech brand, but it is a tech brand first and a fashion brand second (otherwise they would be selling clothing, accessories, and cosmetic products).
Also the comparison between CocaCola (KO) and APPL is financially improper as they are in different sectors of the market, despite both having a retail product and consumable products.
(It is closer in relation to MSFT than APPL, in that its average range is around $30+.)
One thing I suppose you don't take into account is the fact that the market represents the value of a company based on what people are willing to pay for it. This implies that the value of the stock expresses the public interest in the company, not just its sales and/or dollar value.
When people believe in a company, they buy its stock (if they have the ability and/or knowledge), and as such it does not strictly relate to bankers or fund managers; it expresses the emotional effect the company has on the public (this can be shown in its volatility each day).
The more people are emotionally attracted to a stock, the greater the stock's volatility; when they expect the company to do well, they buy; when they expect the company to do poorly, they sell. So you can have a great deal of emotion in the market that ends up causing a stock to either rise or fall; it isn't only about the money though that is a very important piece. Without money being involved, what interest would someone have in buying a company's stock?
So it is implied that a company's overall welfare and public interest is what defines its value, and that value is expressed in the emotionally-based and financially-based purchasing of the company's stock.
Also, it is the job of investors to know, clearly and completely, all relative information about a stock prior to investing in that stock.
Therefore, what you assume about (what you call bankers, but they are investors that work for banks) investors is false because they would be fired if they invested in a company that they know nothing about. So whilst their motive is for profit (and to keep their job), their knowledge of a company they are investing in is far better than the average person's knowledge about that company.
I work in the financial industry, and have for years (the only job I have currently), and my father and older brother does as well (they have worked in it since 1992 when I was 2 years old). Since 1992, throughout my childhood and even now, I consistently meet new people who work in an exchange (CBOE, NYSE, etc.) and who work on the floor of the exchange, and they have a motive for profit, but they will absolutely not invest in something they don't know a great deal about. I've learned more from them about companies than I have been able to learn from the company's website, news releases, financial reports, or marketing.
The assumption that they don't understand these basic ideas about a company, especially one they are investing in, is completely false.
They would not be where they are if they did not understand such things, and they would not be profitable if they did not understand such things.
Amateur traders believe that they can trade based on what they see on a chart (price and indicators), and the simple fact is that they might get lucky, however without being lucky they will fail to make profit based on the price alone.
This is why the overwhelming majority of activity and strength in the market is done by banks and fund managers, because they know what stock they are trading in the sense that they understand what that stock is at a very advanced level.
(And yes, even with all that knowledge they can make fatal errors by over-leveraging and not properly managing their portfolio risk, but that is not because they are ignorant about a company - it's because their strategy is either wrong and/or because they are not properly managing their risk. If you manage your risk properly, you will hedge your position so that you cannot lose more than a certain percentage of your portfolio in a single trade. We've recently seen several failures in that area, and by people who are extremely smart in the areas mentioned above. No one is inherently safe from failure based on their knowledge.)
So, the markets do not judge a company solely based on profit. Profit is merely the motive for investment. Belief in a company is what triggers investment, and without that belief the profit potential has no relevance. Which is why the market is an amazing tool for determining the success and projected success of a company.
Also note that the market value of a company is not a representation of how much money the company is making, instead it "is subject to seller and buyer's perception and interpretation of parameters that they decide to take into consideration (Wikipedia quote, just for reference)". So they could determine that the company is valuable simply based on the fact that its name is "Apple", and then buy it simply for that reason (a very amateur investment, but there are many retail traders that make amateur investments based on criteria like this). The point being that they could have any number of reasons to invest in the stock, and none of those reasons might be relative to the company's sales.
Consider the real estate market. What makes the market value of a house increase or decrease?
The fact that someone (or multiple people) either want it or does not want it. The more people want to live in Dublin, the greater the market value for real estate in that area, and the less people want to live in Dublin, the lesser the market value for real estate in that area.
Consider the Tulip Mania (click for history lesson
). It was not based on the value of the tulip, rather the speculative/projected value of the tulip. It was "all the craze" and people bought tulip bulbs because it was the thing to do, and then its value collapsed (similar to the real estate market in recent years). The underlying factor was that the tulip bulb had no ability to increase its own value after being invested in. The same with the real estate market, of itself real estate is incapable of increasing its own value. The value is based on supply and demand.
The same is true of APPL, there is a supply and demand for its stock, and as long as APPL increases its own value (through products, marketing, media, popularity, etc.) then investors will invest in it and it will continue to grow.
So long as investors do not begin to inflate the value of the stock (similar to what happened with tulip bulbs and real estate) it will not have a bursting bubble.
APPL is not immune to supply and demand, and it isn't able to control who invests in it and/or why they invest in it, thus they might eventually become a bursting bubble, however at this point their market value is a bit off compared to their fair value (see here for fair value
), so things like their sales aren't quite as important to investors as the speculation is (speculation implies future success in this case) for the stock.
In relation to the comments about Apple's products, I agree. I don't prefer Apple over Microsoft products, and without some form of marketing there is no way I'd be purchasing their products for the prices they set them at.
So it is true that, in the public/retail market, the only thing that causes people to purchase the product is the hype/appeal/marketing/etc. versus its intrinsic/fundamental value.
Anyway, it's rather interesting to see how others view the market, but I think I'm doing a terrible job at explaining it so I'll stop, lol.