Back in the late 1990s, a stock analyst on a TV money show was asked if he thought it was a good time to buy Microsoft stock. Digging deep into his reservoir of pomposity, he said, "The stock market is open 250 days of the year and any one of those days would be a good time to buy Microsoft stock." So, here is Microsoft, years later, at roughly the same price it was then. What did he know?

The same might be true of Apple (AAPL) when it comes to professionals getting it wrong. The New York Times recently cited that virtually all of the 52 analysts who ranked Apple termed it a buy throughout last year and all but two of them still think it's great after having watched the stock drop by over 30 percent. If there's a point to be learned from this, it's that analysts don't know any more than we do when it comes to predicting the future value of a stock. The world's largest company has become an obsession -- more like a source of wonderment -- for today's investors. It remains to be seen whether it will wind up becoming a Microsoft or a Berkshire Hathaway over the next 20 years.

Unbeknown to many, those of us with 401(k) plans and IRAs invested in mutual funds are heavily invested in Apple, even if we have been unaware that our funds had purchased lots of the stock. The greater fool theory combined with the wisdom of crowds prompted most fund managers at the helm of large-cap funds to invest in Apple shares because everyone else was doing it. It helps to remember that fund managers don't get fired if they keep pace with their peers -- only when they fall below the pack for sustained periods. Like a chapter from the "Left Behind" series of religious books, managers tend to invest in many of the same companies. If they're going to go over the cliff, they want the company of the rest of the lemmings.

Ultimately, the current price of a stock is based on the collective wisdom of what people feel will be its future stream of profits. With Apple, which is sitting on more than $100 billion of cash right now, the mind is free to wander when it comes to speculation as to how that money will be deployed into the future. Everything from computers in eyeglasses to automobile manufacturing has been considered as a possibility or generating future revenues. At the same time, whatever fantasies they bring to fruition are expected to be as profitable as their current phenomenal product mix.

It hasn't always been this way. Apple went public in 1980 at $22 a share and had dropped to $3 by 1984. It reached $32 at the height of the dot-com boom in 2000, but that reflected two 2-for-1 stock splits in 1987 and 2000, so a pre-'87 share by then had morphed into 4 shares worth $128. Yet another split in 2005 brings that share count to 8 shares. Imagine how ecstatic an original buy-and-hold investor might have been a few months ago when their 8 shares hit $700 each. And think about the person who waited until after the IPO to buy their shares at just $3 each a few years later. For every three 1984 bucks, they had $5,600.

But, when we fall in love with a stock, it's important to recall that the stock doesn't love us. It's like the attraction of a "bad boy" or "bad girl." Apple's amazing trajectory started with having been the largest public offering after Ford Motor, but its history since has been a roller coaster in an industry that, itself, is fraught with volatility. By comparison, the price of Berkshire Hathaway stock in 1980 was $380. Today, it's flirting with $150,000. That's about a 400 times increase in value, but the steady rise in value over the years, investing in staid insurance companies, banks and railroads, has allowed investors to sleep at night. No Berkshire Hathaway investor ever stared at a statement showing that their stock had lost more than 90 percent of its value. Trying to guess where Apple stock might go next is just a form of entertainment. John Spooner's book, "Do You Want to Make Money or Would You Rather Fool Around?" says it all for those with illusions regarding a single stock's future performance. In the end, there's no substitute for diversification. Put your eggs in a bunch of baskets, and rebalance those baskets from time to time.

Stephen J. Butler is CEO of Pension Dynamics. Contact him at 925-956-0506 or sbutler@pensiondynamics.com.