Above you’ll find Andy Zaky’s chart of Apple’s plummeting price/earnings ratio. This isn’t a question of Apple’s value actually falling, rather what’s happening is that Apple’s earnings are growing very rapidly and the market seems to be discounting those earnings. Two years ago the market paid $32 for $1 of Apple earnings and today it’s closer to $13. Felix Salmon offers some theories as to why this might be the case, but I think I’m closer to Karl Smith’s view. The crux of the matter, as I see it, is Apple’s ever-growing cash horde which went from $70 billion in liquid assets at the end of Q2 to $82 billion in liquid assets at the end of Q3. The company is earning huge profits, which is great, but since it seems determined to neither return those profits to shareholders nor to re-invest them in expanded operations it’s hard to see how investors aren’t going to discount the value of the enterprise. There’s more to business than dividends and share buy-backs, but stockpiling ever-larger sums of liquid assets isn’t really on the list.