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But you're talking about two different things. In the case of an iPod, you're basing its value (at least partially) on its utility, much of which is very subjective.

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There is a difference between cost and value. The stock market tries to make the cost equal the value, but it's not exact. Let's take the example of a company that was at one time trading for $20 a share, but gets bought out for cash at $1 a share. Those people who bought at $20 paid fair market value at the time. But they ultimately only recieved $1 back. The cost was $20, but they bought something that had an ultimate value of $1. (It's possible that that might be advantageous to them after the fact for some reason -- taxes, probably -- but on its own, it shows that cost and value are not the same thing.)