Apple has ~$100 Billion in cash. Cold hard cash. They have approximately 1 Billion shares, meaning they're worth $100/share simply on the cash at hand. If every apple product was destroyed, every apple building demolished, every trademark, copyright, patent destroyed, and every apple employee killed - the stock would STILL be worth $100/share based solely on that cash.
Let's assume this is true. If you purchase at today's market price, where would that leave you? Losing 83% of your principal investment. That's where. This is my point about risk exposure. All that lost principal is worth several times that in future dollars, due to the orders of magnitude of compounded returns you could have achieved over time had you kept that principal.
Preserving principal is far more important than large short term returns, because it produces exponentially larger returns in the end.
So saying that Apple's value is "well below $600/share" is going to need some citation to it, as most professionals are giving it a valuation in the $800/share range.
This is not what I wrote. I wrote that their BOOK value is well below $600 per share... I also used that in a context discussing where the marginal value above book is coming from. My analytical methods aren't different from M&A experts. The difference is that M&A experts are in the business of securing transactions at a good discount. Street analysts, however, are in the business of generating hype to make it profitable for either their high net worth clients or for the institution itself (See Goldman Sachs and recent investigations into their misleading guidance to high net worth clients).
What I didn't say in that statement was what the intrinsic value of Apple is... it's still lower than $600 per share. But analysts don't make boatloads of money telling you this. They make boatloads of money convincing you that the future target is in the stratosphere.... and then Goldman dumps its own positions on the way up. You might have read a news article or two about this.
I did a quick analysis of a luxury brand, Tiffany & Co., using the exact specified methods that Standard and Poor's own analyst report had stated they used. Using exactly their methods, and their assumptions, I came to a valuation about HALF of what theirs was. I weighed it against another analyst board that uses similar methods to mine (which are ultimately based on Graham and Buffett's methods), and I was in the right ballpark. S&P wasn't.
The difference is I'm not in the business of making shmucks out of you guys. Street analysts are. I'm a business analyst. My job is to tell my executives where we are going to REALISTICALLY land in terms of operating results in the coming quarter, year, etc.
But if you think the guy who makes millions for Goldman at the expense of the broader population's gullibility is totally trustworthy (because they absolutely weren't snowing us about the value of MBSes, CDOs and other derivatives either...), then go right ahead and base your investment strategy off of trading as long as you're at or near their inflated target prices.
All I can do is present to you my view, which is a more conservative estimate than any licensed market hypester is going to share with you... They're meanwhile sitting on internal analyses that are closer to mine, executing purchases for their company at those prices, and then dumping to you at the inflated targets they give. If you think that's the better side of the equation to be on, I can't and won't argue with you.
