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Apple Share Price Hits $600, Just One Month After Hitting $500

You are right that nothing is infinite but the current markets that Apple is in is growing and Apple itself is growing inside those markets.

phone: dumb phone -> smart phone, Apple has 9% of total phone market.
tablet: new fast growing market, Apple has 60% but total market is growing.
pc: total market is slightly shrinking but mac growing at the expense of windows pc's.
tv: hard to say, wait and see.

Avatar74 said:
You understand that Share of Wallet is a metric that weighs the potential of untapped or yet to exist markets against available consumer capital to spend on them... right?

How many more yet to exist products can Apple have in the market at any given time, competing against other products AND against each other (cannibalism) for the customer's disposable income? Look at their past business and how instead of leaving certain products in the market indefinitely, they phase out some and bring in others... they're pacing their growth, even if the market isn't paying attention to this at this moment. They're going to slowly reduce that pace over time, but the market will be slower still to react to that adjustment... because, once again, people in large groups tend to act stupidly.

And that's bad for an investor, because what it signals is that the market will make a sudden and significant reaction to Apple's conservative strategy somewhere way down the road, instead of giving you and everyone else a fair lead time by adjusting its sights as Apple adjusts theirs. Overall revenue growth is up, but unit sales are declining in some segments.

It's simple math: If the total disposable income in the market is x, and 0.8x is already occupied purchasing Apple's products and a bunch of other things every family spends its money on, then how many more products at what price point given churn, retention rates, product interdependencies, cannibalism risk, etc. can Apple sell in any given quarter? Unless consumer incomes rise, and rise sharply, that wallet (their disposable income) is not of infinite size... no matter what size it is. It is not infinite, and every amount of new acquisition any business does (keep in mind I do precisely this sort of analysis for a gigantic software company) reduces the available share of wallet that hasn't already been gobbled up.

That includes access to revolving credit because there's a limit to that as well, dictated by FICO scores, available capital in the credit markets, tightening of lending standards following the financial and housing crises of 2008...

Apple's growing at a much faster pace than any of these... so by what mathematics do you say "when there actually is a wallet" as if there isn't one? Are you saying it's better to be the guy who doesn't pay attention and gets left holding the bag, than to be the guy paying attention?
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brdeveloper said:
I wouldn't keep AAPL stocks much longer under my custody if I had any :p
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If you sell at 2x then you will never hit 10x.
 
avatar74 said:
it's as i told a close friend yesterday, buying aapl is not an investment strategy. There are two important words there: "investment" and "strategy".

Investment requires active research, and making decisions not based on speculative plays but a sound analysis of the value of the asset being acquired. Hearing about a company as ubiquitous as apple and then jumping on board on the assumption that it'll keep going up (remember the housing market?) is not investing.

If all of apple's enterprise were struck by a meteor tomorrow and wiped off the face of the planet, would the average apple speculator be well insulated from that catastrophe in the rest of their portfolio. Would their "sit and presume infinite growth" tack work with the broader market?

If the answer to questions like these is "no" then whatever else you want to call it, it's not investing, and it's not a strategy.

Spend less time beating yourself up for "shoulda, woulda, coulda" on a company that could have just as easily gone the other way... And start beefing up your knowledge of investing, and insulate yourself against potential catastrophic loss. That, and not consistent huge wins, is what will growth your wealth tremendously in the long term.

Chasing unsustainable returns is a sure fire way to expose your principal to risk of loss... And that kind of loss compounds over time. I don't miss the aapl boat because i have much more stable long term investments that are actually providing pretty stellar returns, very close to apple's.... But without the volatility of the umpteen zillion speculators who are all sitting and hoping with their eyes closed and ears shut.

I'm not saying that apple will do terribly, but apple's book value is well below 600 dollars per share. So the difference is owing entirely to speculation on where they will go in the future. That works perfectly as long as apple keeps producing double digit growth infinitely... But its the "infinitely" part that is a statistical impossibility. Growth rates have to shrink at that scale because a) apple is gaining share of wallet much faster than the number of wallets or size of wallets is increasing, and b) apple has to produce exponentially more marginal revenue each quarter just to maintain the same growth rate mathematically.

And then there's the steve factor... Any time a business's image and success are so inextricably tied to an iconic figure you cannot top that. No one will ever take the reins of apple with a greater vested interest than steve had. No visionary of steve's caliber will prefer to work for apple over starting his own company.

A shrewd investor is like a good hockey player... Skate to where the puck is going next, not to where it is now.
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+1
 
I bought at 14 and haven't sold a share yet. What keeps me in it is that now there is adult management that is obviously more comfortable for the investment world. Dividends will allow for even more investors.

Apple has the money to blow everyone else away in terms of R&D, control of commodities, buying patents and companies with interesting technology, etc, all the things we know of.

Apple can at any time decide to compete in the specs race, the Pro market, etc. They can get into making their own chips, screens, etc any time they want.

How hard is it now to make memory modules?

When is Apple going to go into the broadband delivery service sector? Everything they want to do with iOS and small thin devices now depends on evil carriers and silly cell phone technology. How good is your DSL? Outside of the Apple campuses, universities, and specially wired buildings it is pretty bad for most folks. And that is in the US, 5% of the world's population.

In short, there is a huge amount of growth available and Apple is in a position to take advantage of that. Doesn't mean they won't make terrible decisions and blow it, but at least there is a good chance of future success.

I'm going to hold on, but I have gone through many huge dips in the stock price and expect more.
 
xinu said:
But Apples Total Equity is quite small.

And if economy crashes, Apple loses 80% of its value immediately.

IBM wont. Like it didnt with when Lehman Brothers fcked up everything.
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I was assuming that when people said Apple's stock was "too high" and that it would "crash" that we were dismissing economic meltdown and other aspects that are completely outside of Apple's control. Apple, of it's own merits, in the current economy, isn't too high. But see my follow on reply below.

Avatar74 said:
It can slow down, but that clearly isn't how the average bandwagoner sees Apple in their myopic view. They'll react far after the fact... They're not even seeing the signs right now, such as the 3 million unit shortfall on iPhone 4S sales last year, or the depletion of $760 million in warranty reserves (almost the entire bucket) from the iPhone 4's antenna gate issues among other things. Not a huge amount, but the fact that I got down voted in another thread for pointing this out suggests to me that people generally don't read the fine print in the back of the annual reports).

The bell curve of investor awareness is such that the majority will not adjust slowly in this case because Apple has umpteen zillion speculators riding it like it's the only thing out there... because they don't do their homework. If they did, they wouldn't bat an eye over Apple.
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I am in no way going to justify the way the stock market works, or will I say that it makes sense. The ebb and flow of the market is what it is. What I would say that is that the way the marker is ebbing and flowing with regards to Apple is not an anomaly. Stock buyers are not being "temporarily tricked", at least not any more than is usual with regards to stock markets.

Quite frankly I don't play the stock market game, because I spend most of my "how to predict crazy" energy dealing with personal relationships. So in conclusion, I don't agree with people that say "The markets are sane, except for the way it handles Apple". I would agree with either of the following two statements though "Apple is being handled the same as the market always handles things", and "None of it really makes logical sense". Neither of those statements prevent the market from being predictable though.
 
I don't see why everyone is saying I wish I had bought AAPL XX years ago. Even though it may seem "too late" learn to trade options and make more money than you would buying actual stocks with less money.

caveat though, options can be very dangerous if you don't know how to play it right.

I'm thinking AAPL will hit 650 by April, my money is on that. If not my money is on 550 as well :)
 
The truth is that this is sad. Apple under Steve Jobs was perhaps the most enlightened company to have existed since the Industrial Revolution began. It's clear that the stock price is being artificially manipulated - possibly with mass naked short selling (http://en.wikipedia.org/wiki/Naked_short_selling). What this means is that Wall Street is bloating Apple for temporary financial gain and will dispose of it accordingly.

Want more info? Google "Patrick Byrne of Overstock.com naked short selling" and check this out: http://m.sltrib.com/sltrib/mobile/53683903-79/overstock-public-bank-case.html.csp

It looks like Bank of America is going to collapse and take the whole economy down with it. Check out yesterday's article in Rolling Stone: http://www.rollingstone.com/politics/news/bank-of-america-too-crooked-to-fail-20120314 Apple and mortgages will be the most affected. Steve Jobs was a one man army against the type of people who began looting Apple the moment he passed away. That's why he built up such large cash reserves, and probably why he didn't get involved with "charity" - like Bill Gates Foundation which is just a front for colossal money laundering.
 
axonic labs said:
You are right that nothing is infinite but the current markets that Apple is in is growing and Apple itself is growing inside those markets.

phone: dumb phone -> smart phone, Apple has 9% of total phone market.
tablet: new fast growing market, Apple has 60% but total market is growing.
pc: total market is slightly shrinking but mac growing at the expense of windows pc's.
tv: hard to say, wait and see.
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Having an Apple product is like drinking water in USA. However, considering markets worldwide, Apple doesn't sell too much as appears to be. Actually, Apple numbers look good because people from USA consumes a lot, the importing taxes for electronics are pretty low so every american has a bunch of useful and useless gadgets. Although they're expensive by the american standards, Apple products are pretty affordable for the average consumer. This isn't true outside USA. Here in Brazil (and I presume this happens in all BRICs and in some manner to Europe), Apple products aren't so competitive or even known by consumers.
 
Well lets see it this way

Apple is now bigger than Exxon or US largest Banks.

People need oil and money. People dont need Apple iOS toys.

Bubble? Yes.
When it will burst?
When US starts another war and oil prices go high enough.
Combined that with total Eurozone collapse (it is coming) anything can happen.
 
Avatar74 said:
You understand that Share of Wallet is a metric that weighs the potential of untapped or yet to exist markets against available consumer capital to spend on them... right?

Unless consumer incomes rise, and rise sharply, that wallet (their disposable income) is not of infinite size... no matter what size it is. It is not infinite, and every amount of new acquisition any business does (keep in mind I do precisely this sort of analysis for a gigantic software company) reduces the available share of wallet that hasn't already been gobbled up.

Apple's growing at a much faster pace than any of these... so by what mathematics do you say "when there actually is a wallet" as if there isn't one? Are you saying it's better to be the guy who doesn't pay attention and gets left holding the bag, than to be the guy paying attention?
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If you are not paying attention and testing your logic you are not an investor. Share of wallet is a guess and the verbiage is meant to imply firm limits. I prefer Share of Galaxy still finite but implying more expansive limits.

In theoretical terms your analysis is valid my contention is that you grossly underestimate the size of new markets, the pace of growth in disposable income in those markets and therefore overestimate the impact of AAPL's current growth rate.
 
This is a good observation.

China has gone from contributing almost zero Apple sales (2009) to being the second largest market in less than three years.
 
I bought at $65. At that time it was a good investment. Wish I hadn't sold it. Made a profit but not as much as I could have. Even if I did though it's not like it's a life changing amount. I'd be at around $1,000.00 now if I'd kept it.

Stocks are just one basket among many to put your money into and not a very reliable one at that. I would never encourage a person to put all their money into stocks. VERY UNWISE!!!! No matter what stock it is!

Money for stocks should ONLY be EXTRA money that you know you wouldn't miss if you lost it.
 
phas3 said:
I don't see why everyone is saying I wish I had bought AAPL XX years ago. Even though it may seem "too late" learn to trade options and make more money than you would buying actual stocks with less money.

caveat though, options can be very dangerous if you don't know how to play it right.

I'm thinking AAPL will hit 650 by April, my money is on that. If not my money is on 550 as well :)
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Using options in a stock replacement strategy with deep in the money calls is actually less dangerous than owning shares outright provided you fully understand the trade.
 
Jeffacme said:
Using options in a stock replacement strategy with deep in the money calls is actually less dangerous than owning shares outright provided you fully understand the trade.
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I use in-the-money options as well (and have one such contract now), but the point still stands that it is leveraged. I was able to buy a contract last October for 100 shares for about the price of 20 shares of AAPL, and while that's been a boon for the past 6 months, there have been periods when AAPL has gone in the other direction.

Sure, it's 5x as much going up, but it's also the same in the other direction. People do need to be careful.
 
ha, apple hits $600 for like 5 seconds and it's major news. Currently the stock is down about $8. maybe it will end the week at $600 or above. But already I see the media trying to downplay the demand for the new iPad. I've seen numerous stories of surprise that allegedly not many people are camping out for the device. I can't wait for Apple to release sales figures that blow everyone away. :D
 
lifeinhd said:
Partially true. I agree AAPL is grossly overvalued, and that bubble will likely pop sometime in the next couple years. However, I disagree on your assessment of what an "investment strategy" should be. The most important thing an investor can do is diversify, not just across multiple companies, but across multiple markets as well, the idea being that markets increase in value over time. So if you invest in a dozen markets and hold onto that stock for 50 years, you're safer and likely to net a reasonable sum when you cash in. Dumping all your money into one company, as one poster claims he did, is too risky, no matter how well performing that company is/you expect it to be.
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Nobody knows whether a stock is overvalued or undervalued until after the fact. The function of the markets is to set value, so by definition what the stock sells for at any given moment is the correct value. Every other argument for valuation is based on guessing the future, and good luck with that.

Second part I agree with completely. Most individuals should not be buying stocks at all, they should be in a balanced portfolio of unmanaged index funds. It isn't exciting, but over time it's a sure bet.
 
KPOM said:
I use in-the-money options as well (and have one such contract now), but the point still stands that it is leveraged. I was able to buy a contract last October for 100 shares for about the price of 20 shares of AAPL, and while that's been a boon for the past 6 months, there have been periods when AAPL has gone in the other direction.

Sure, it's 5x as much going up, but it's also the same in the other direction. People do need to be careful.
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It is safer because the losses are limited to the price of the contract. The same cannot be said of owning 100 shares of AAPL outright.
 
It is rising so fast because the last earnings report was incredibly higher than the expectations. Not to mention there was a tremedous amount of uncertainty about the company after Steve Jobs death.

Analysts had expected the company to report earnings excluding items of $10.10 per share on revenue of $38.9 billion

Apple delivered earnings excluding items of $13.87 a share on revenue of $46.3 billion

As long as Apple continues to outperform the expectations, the stock will continue to rise. Most agree that the expecptations are very conservative, hence the continued growth.
 
Jeffacme said:
It is safer because the losses are limited to the price of the contract. The same cannot be said of owning 100 shares of AAPL outright.
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that's why I love options, whether the market is bullish or bearish you can still make money with very little in your account.
 
Jeffacme said:
It is safer because the losses are limited to the price of the contract. The same cannot be said of owning 100 shares of AAPL outright.
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True, but if you buy $10,000 of AAPL vs $10,000 for a call option, you can still lose $10,000. It would take a much smaller decline in the value of AAPL to lose all $10,000 with the option contract.

The difference, of course, is that $10,000 will buy only about 16 shares of AAPL right now, while it will buy a contract to buy 100 Apple shares in October for $515.
 
tevans333 said:
It is rising so fast because the last earnings report was incredibly higher than the expectations. Not to mention there was a tremedous amount of uncertainty about the company after Steve Jobs death.

Analysts had expected the company to report earnings excluding items of $10.10 per share on revenue of $38.9 billion

Apple delivered earnings excluding items of $13.87 a share on revenue of $46.3 billion

As long as Apple continues to outperform the expectations, the stock will continue to rise. Most agree that the expecptations are very conservative, hence the continued growth.
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You know what beating the estimates every time means? It means you are making ****** estimates.
 
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