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Apple's Market Value Hits $2 Trillion
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Why would you short a stock if you know the government manipulates the market to keep share prices high?
You are correct that markets price in expectations. But it seems to me unprecedented that an economic shock of this magnitude would show up as a mere couple of months drop that recovers fully.
The pandemic is most definitely not over economically. Whole sectors of the economy (gyms, bars, restaurants, commercial real estate and more) are still hugely impacted.
Why wouldn’t you buy if you know the stock is just going higher, whatever the reason?
Of course sectors are impacted, but others are doing even better, like Apple,Amazon, Target, Walmart, etc.
Even the ones that are struggling like travel, hotels and airlines are still better than 3 months ago because restrictions have been largely lifted.
This is why looking forward is so powerful.
I have not. I sold some for the first time yesterday at 467.77, and that was an arbitrary number I used for a limit order trigger. Not too worried about having left money on the table (at least this morning) because my whole intent was to reduce my position. What I have left will perform fine.
Its a known fact that when Apple is more expensive than the competitor, and in a recession people's money is tighter so they spend less than before the recession. What you are saying is that people in a recession are more willing to buy a $50K BMW(Apple) over a $25K Toyota Camry. That does not compute. All businesses and employee income have decreased during the COVID-19 except for few like pharmaceuticals and online delivers/stores. Tourism, manufacturing, cinema, restaurants, retail, construction...
So you are saying that a $10T company can be worth $20T by next year?
If Apple was worth $1T last year, logically, it should double its sales and revenue for it to be worth $1T today.
Does Apple have twice the customers of last year? Did they sell double the amount of iPhones, Macs, iTune movies&music, Apple Music subscribers of 2019?
I get that a billion dollar company can generate a million dollars easier than a million dollar one, but as you grow larger it gets harder to double. If you have a $1k its easy to make it $2k, but it will be harder to make $1M to $2M. It does not infinite doubles. If you are worth $1000 Trillion you won't be $2000 Trillion in value next year. In fact, many companies need to fight to hold their ground as many lose their stock value or completely crash. You seem to think Apple will grow forever and ever.
I thought investment works by buying today on the hopes of gaining more tomorrow, not buying today on the hopes of last month's return. You are saying because Apple was still lucrative this quarter people bought their stock, yes, but that does not mean its going to be lucrative tomorrow. In fact, its sales might drop.
The investment rules states: buy low sell high, not buy high on hopes it gets higher.
To be fair, facebook is excellent to its customers. It’s just that we aren’t the customers.
Nope. Here are some known facts:
https://www.macrumors.com/guide/earnings/
The top 4 results ought to adequately lay down the relevant trend, which is: Apple crushed it. It doesn't need to "compute," though there are some theories.
Among other things, you're assuming the recession has hit all income brackets equally. It hasn't. It has been hardest on those with the least disposable income to begin with.
Also, as I pointed out, Apple happens to sell products that were in higher demand as the lockdowns kicked in. Portable computers purchased by businesses for their employees, and home entertainment as a replacement good for bars, restaurants and cinemas.
Neither of us said anything that was forward looking. Your question was backwards looking:
I also made exactly the point you're trying to regarding the ability to sustain that growth:
To be clear, I'm not advocating investing in this way, I'm answering your question about why prices are moving as they do. If the market were just the two of us, it would look different.
Your basics are right-- invest today to gain tomorrow-- but you're acting like you can predict the future. You can't. And if you could then that information would already be priced in. If you know the future, you don't wait for it to happen.
So since nobody knows, what do people do? What we do with everything else: we look around and examine what other people think. It's worth looking at the stock market through the lens of the Keynesian Beauty Contest. It's a subtle difference to absorb, but the gist of it is that when you sell an asset it doesn't matter what you think it's worth, what matters is what the buyer thinks it's worth. So if you're interested in earning a return, you aren't looking for stocks that you think are going to be most valuable when you sell, you're looking for stocks that you think other people will find most valuable.
And while I've generally avoided anything that smells of momentum trading and done better by sticking to what I think I know, you'll notice that it's harder and harder to stand by your lonely beliefs when everyone else around you seems to disagree and, worse, are making money hand over fist in validation of their beliefs. For example, I thought Tesla was insanely overvalued and was confident enough in my beliefs to short the stock. That went very badly in a very short period of time... I think they're even more insanely overvalued now than then, but I've decided I'll just accept others opinions this time and lose less money.
Sometimes it's hard to know whether what you're observing is the wisdom of the crowd, or irrational exuberance.
Every earnings report has a safe harbor clause along the lines of "past performance does not indicate future returns". So what's the answer? To do nothing because they're paralyzed that sales might drop? That risk never goes away.
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You just said a lot of stuff to prove you don’t understand how stocks and valuations work, and you didn’t see Apple’s last quarter performance. Apple just proved their customers spent more, not less, during the pandemic.
Apple has been misunderstood for years, now trades at 33X earnings, completely reasonable for their business with services growth like we’ve seen. They don’t need to double their sales to get double the valuation because there is a difference between types of revenue and earnings quality.
There are no rules in investing besides don’t lose capital.
You can buy a lot of stocks low...doesn’t mean they are going higher. Many stocks people thought were high have just gone higher.
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No, nothing like tulips.
Apple trades at 33X earnings...totally reasonable, particularly in this market. Can it go lower, sure...but it’s not speculative.
Look at Tesla, Netflix, or even Amazon for speculation. I still like those companies too, but they don’t have earnings like Apple.
Yup. I've been in and out of Tesla a few times now - always net positive so far. But the last time I sold all my position was June 29. I sold at $1000 and doubled my money. I will never be ashamed of 100% return (in two months, to boot) - but you see where it is now. Sigh. "Insanely overvalued" is spot on, but nevertheless, I may dabble with it after the split and probable dip.
Hey, you sold me my cover shares! Thanks!
Actually, I was taking my lumps a while back, but it's always fun to imagine who the person is on the other side of the transaction... Just stepped into Tesla once, and touched a live wire. I think I'll leave it to people bolder than me for a while.
I have not. I sold some for the first time yesterday at 467.77, and that was an arbitrary number I used for a limit order trigger. Not too worried about having left money on the table (at least this morning) because my whole intent was to reduce my position. What I have left will perform fine.
I've been seriously considering it after seeing the massive drop over a week when the US realised they were not save from CV19. It would've been a good opportunity to cash out and jump back in when signs of recovery started to appear. Live and learn I guess.
There are earnings behind a lot of these companies...this is nothing like tulips, which had zero value. US companies are making money hand over fist.
Nope, i don't understand how stocks work and if I did I wouldn't have asked my original question. Apple's customer's who spent more during the pandemic...remember we are only 5 months into the pandemic, things were pretty normal in February only by March things started to change. The real effect of it is going to hit by next January if things continue in this road, when people have been out of jobs for 6-9 months.
and they are trading 33x the earnings, do you mean that if I bought all of Apple I will have to wait 33 years to cover my initial investment before i actually start getting richer?
How they are excellent to their customers? They abuse their privacy, sell them to 3rd parties, track you around the internet...
Seems like the point that that post implied is that those aren't the actual Facebook customers.
1. Personally I think you are right about things getting darker before it's all over. That said, sales and earnings are only indirectly related to a stock's performance. Stock prices are based on demand, period. You are trying to apply logic to the market, and you can't. What I can tell you is the same as you can hear from many others with both more and less experience than me: Apple is a solid company that has built an ecosystem that people love, and once they are in that ecosystem they tend to spend money in it. For every bitter butterfly-keyboard-axe-to-grind, there are 10 new customers buying their first iPhone or Mac. With Apple Silicon and 5G phones on the horizon, it isn't wise to bet against Apple in the short/medium term. That mentality is being factored into the price of AAPL in real time, pandemic or not.
2. Yeah, you really don't understand stocks. Not judging, but earnings per share are only one metric with nothing to do with how your stock purchase will perform. The share prices do what they do, and we can take a company's earnings, put them into an equation, and come up with a number that is a sortof benchmark - but one that is completely beholden to the share price, which, again, is driven strictly by demand. Look at something like TSLA, which has doubled twice since the spring. They've surprised people with being more solvent than expected here and there, but no way have their earnings quadrupled since March. If you believe in a company (and maybe more importantly, if you think many others believe in the company), buy into it. To directly answer your question another way - in the case of AAPL, the earnings per share number is about to be reduced to roughly 1/4 of what it is now due to the split - no one is complaining about that, I assure you.