Is it uncommon for a company's cash holdings to be 20% of their market cap. Is Apple that undervalued? That's like bank percentages, right?
That's ~beyond~ bank percentages... Which makes Apple so unique, and dare I say, awesome.
They are more "captialised" than any major bank.
"The capital ratio is the percentage of a bank's capital to its risk-weighted assets. Weights are defined by risk-sensitivity ratios whose calculation is dictated under the relevant Accord. Basel II requires that the total capital ratio must be no lower than 8%."
Obviously Apple is not a bank, but if you compare their cash holdings to market cap as you've done, I think it's very, very unique, and Steve and Co. have learnt never, ever, ever to be at mercy of the financial industry or the share market.
Of course maybe someone can chime in on the technical term for comparing cash holdings to market cap.
I continue to mention that unless all companies are required to issue dividends or other profit sharing, then Apple does not need to give dividends.
If anything, I had a thought that all shareholders could be given a $50 Apple Store gift voucher per X stocks as a "dividend". This is a win-win for almost everyone, in my view. Who knows, maybe this common sense idea is too common sense for the Street.
Mom-and-Pop investors would love it, I'm sure the financial institutions would hate it (all the more reason to do it ).
Both anantksundaram and melgross - please listen....
You are both respected members of this forum - I am not sure which side of the bed you both got out of, that this has degenerated into such a major slanging match.
Normally, I would not bother to even address such a conversation, but I am going to try - simply because you both usually have valid, interesting and useful opinions.
Regarding Market Cap calculations - it is a simple number that is "Shares Outstanding" * "Current Market Price".
Now, the Shares Outstanding number is where the confusion comes from. The problem is, there are generally shares issued as incentives to employees, that are not yet vested. For instance, if Tim Cook received a major share grant last year, which vests over the next few years, most sources DO NOT count those shares in market cap. Simply because those shares do not exist, and cannot be sold till they vest. However, things are never as simple as that - there is usually a vesting schedule, etc. which complicates things. Other sources of confusion are when there are multiple classes of Shares - but in Apple's case, that is not an issue.
Considering this specific discussion - my take is that FT's Shares Outstanding number is either "wrong", or it includes shares that are broadly not included by most other reputed market sources. Bloomberg and Reuters are pretty much the "official" source as far as such things are concerned, and most market professionals go with the numbers shown by Bloomberg and Reuters.
Secondly, just to clarify, there is no difference between Market Cap and Equity. Or rather - they are 2 totally different terms - the word Equity by itself means just Common Shares. Whereas Market Cap is a $ figure. It is the Shares Outstanding figure that is different between FT and others - and considering the evidence, it is more than likely FT is wrong, or is using non-standard ways to count Shares Outstanding.
Just because FT is a respected newspaper means nothing - everyone can still make mistakes. And especially in media, there are also vested interests to consider. The Lex Column in FT is well known to have a vested interest - in terms of pumping up stocks, or pushing them down. But most likely, FT depended on a bad source and went to press without verifying the details - kind of like a low key "Dewey Defeats Truman" - it happens.
But there is a bigger issue here - In post #74, there was a statement made "I should have just removed his posts". I hope the reference was just to adding anantksundaram to the Ignore List, rather than actually ban the user. The confusion arises because a Moderator made it - and presumably the moderator has the ability to ban the user. Because if there was a threat made to ban the user, it definitely is not healthy for a forum. The whole idea of a forum is for people to discuss, even if there are differences of opinion - without indulging in personal attacks and insults. Just because someone does not agree with you, or you dont like their style, is not a valid reason to ban a user.
Of course, it is not like AI is public service operation that has to adhere to specific rules. So, I guess it is theoretically possible that a user can be banned for any reason. Just saying that it is not healthy.
For reference, posts can be edited or removed by mods without banning someone. I admire your [non-excessive] temerity on these forums so far. Hope you hang around.
Quote:
Originally Posted by macarena
But there is a bigger issue here - In post #74, there was a statement made "I should have just removed his posts". I hope the reference was just to adding anantksundaram to the Ignore List, rather than actually ban the user. The confusion arises because a Moderator made it - and presumably the moderator has the ability to ban the user. Because if there was a threat made to ban the user, it definitely is not healthy for a forum. The whole idea of a forum is for people to discuss, even if there are differences of opinion - without indulging in personal attacks and insults. Just because someone does not agree with you, or you dont like their style, is not a valid reason to ban a user.
Of course, it is not like AI is public service operation that has to adhere to specific rules. So, I guess it is theoretically possible that a user can be banned for any reason. Just saying that it is not healthy.
For reference, posts can be edited or removed by mods without banning someone. I admire your [non-excessive] temerity on these forums so far. Hope you hang around.
I guess removing posts is an order of magnitude different from banning a user - but the concept still holds the same. I don't agree with such measures unless there is a violation of some forum rules, or decorum.
I will definitely hang around - I enjoy this way too much to leave on my own. Hopefully, I won't be stepping on anyone's toes... and wont be banned, etc. But seriously - what really is the point of banning someone in a free forum like this? It takes 2 minutes to create a new id - and the only thing you lose is post history, and maybe some credibility if you are a frequent poster.
Not sure if I am worthy of admiration - but thanks!
I guess removing posts is an order of magnitude different from banning a user - but the concept still holds the same. I don't agree with such measures unless there is a violation of some forum rules, or decorum.
I will definitely hang around - I enjoy this way too much to leave on my own. Hopefully, I won't be stepping on anyone's toes... and wont be banned, etc. But seriously - what really is the point of banning someone in a free forum like this? It takes 2 minutes to create a new id - and the only thing you lose is post history, and maybe some credibility if you are a frequent poster.
Not sure if I am worthy of admiration - but thanks!
Well, I think you're doing quite well. Since I have been facing some of the issues you discussed, I'll open a thread in the Feedback section and we can have this pertinent discussion there, as forum-specific discussion should be held there.
Now, one caveat though, we'll need guidance on this, but some specific requests and feedback about specific forum members should be directed by PM to mods, and may not be suitable for discussion in that thread. But other than that, I think we can use that thread.
HaHa Duuhh... I do own shares, forgot about it. It's in my superannuation (Australian equivalent of 401K)
OK, it's not exactly shares pe se, it's an ethical investment mutual fund. Hippie stuff to some of you, but I think it's the only way to fly in terms of the financial market, at least for me:
They've been able to maintain it at 4% returns for several years now, which helps me sleep at night, even though my "retirement" fund is a quite small amount [so much so that I think I'll have to retire on Mars when I retire, that's how long I have to keep working for].
Interestingly, since AFAIK they don't have an IRA system (self-managed tax-free interest accrual) in Australia like in the US, to get better, guaranteed returns on your retirement fund, you can do what's called a "self-managed" fund, in which you simply take all that money and invest it how you like (though you cannot withdraw it until old age). In which case there are many savings accounts in AUD that give 5.5% to 6% returns which will be better than the "Defensive" strategy I have with Australian Ethical Fund. The downside is the time, expense and regulatory hoops of self-managing your retirement fund in Australia.
Of course, some may say, why bother with a retirement fund you can only access 40 years down the line.
Well, as like an IRA, superannuation enables tax-free growth of the investment, and whereby tax is taken out but only when you retire and you draw on superannuation as an income. Secondly, for all employees, in Australia, employers ~must~ pay 9% on top of your salaray specifically for superannuation... This is unlike the 401K where it's entirely up to the employer. Thirdly, for the self-employed, you can contribute to the fund, and the government will match up to $1,000 in co-contribution. That is, free $1,000 into your superannuation every financial year.
Now the difference with IRAs and superannuation is that an IRA has a 10% penalty when withdrawing it, besides the income tax of the actual money withdrawn from the IRA. However, in Australia, there is no penalty, because, except for very, very specific cases, you simply cannot take out any of your "preserved benefits" portion (usually the whole amount) of your superannuation.
For example, after a few years working in the USA when I needed to leave the country, I would withdraw my IRA and just pay 10% as a "tax", because during that tax year I wouldn't have earned much in the USA. In Australia, this is virtually impossible if you're a permanent resident or citizen, to my knowledge.
HaHa Duuhh... I do own shares, forgot about it. It's in my superannuation (Australian equivalent of 401K)
OK, it's not exactly shares pe se, it's an ethical investment mutual fund. Hippie stuff to some of you, but I think it's the only way to fly in terms of the financial market, at least for me:
They've been able to maintain it at 4% returns for several years now, which helps me sleep at night, even though my "retirement" fund is a quite small amount [so much so that I think I'll have to retire on Mars when I retire, that's how long I have to keep working for].
Interestingly, since AFAIK they don't have an IRA system (self-managed tax-free interest accrual) in Australia like in the US, to get better, guaranteed returns on your retirement fund, you can do what's called a "self-managed" fund, in which you simply take all that money and invest it how you like (though you cannot withdraw it until old age). In which case there are many savings accounts in AUD that give 5.5% to 6% returns which will be better than the "Defensive" strategy I have with Australian Ethical Fund. The downside is the time, expense and regulatory hoops of self-managing your retirement fund in Australia.
Of course, some may say, why bother with a retirement fund you can only access 40 years down the line.
Well, as like an IRA, superannuation enables tax-free growth of the investment, and whereby tax is taken out but only when you retire and you draw on superannuation as an income. Secondly, for all employees, in Australia, employers ~must~ pay 9% on top of your salaray specifically for superannuation... This is unlike the 401K where it's entirely up to the employer. Thirdly, for the self-employed, you can contribute to the fund, and the government will match up to $1,000 in co-contribution. That is, free $1,000 into your superannuation every financial year.
Now the difference with IRAs and superannuation is that an IRA has a 10% penalty when withdrawing it, besides the income tax of the actual money withdrawn from the IRA. However, in Australia, there is no penalty, because, except for very, very specific cases, you simply cannot take out any of your "preserved benefits" portion (usually the whole amount) of your superannuation.
For example, after a few years working in the USA when I needed to leave the country, I would withdraw my IRA and just pay 10% as a "tax", because during that tax year I wouldn't have earned much in the USA. In Australia, this is virtually impossible if you're a permanent resident or citizen, to my knowledge.
Anyone else would like to chime in?
A trillion will surely happen, I feel. I mean, if the Stock were valued at a fair P/E, and keeping AMZN's INSANE P/E of 150 in mind, and considering Apple IS growing at almost 100% Y.O.Y (last year), AAPL should be a $1,000 Stock right now, with a healthy and generous P/E ratio (they've beyond earned it).
As crazy as the numbers "$500 Billion" and "1 Trillion" sound, think about this, APPLE HAS 20% OF THAT VALUE IN THE BANK IN LIQUID FORM! Or even better, a staggering 10% of cash on a Trillion Dollars. When they hopefully do hit 1 Trillion, who knows how much they'll have in cash/assets.
Fact is, it's extremely realistic, if you don't focus on the "wow" effect of the simple market cap numerical.
As happy as I should be with my 180 Shares, I wish I bought more! Not too late, though. I still long for the days when I had 240 Shares.... I sold like an idiot at $395! You live and you learn, and I got a great lesson from that, that will always hopefully continue to benefit me greatly in life.
Comments
Is it uncommon for a company's cash holdings to be 20% of their market cap. Is Apple that undervalued? That's like bank percentages, right?
That's ~beyond~ bank percentages... Which makes Apple so unique, and dare I say, awesome.
They are more "captialised" than any major bank.
"The capital ratio is the percentage of a bank's capital to its risk-weighted assets. Weights are defined by risk-sensitivity ratios whose calculation is dictated under the relevant Accord. Basel II requires that the total capital ratio must be no lower than 8%."
Obviously Apple is not a bank, but if you compare their cash holdings to market cap as you've done, I think it's very, very unique, and Steve and Co. have learnt never, ever, ever to be at mercy of the financial industry or the share market.
Of course maybe someone can chime in on the technical term for comparing cash holdings to market cap.
Some interesting discussions on the above here:
http://m.theage.com.au/business/worl...130-1qpdm.html
http://www.businessinsider.com/cash-...oldings-2011-7
I continue to mention that unless all companies are required to issue dividends or other profit sharing, then Apple does not need to give dividends.
If anything, I had a thought that all shareholders could be given a $50 Apple Store gift voucher per X stocks as a "dividend". This is a win-win for almost everyone, in my view. Who knows, maybe this common sense idea is too common sense for the Street.
Mom-and-Pop investors would love it, I'm sure the financial institutions would hate it (all the more reason to do it
You are both respected members of this forum - I am not sure which side of the bed you both got out of, that this has degenerated into such a major slanging match.
Normally, I would not bother to even address such a conversation, but I am going to try - simply because you both usually have valid, interesting and useful opinions.
Regarding Market Cap calculations - it is a simple number that is "Shares Outstanding" * "Current Market Price".
Now, the Shares Outstanding number is where the confusion comes from. The problem is, there are generally shares issued as incentives to employees, that are not yet vested. For instance, if Tim Cook received a major share grant last year, which vests over the next few years, most sources DO NOT count those shares in market cap. Simply because those shares do not exist, and cannot be sold till they vest. However, things are never as simple as that - there is usually a vesting schedule, etc. which complicates things. Other sources of confusion are when there are multiple classes of Shares - but in Apple's case, that is not an issue.
Considering this specific discussion - my take is that FT's Shares Outstanding number is either "wrong", or it includes shares that are broadly not included by most other reputed market sources. Bloomberg and Reuters are pretty much the "official" source as far as such things are concerned, and most market professionals go with the numbers shown by Bloomberg and Reuters.
Secondly, just to clarify, there is no difference between Market Cap and Equity. Or rather - they are 2 totally different terms - the word Equity by itself means just Common Shares. Whereas Market Cap is a $ figure. It is the Shares Outstanding figure that is different between FT and others - and considering the evidence, it is more than likely FT is wrong, or is using non-standard ways to count Shares Outstanding.
Just because FT is a respected newspaper means nothing - everyone can still make mistakes. And especially in media, there are also vested interests to consider. The Lex Column in FT is well known to have a vested interest - in terms of pumping up stocks, or pushing them down. But most likely, FT depended on a bad source and went to press without verifying the details - kind of like a low key "Dewey Defeats Truman" - it happens.
But there is a bigger issue here - In post #74, there was a statement made "I should have just removed his posts". I hope the reference was just to adding anantksundaram to the Ignore List, rather than actually ban the user. The confusion arises because a Moderator made it - and presumably the moderator has the ability to ban the user. Because if there was a threat made to ban the user, it definitely is not healthy for a forum. The whole idea of a forum is for people to discuss, even if there are differences of opinion - without indulging in personal attacks and insults. Just because someone does not agree with you, or you dont like their style, is not a valid reason to ban a user.
Of course, it is not like AI is public service operation that has to adhere to specific rules. So, I guess it is theoretically possible that a user can be banned for any reason. Just saying that it is not healthy.
But there is a bigger issue here - In post #74, there was a statement made "I should have just removed his posts". I hope the reference was just to adding anantksundaram to the Ignore List, rather than actually ban the user. The confusion arises because a Moderator made it - and presumably the moderator has the ability to ban the user. Because if there was a threat made to ban the user, it definitely is not healthy for a forum. The whole idea of a forum is for people to discuss, even if there are differences of opinion - without indulging in personal attacks and insults. Just because someone does not agree with you, or you dont like their style, is not a valid reason to ban a user.
Of course, it is not like AI is public service operation that has to adhere to specific rules. So, I guess it is theoretically possible that a user can be banned for any reason. Just saying that it is not healthy.
I'm with you there, sir. Been a happy investor in AAPL since $72/share, and only continue to increase my holdings every month.
Best stock I have ever held, by far.
Ditto.
My first shares were purchased at a split-adjusted $2.50; wish I had bought more.
My last purchase was when it dropped to $354 after the intro to 4S; bought at $360 for the grandkids education fund.
Both anantksundaram and melgross - please listen....
Etc etc.
I agree with everything you say.
Nice way to start the day!
For reference, posts can be edited or removed by mods without banning someone. I admire your [non-excessive] temerity on these forums so far. Hope you hang around.
I guess removing posts is an order of magnitude different from banning a user - but the concept still holds the same. I don't agree with such measures unless there is a violation of some forum rules, or decorum.
I will definitely hang around - I enjoy this way too much to leave on my own. Hopefully, I won't be stepping on anyone's toes... and wont be banned, etc. But seriously - what really is the point of banning someone in a free forum like this? It takes 2 minutes to create a new id - and the only thing you lose is post history, and maybe some credibility if you are a frequent poster.
Not sure if I am worthy of admiration - but thanks!
I guess removing posts is an order of magnitude different from banning a user - but the concept still holds the same. I don't agree with such measures unless there is a violation of some forum rules, or decorum.
I will definitely hang around - I enjoy this way too much to leave on my own. Hopefully, I won't be stepping on anyone's toes... and wont be banned, etc. But seriously - what really is the point of banning someone in a free forum like this? It takes 2 minutes to create a new id - and the only thing you lose is post history, and maybe some credibility if you are a frequent poster.
Not sure if I am worthy of admiration - but thanks!
Well, I think you're doing quite well. Since I have been facing some of the issues you discussed, I'll open a thread in the Feedback section and we can have this pertinent discussion there, as forum-specific discussion should be held there.
Edit: Link here: http://forums.appleinsider.com/showthread.php?p=2059786
Now, one caveat though, we'll need guidance on this, but some specific requests and feedback about specific forum members should be directed by PM to mods, and may not be suitable for discussion in that thread. But other than that, I think we can use that thread.
OK, it's not exactly shares pe se, it's an ethical investment mutual fund. Hippie stuff to some of you, but I think it's the only way to fly in terms of the financial market, at least for me:
http://australianethical.com.au/strategy/defensive
They've been able to maintain it at 4% returns for several years now, which helps me sleep at night, even though my "retirement" fund is a quite small amount [so much so that I think I'll have to retire on Mars when I retire, that's how long I have to keep working for].
Interestingly, since AFAIK they don't have an IRA system (self-managed tax-free interest accrual) in Australia like in the US, to get better, guaranteed returns on your retirement fund, you can do what's called a "self-managed" fund, in which you simply take all that money and invest it how you like (though you cannot withdraw it until old age). In which case there are many savings accounts in AUD that give 5.5% to 6% returns which will be better than the "Defensive" strategy I have with Australian Ethical Fund. The downside is the time, expense and regulatory hoops of self-managing your retirement fund in Australia.
Of course, some may say, why bother with a retirement fund you can only access 40 years down the line.
Well, as like an IRA, superannuation enables tax-free growth of the investment, and whereby tax is taken out but only when you retire and you draw on superannuation as an income. Secondly, for all employees, in Australia, employers ~must~ pay 9% on top of your salaray specifically for superannuation... This is unlike the 401K where it's entirely up to the employer. Thirdly, for the self-employed, you can contribute to the fund, and the government will match up to $1,000 in co-contribution. That is, free $1,000 into your superannuation every financial year.
Now the difference with IRAs and superannuation is that an IRA has a 10% penalty when withdrawing it, besides the income tax of the actual money withdrawn from the IRA. However, in Australia, there is no penalty, because, except for very, very specific cases, you simply cannot take out any of your "preserved benefits" portion (usually the whole amount) of your superannuation.
For example, after a few years working in the USA when I needed to leave the country, I would withdraw my IRA and just pay 10% as a "tax", because during that tax year I wouldn't have earned much in the USA. In Australia, this is virtually impossible if you're a permanent resident or citizen, to my knowledge.
Anyone else would like to chime in?
HaHa Duuhh... I do own shares, forgot about it. It's in my superannuation (Australian equivalent of 401K)
OK, it's not exactly shares pe se, it's an ethical investment mutual fund. Hippie stuff to some of you, but I think it's the only way to fly in terms of the financial market, at least for me:
http://australianethical.com.au/strategy/defensive
They've been able to maintain it at 4% returns for several years now, which helps me sleep at night, even though my "retirement" fund is a quite small amount [so much so that I think I'll have to retire on Mars when I retire, that's how long I have to keep working for].
Interestingly, since AFAIK they don't have an IRA system (self-managed tax-free interest accrual) in Australia like in the US, to get better, guaranteed returns on your retirement fund, you can do what's called a "self-managed" fund, in which you simply take all that money and invest it how you like (though you cannot withdraw it until old age). In which case there are many savings accounts in AUD that give 5.5% to 6% returns which will be better than the "Defensive" strategy I have with Australian Ethical Fund. The downside is the time, expense and regulatory hoops of self-managing your retirement fund in Australia.
Of course, some may say, why bother with a retirement fund you can only access 40 years down the line.
Well, as like an IRA, superannuation enables tax-free growth of the investment, and whereby tax is taken out but only when you retire and you draw on superannuation as an income. Secondly, for all employees, in Australia, employers ~must~ pay 9% on top of your salaray specifically for superannuation... This is unlike the 401K where it's entirely up to the employer. Thirdly, for the self-employed, you can contribute to the fund, and the government will match up to $1,000 in co-contribution. That is, free $1,000 into your superannuation every financial year.
Now the difference with IRAs and superannuation is that an IRA has a 10% penalty when withdrawing it, besides the income tax of the actual money withdrawn from the IRA. However, in Australia, there is no penalty, because, except for very, very specific cases, you simply cannot take out any of your "preserved benefits" portion (usually the whole amount) of your superannuation.
For example, after a few years working in the USA when I needed to leave the country, I would withdraw my IRA and just pay 10% as a "tax", because during that tax year I wouldn't have earned much in the USA. In Australia, this is virtually impossible if you're a permanent resident or citizen, to my knowledge.
Anyone else would like to chime in?
A trillion will surely happen, I feel. I mean, if the Stock were valued at a fair P/E, and keeping AMZN's INSANE P/E of 150 in mind, and considering Apple IS growing at almost 100% Y.O.Y (last year), AAPL should be a $1,000 Stock right now, with a healthy and generous P/E ratio (they've beyond earned it).
As crazy as the numbers "$500 Billion" and "1 Trillion" sound, think about this, APPLE HAS 20% OF THAT VALUE IN THE BANK IN LIQUID FORM! Or even better, a staggering 10% of cash on a Trillion Dollars. When they hopefully do hit 1 Trillion, who knows how much they'll have in cash/assets.
Fact is, it's extremely realistic, if you don't focus on the "wow" effect of the simple market cap numerical.
As happy as I should be with my 180 Shares, I wish I bought more! Not too late, though. I still long for the days when I had 240 Shares.... I sold like an idiot at $395! You live and you learn, and I got a great lesson from that, that will always hopefully continue to benefit me greatly in life.