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Apple 'not too big to blow it out' in upcoming quarterly results

post #1 of 67
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With Apple's Oct. 18 quarterly earnings report approaching, one Wall Street analyst expects the iPhone maker to issue a "blowout" report, noting the company is "not too big" to surprise investors with sales of 12 million or more iPhones.

Yair Reiner with Oppenheimer said in a note to investors on Friday that although AAPL stock is up 37 percent in 2010, it has still lagged behind the company's fundamentals, in which consensus earnings per share estimates are up 75 percent since January.

"The prime factor behind the underperformance of the stock relative to the fundamentals seem to be investor concern about Apple's size," he wrote. But a blowout September quarter would spur an "overdue" catch-up with investors, he said.

As such, Oppenheimer has raised its 12-to-18-month price target for AAPL stock to $345. Reiner said he expects Apple to report $19.9 billion in revenue and $4.41 earnings per share, increases from his previous predictions of $18.5 billion in revenue and $4.01 earnings per share.

Reiner also increased estimates for iPhone sales to 12 million in the quarter, up from the previous projection of 10.5 million. He also sees Apple selling 4.5 million iPads, an increase from his earlier forecast of 3.9 million. He also said his estimates could still prove to be slightly conservative.

"Bottom line, as big as Apple is today, it seems destined to get much bigger," Reiner wrote. "We're still taking our first baby steps into an iOS world in which seamless connectivity to cloud services through purpose-built apps lays waste to conventional modes of broadcasting, marketing, distributing, and consuming every manner of video, audio and printed material."

The analyst said his one concern with Apple is expectations of a Verizon iPhone in early 2011. Reiner said he doesn't see the motivation for either Verizon or Apple to make a deal so soon.

Reiner previously expressed concern that the iPhone 4 "antennagate" controversy could negatively affect Apple's handset sales. But as the controversy has faded away, it's no longer considered a factor.
post #2 of 67
Quote:
Originally Posted by AppleInsider View Post

With Apple's Oct. 18 quarterly earnings report approaching, one Wall Street analyst expects the iPhone maker to issue a "blowout" report, noting the company is "not too big" to surprise investors with sales of 12 million or more iPhones.......

"Bottom line, as big as Apple is today, it seems destined to get much bigger," Reiner wrote. .....

The analyst said his one concern with Apple is expectations of a Verizon iPhone in early 2011. Reiner said he doesn't see the motivation for either Verizon or Apple to make a deal so soon.

Reiner previously expressed concern that the iPhone 4 "antennagate" controversy could negatively affect Apple's handset sales. .....]

Gee, its like the guy reads the paper and agrees with every article he reads.... So what is there to analyse.???????

Someone said antennagate would be big..... he agreed. Steve shows antennagate is no big deal.... he agrees.

Sorry, little data here, I think.

Just a thought,
en
post #3 of 67
The 'too big to grow much more' concept is really not well thought out. As anti-apple types have loved to point out for years, Apple only has a small penetration into most markets outside of iPods/ music. The fact they are far more profitable in those other sectors than those with the lions share is only more reason to see very healthy growth potential in those very areas. AAPL is ridiculously under valued.

I appreciate this always brings cries of derision from the math geniuses pointing out there is no numerical gain, but I'd like to see a stock split because it encourages more people to buy as they 'seem' as more affordable.
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post #4 of 67
I'm sure Apple will do very well. They seem like a fine company.
post #5 of 67
I am expecting a blowout, but while the law of large numbers doesn't prevent a surprise, I am kind of wondering what will drive the next 100% growth in earnings... and if the share price will keep pace.

I'm also starting to wonder if they will split the stock one of these days. The high price puts me in to options... but some day I expect them to pay a dividend.
post #6 of 67
Quote:
Originally Posted by aaarrrgggh View Post

I am expecting a blowout, but while the law of large numbers doesn't prevent a surprise, I am kind of wondering what will drive the next 100% growth in earnings... and if the share price will keep pace.

I'm also starting to wonder if they will split the stock one of these days. The high price puts me in to options... but some day I expect them to pay a dividend.

Agreed on the law of large numbers, but the smart-phone segment of the entire market is increasing. In 5 years everything will be smart, or feature ( from < 10% now?). Theres the growth - although Apple should aim to garner more market share than they have now.
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post #7 of 67
Quote:
Originally Posted by digitalclips View Post


I appreciate this always brings cries of derision from the math geniuses pointing out there is no numerical gain, but I'd like to see a stock split because it encourages more people to buy as they 'seem' as more affordable.

I think this only brings derision when popple make it seem like:
* with a split a $3 increase in stock would be worth twice as much!!!
* people can't afford to buy AAPL without a split...

Or some such nonsense. The way you put it is entirely reasonable. There is no denying that people can be illogical with their response to the stock market. Remember when adding ".com" to your companies name bosted stock ridiculously?
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post #8 of 67
I would like to see a stock split, I cant afford $300.00+ per share myself.
post #9 of 67
I would rather see the stock not split... it keeps the tourists out and the volatility down. Same with their hi cash and no dividends. If we go into a recession and the stock price gets cut in half, then a buyback would make sense.

Apple has a lot of potential if they improve their manufacturing and increase distribution. There is still short supply of iPhones, iPad in most of the world, starting with China. Once that is done, they should market the unlocked phones as well. I got mixed feeling about multiple radio techs like CDMA and TD-SCDMA... it would complicate their inventory management and the reduce the economies of scale.

iOS could be expanded into a host of new products like laptops, car navigation systems, etc. The capability of devices like the iPhone, iPod, iPad, etc could be improved with RFID sensors, improved cameras where applicable. The iTV has been crippled... how about enabling the Blue Tooth, keyboard, mouse use? Increasing the Flash to 64 or allowing after market upgrades with chip swaps? Let it run App Store applications, browser, etc. More video services besides Netflix? Charge $299 for a deluxe version. Keyboard, mouse extra. Why does Apple even need a crippled $99 product anyways? Anybody remember the IBM PC Jr?
post #10 of 67
Quote:
Originally Posted by zindako View Post

I would like to see a stock split, I cant afford $300.00+ per share myself.

Yes you can. Just buy fewer shares. All of the online brokers allow odd lot purchases. At places like share builder you don't even have to buy whole numbers of shares, you just tell them how many $ per week you want in a certain stock. My dividend reinvestment allows me to buy fractional shares of stocks I own (although this is not applicable to AAPL).
post #11 of 67
this report is another part of a Verizon conspiracy to get AI to say "Verizon iPhone" again.
post #12 of 67
Quote:
Originally Posted by asdasd View Post

Agreed on the law of large numbers, but the smart-phone segment of the entire market is increasing. In 5 years everything will be smart, or feature ( from < 10% now?). Theres the growth - although Apple should aim to garner more market share than they have now.

In this case, the law of large numbers isn't really a law, it's more like a theory. It might hold true if Apple wasn't pushing out successful new products and opening up new markets on a regular basis. You do have to wonder how the blockbusters can possibly keep coming, but for the time being at least, they have the products to continue the revenue growth at the current blistering pace. It will have to wind down at some point, but it doesn't look like soon.
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post #13 of 67
Quote:
Originally Posted by zindako View Post

I would like to see a stock split, I cant afford $300.00+ per share myself.

Here is a secret for you ... buy half as many as you'd buy at the split price.
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post #14 of 67
Quote:
Originally Posted by digitalclips View Post

The 'too big to grow much more' concept is really not well thought out.

That's the beauty of markets. The concept as you describe it is a self-imposed limitation of the human mind. The market is finite, but it remains a very big place with plenty of room for growth.

Quote:
Originally Posted by aaarrrgggh View Post

... I am kind of wondering what will drive the next 100% growth in earnings... and if the share price will keep pace.

Quote:
Originally Posted by Dr Millmoss View Post

... You do have to wonder how the blockbusters can possibly keep coming, but for the time being at least, they have the products to continue the revenue growth at the current blistering pace.

I've been wondering that for over a decade. I thought the iMac would change the world, and it did However, I had no idea the iPod would have an even greater effect, or the iTunes Store, or the App Store for that matter. I doubt many others predicted their success either, in fact, many "analysts" initially derided these concepts as failures.

The point is who knows what products Apple will introduce in the next few years, but the only certainties are:

1. We have no idea what they'll be
2. Analysts will deride them as failures

Quote:
Originally Posted by Dr Millmoss View Post

It will have to wind down at some point, but it doesn't look like soon.

Apple has positioned itself as a leader in connected mobile devices, with ten years of R&D and marketing research behind it. Products are already in the pipeline that we can't even guess about.

There will always be competing products aimed at keeping Apple off balance (like netbooks), but the best any competitor can hope for is to be almost as good.
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post #15 of 67
Quote:
Originally Posted by zindako View Post

I would like to see a stock split, I cant afford $300.00+ per share myself.

Position size is important. Figure out how much you want to spend on any one stock, relative to the size of your portfolio and then purchase accordingly.

For example, if your portfolio is 100K, it would be prudent to not be in for more than 10K for any one stock. You could buy 100 shares of a $100 stock, or 33 shares or a $300 stock.

Decide *before* you enter the trade what your maximum loss will be if it goes against you, and set a stop loss after you get in. Yes, you may be really bullish on prospects of the stock, but the market can be irrational longer than most of us can remain solvent. Protect your capital.

You might consider a hedge against your long position. For instance you could sell a call against your long stock, or even use part of the proceeds of the call to buy a put.

That may limit your upside potential within the option period, but will also limit your downside exposure.

You can also sell a put to perhaps buy AAPL at a discount.

There are lots of strategies that you can use to generate a little income off your investment even if it the stock does not pay dividends.

What more can a fanboi ask for? ;-)
post #16 of 67
Quote:
Originally Posted by vexorg View Post

For example, if your portfolio is 100K, it would be prudent to not be in for more than 10K for any one stock.

Several years ago my well-intentioned young stock broker called me to say my AAPL holdings made my portfolio very unbalanced. I thanked him for his opinion.

My portfolio is much more unbalanced today.
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post #17 of 67
Quote:
Originally Posted by AjitMD View Post

Why does Apple even need a crippled $99 product anyways?

I don't think the AppleTV is crippled at all. It does what it was meant to do, get digital content (iTunes) onto your TV for viewing. If you want a computer on your TV, get a computer. AppleTV is for watching content, nothing else. Why anyone wants to hook a computer up to a TV in the first place is just weird. Especially since most people have been going the opposite direction for years.

Your best route, buy a used Mac mini off of eBay and hook it up to your TV.
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post #18 of 67
Having been a long time Apple user, I'm simply amazed how large Apple has become, especially after being beat up in the early 90's. I think Steve Jobs needs to be recognized as one of the greatest businessmen of all time.

Almost $20 billion in one quarter! How far off is Apple from making $100 billion annually?
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post #19 of 67
Quote:
Originally Posted by john galt View Post

Several years ago my well-intentioned young stock broker called me to say my AAPL holdings made my portfolio very unbalanced. I thanked him for his opinion.

My portfolio is much more unbalanced today.

Investment genius that I am, I once sold my AAPL holdings which I bought for $25 or so for $11 as it hit a free fall.

I have since made up for that many times over, but at the time, I had no way of knowing that the stock would *not* go to 0. Looked in that context, I don't regret the action although I should have limited my losses better by keeping the stop tighter.

It's easy to say I should have done this or that with the benefit of hindsight.

I am glad you have done well with your AAPL holdings, and I congratulate you. Still, I stand by what I said. Investment is a numbers game, and one should never put too many of your eggs in one basket.

In my own case, currently my AAPL holdings sit at nearly 20% of my portfolio due to the stock's appreciation. However at the time of purchase, I committed less than 10% of my capital.

BTW, one poster wished that the volatility of the stock would be less. Don't knock it. Higher volatility keeps option prices higher and is great if you are a premium seller. Besides what makes AAPL a great stock is it's high beta.
post #20 of 67
Quote:
Originally Posted by john galt View Post

The point is who knows what products Apple will introduce in the next few years, but the only certainties are:

1. We have no idea what they'll be
2. Analysts will deride them as failures

I don't care about what the analysts say, positive or negative. What matters to me (and to them, ultimately) is EPS growth -- current, and the promise for the future. Apple does have to keep pulling those rabbits out of their magic hat, and each rabbit has to be successively larger than the last one to keep earnings growing at the current rate. It's a very, very difficult trick, and becomes successively more difficult to replicate. I don't doubt that Apple has a great many things in the pipeline. What I'm saying is that each one has to be a bigger smash hit than the one before or you'll surely see lower multiples going forward. That's why the market is currently not totally convinced and may be selling AAPL a bit short. The market is collectively asking a legitimate question. The reaction to the next earnings report is going to be very interesting.
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post #21 of 67
Quote:
Originally Posted by john galt View Post

Several years ago my well-intentioned young stock broker called me to say my AAPL holdings made my portfolio very unbalanced. I thanked him for his opinion.

My portfolio is much more unbalanced today.

Nice one.

And, people forget that our true portfolio includes our house, the capitalized value of our human capital based on future earnings (and that of our spouse), our 401-Ks, the (hope) that our children will someday bail us out if/as needed, our future social security income (which, contrary to hyperventilations, is not 'broke' or 'bankrupt,' but will perhaps end up paying 20% less than previously promised), and indeed, even our health (assuming that it is good).
post #22 of 67
Quote:
Originally Posted by Dr Millmoss View Post

The reaction to the next earnings report is going to be very interesting.

The reaction to the next earnings report is always interesting.
post #23 of 67
Quote:
Originally Posted by vexorg View Post

Besides what makes AAPL a great stock is it's high beta.

Huh? Care to explain that one?
post #24 of 67
Quote:
Originally Posted by anantksundaram View Post

Huh? Care to explain that one?

Beta is a measure of a stock's volatility. By definition the broad market is 1.0. A security that has a beta of 1 will more or less move with the market. A stock with a beta of 1.2 will be 20% more volatile than the market.

AAPL's current beta is 1.43.

If you want movement in a stock to make money, then a high beta stock is desirable. If you want stability in the stock price, then you want something that has a low beta.

MSFT for instance is a great company. (stop sniggering you guys) It makes money hand over fist. But the beta of the stock is .78. The stock price hardly moves.

Of course with volatility, you have to be much more vigilant on price action. Remember a few weeks ago when Tim Cook was rumored to be leaving Apple, and the stock nose dived for a little bit there.
post #25 of 67
Quote:
Originally Posted by john galt View Post

Several years ago my well-intentioned young stock broker called me to say my AAPL holdings made my portfolio very unbalanced. I thanked him for his opinion.

My portfolio is much more unbalanced today.

Several years ago, Steve Jobs also exchanged a bunch of Apple warrants because he didn't think that Apple stocks would take off --- which ultimately cost him more than 10 billion dollars. It was labeled as "the dumbest trade ever" by the Wall Street Journal.
post #26 of 67
Quote:
Originally Posted by vexorg View Post

Beta is a measure of a stock's volatility. By definition the broad market is 1.0. A security that has a beta of 1 will more or less move with the market. A stock with a beta of 1.2 will be 20% more volatile than the market.

AAPL's current beta is 1.43.

If you want movement in a stock to make money, then a high beta stock is desirable. If you want stability in the stock price, then you want something that has a low beta.

MSFT for instance is a great company. (stop sniggering you guys) It makes money hand over fist. But the beta of the stock is .78. The stock price hardly moves.

Of course with volatility, you have to be much more vigilant on price action. Remember a few weeks ago when Tim Cook was rumored to be leaving Apple, and the stock nose dived for a little bit there.

Beta is not a measure of stock performance -- it's simply a measure of volatility, and volatility tells you nothing about returns, or even potential returns. A stock can be just a volatile going down as up. It can also be relatively stable going up or down. A high beta is neither good nor bad. It is what it is.
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post #27 of 67
Quote:
Originally Posted by Dr Millmoss View Post

Beta is not a measure of stock performance -- it's simply a measure of volatility, and volatility tells you nothing about returns, or even potential returns. A stock can be just a volatile going down as up. It can also be relatively stable going up or down. A high beta is neither good nor bad. It is what it is.

You are absolutely correct. A volatile stock can go up as quickly as it goes down. For a passive investor who just wants to buy and hold, that can be a scary rollercoaster ride.

An options trader, particularly one that sells premium thrives on high volatility.

An example of where this can be particularly effective when there is a period of high volatility (say just before results are released) followed by a volatility crush (where volatility goes down quickly, like after results are released)

A seller of volatility in such an instance can have the underlying stock move against him and still make money on the trade while a call buyer watches on wondering why the stock went up, like he thought it would yet he is still losing money.
post #28 of 67
Quote:
Originally Posted by vexorg View Post

Beta is a measure of a stock's volatility. By definition the broad market is 1.0. A security that has a beta of 1 will more or less move with the market. A stock with a beta of 1.2 will be 20% more volatile than the market.

AAPL's current beta is 1.43.

If you want movement in a stock to make money, then a high beta stock is desirable. If you want stability in the stock price, then you want something that has a low beta.

MSFT for instance is a great company. (stop sniggering you guys) It makes money hand over fist. But the beta of the stock is .78. The stock price hardly moves.

Of course with volatility, you have to be much more vigilant on price action. Remember a few weeks ago when Tim Cook was rumored to be leaving Apple, and the stock nose dived for a little bit there.

I am truly sorry, but you need to stop spouting nonsense, my friend. Beta is simply a standardized measure of the covariance of a stock's returns to that of the market as a whole. More precisely, it is the covariance in the returns of the stock against the returns on the market portfolio divided by the variance of returns of the mkt portfolio. It does not measure 'volatility' (despite what some 'free' websites will tell you), but rather, a measure of the sensitivity of a stock's returns to the returns of the mkt portfolio.

It measures the 'systematic' risk left behind in a stock after the 'unsystematic' risk has been presumably diversified away by 'rational' investors. (Btw, the term 'volatility' refers to systematic risk + unsystematic risks).

For instance, a beta of 1.43 simply means that a 1% increase in the value of the market portfolio is, on average, expected to result in a 1.43% increase in the price of Apple's stock. The only issue is whether a stock produces a return consistent with its beta. Period. (You can, in other words, be a high-beta stock that outperforms, a low beta stock that outperforms, or a high-beta stock that underperforms, or a low-beta stock that underperforms; the concept of a 'desirable beta' is utter nonsense).

I could go on, but I won't.

Go look up any basic textbook on finance. Or, please, go enroll in a class on basic finance (many community colleges offer very low-priced courses).
post #29 of 67
Quote:
Originally Posted by vexorg View Post

You are absolutely correct.

Unfortunately, on the issue of what the beta means, he is not.

Add: I've got to run to a meeting, so I'll be unable to respond before later this evening. Sorry about that. The key point I am making is, you don't get to make up your own definitions for well-established, well-known concepts.
post #30 of 67
Quote:
Originally Posted by vexorg View Post

You are absolutely correct. A volatile stock can go up as quickly as it goes down. For a passive investor who just wants to buy and hold, that can be a scary rollercoaster ride.

An options trader, particularly one that sells premium thrives on high volatility.

An example of where this can be particularly effective when there is a period of high volatility (say just before results are released) followed by a volatility crush (where volatility goes down quickly, like after results are released)

A seller of volatility in such an instance can have the underlying stock move against him and still make money on the trade while a call buyer watches on wondering why the stock went up, like he thought it would yet he is still losing money.

Now you're really talking about the difference between trading and investing. An investor doesn't care about volatility one way or another, if they believe the company is sound and their prospects for increasing earnings over time is good. Traders OTOH are always trying to guess short-term moves. Suffice to say, I think most people who have the nerve to buy individual stocks should behave as investors, not traders.
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post #31 of 67
Quote:
Originally Posted by zindako View Post

I would like to see a stock split, I cant afford $300.00+ per share myself.

There are always deep-in-the money calls. There are added risks, but your rate of return goes way up as the underlying stock price increases. I made a "dumb" trade today with some November calls at the money, but it is still up nicely for the day.

At some point I need to reduce my leverage, but it seems like a winning strategy through the end of the year.

(Disclaimer-- don't get into options until you really understand them and the significant risks they pose, and never put more into them than you can afford to lose!)
post #32 of 67
Quote:
Originally Posted by digitalclips View Post

The 'too big to grow much more' concept is really not well thought out. As anti-apple types have loved to point out for years, Apple only has a small penetration into most markets outside of iPods/ music. The fact they are far more profitable in those other sectors than those with the lions share is only more reason to see very healthy growth potential in those very areas. AAPL is ridiculously under valued.

I appreciate this always brings cries of derision from the math geniuses pointing out there is no numerical gain, but I'd like to see a stock split because it encourages more people to buy as they 'seem' as more affordable.


AAPL market cap is scary high. I know it still have good potential to growth in the phone and PC market, but hell AAPL is about to beat Exxon has the biggest market cap in the world. I agree they should split to keep the stock prices lower and alllow small investors to own 1 bundle of 100 stocks. I know now you can own smaller amount of stocks but AAPL still trades in 100 stocks bundle on Nasdaq. Not having a full bundle reduce the amount of trade options you can do (like "sell on stop")

Imo Apple should use part of his cash to buy back stocks and reduce its market cap. And 50 billions is getting pretty high, then dont need that much cash even with all the R&D then need to do.
post #33 of 67
Quote:
Originally Posted by herbapou View Post

AAPL market cap is scary high. I know it still have good potential to growth in the phone and PC market, but hell AAPL is about to beat Exxon has the biggest market cap in the world. I agree they should split to keep the stock prices lower and alllow small investors to own 1 bundle of 100 stocks. I know now you can own smaller amount of stocks but AAPL still trades in 100 stocks bundle on Nasdaq. Not having a full bundle reduce the amount of trade options you can do (like "sell on stop")

Imo Apple should use part of his cash to buy back stocks and reduce its market cap. And 50 billions is getting pretty high, then dont need that much cash even with all the R&D then need to do.

You'll get a lot of argument around here about the value of stock buybacks. They don't provide much value to stockholders.

I don't know about stop orders and odd lots, but even if it's so, that's such a small thing, it can't have any real impact on the stock price. Besides, GOOG has been trading over $300 for ages, and I don't hear anyone militating for a split. But I agree on the cash. They need to start giving some of it back to the stockholders.
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post #34 of 67
Quote:
Originally Posted by Dr Millmoss View Post

You'll get a lot of argument around here about the value of stock buybacks. They don't provide much value to stockholders.

I don't know about stop orders and odd lots, but even if it's so, that's such a small thing, it can't have any real impact on the stock price. Besides, GOOG has been trading over $300 for ages, and I don't hear anyone militating for a split. But I agree on the cash. They need to start giving some of it back to the stockholders.

Well, buying back stocks dont directly change anything but a reduction of the market cap will make APPL more "normal" and that may rise stock price to match eps. Investors dont like abnormal things, and this what make the stock lag behind earnings

The problem with odd bundle of stocks is it work with high volume trading like apple, but the weakness shows when volume is low, in that case there is trade lag. Not gonna happen with apple but its unclean
post #35 of 67
Quote:
Originally Posted by herbapou View Post

Well, buying back stocks dont directly change anything but a reduction of the market cap will make APPL more "normal" and that may rise stock to match eps. Investors dont like anormal things.

Buybacks reduce the number of outstanding shares, which theoretically gives all of the existing shareholders a slightly larger piece of the equity pie. There's nothing "abnormal" about Apple's market cap. It's a function of their level of earnings and the market's anticipation of future earnings.
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post #36 of 67
Quote:
Originally Posted by Dr Millmoss View Post

Buybacks reduce the number of outstanding shares, which theoretically gives all of the existing shareholders a slightly larger piece of the equity pie. There's nothing "abnormal" about Apple's market cap. It's a function of their level of earnings and the market's anticipation of future earnings.

I understand your argument for that, but at some point don't you get PE compression as growth is considered unsustainable by large number theory? XOM's balance sheet looks more compelling than AAPL in many ways, but of course there isn't the earnings growth without oil price growth.
post #37 of 67
Quote:
Originally Posted by anantksundaram View Post

I am truly sorry, but you need to stop spouting nonsense, my friend. Beta is simply a standardized measure of the covariance of a stock's returns to that of the market as a whole. More precisely, it is the covariance in the returns of the stock against the returns on the market portfolio divided by the variance of returns of the mkt portfolio. It does not measure 'volatility' (despite what some 'free' websites will tell you), but rather, a measure of the sensitivity of a stock's returns to the returns of the mkt portfolio.

It measures the 'systematic' risk left behind in a stock after the 'unsystematic' risk has been presumably diversified away by 'rational' investors. (Btw, the term 'volatility' refers to systematic risk + unsystematic risks).

For instance, a beta of 1.43 simply means that a 1% increase in the value of the market portfolio is, on average, expected to result in a 1.43% increase in the price of Apple's stock. The only issue is whether a stock produces a return consistent with its beta. Period. (You can, in other words, be a high-beta stock that outperforms, a low beta stock that outperforms, or a high-beta stock that underperforms, or a low-beta stock that underperforms; the concept of a 'desirable beta' is utter nonsense).

I could go on, but I won't.

Go look up any basic textbook on finance. Or, please, go enroll in a class on basic finance (many community colleges offer very low-priced courses).

OK I stand corrected. My knowledge of Finance is slim to nil. I was trained as an electrical engineer but worked in systems software for most of my career.

I probably have even less knowledge of accounting and wouldn't know what to do with balance sheet or a financial statement.

None of this seems to make a difference to me at this point. I enter and exit trades daily based on technical chart patterns, and have made a comfortable living as a short term trader. I don't generally concern myself with the fundamentals of the companies whose stock I trade, other than to know what they do so as to be able to compare charts with another stock in the same sector.

If I thought for one minute that my trading could benefit from having knowledge of finance, I would take your advice to enroll in a class in a heartbeat. Do you think such a class be of practical use to me in your estimation?

My son who is in his final year in college majoring in CS is taking a finance course as an elective and is finding it rather fascinating and he was just talking the other day about how he would like to pursue this area of study a little further.
post #38 of 67
Quote:
Originally Posted by vexorg View Post

None of this seems to make a difference to me at this point. I enter and exit trades daily based on technical chart patterns, and have made a comfortable living as a short term trader. I don't generally concern myself with the fundamentals of the companies whose stock I trade, other than to know what they do so as to be able to compare charts with another stock in the same sector.

If I thought for one minute that my trading could benefit from having knowledge of finance, I would take your advice to enroll in a class in a heartbeat. Do you think such a class be of practical use to me in your estimation?

Given that you have no interest in fundamentals and are a technical trader -- a fundamental mistake, in my view; but each to his own -- I doubt you'll get any benefit from enrolling in a finance course.

Quote:
Originally Posted by vexorg View Post

My son who is in his final year in college majoring in CS is taking a finance course as an elective and is finding it rather fascinating and he was just talking the other day about how he would like to pursue this area of study a little further.

Congratulations to your son!
post #39 of 67
Quote:
Originally Posted by anantksundaram View Post

Given that you have no interest fundamentals and are a technical trader -- a fundamental mistake, in my view; but each to his own -- I doubt you'll get any benefit from enrolling in a finance course.

I make mistakes on a daily basis. But I am never so vested in my positions that I will not reverse my position at a moment's notice if necessary.

Out of curiosity, is your dismissiveness academic or based on experience, and if so, what has been your annualized return for say, the last 3 years?
post #40 of 67
Quote:
Originally Posted by aaarrrgggh View Post

I understand your argument for that, but at some point don't you get PE compression as growth is considered unsustainable by large number theory? XOM's balance sheet looks more compelling than AAPL in many ways, but of course there isn't the earnings growth without oil price growth.

You are right. Size brings with it P/E reversion to the mean since you need proportionately larger and larger home runs to maintain returns.

And yes, a bet on XOM is fundamentally a bet on oil prices.
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