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Drop in Apple stock blamed on anticipated capital gains tax hike [u]

post #1 of 128
Thread Starter 
After reaching a record high in September, Apple stock has suffered nearly eight straight weeks of losses as investors bail out ahead of potential capital gains tax hikes that could hit as early as next year.

Apple Stock
AAPL stock performance versus S&P 500. | Chart via Reuters


Editor's Note: This article has been modified to reflect the expected 2013 reversion to the 20 percent U.S. capital gains tax of 2003. This article incorrectly stated that the rate would increase to 35 percent.

As noted by Reuters, AAPL stock has lost a quarter of its value, underperforming the S&P 500 average which saw a 7 percent decline over the same period.

Since its mid-September high of $705.07, the stock dropped precipitously and closed Friday at $527.68, losing some $170 billion in market capitalization. The publication pointed out that the market cap dropped is worth more than the entirety of Coca-Cola.

With a market value of around $493 billion, Apple still stands as the most valuable company in the world and leads second-place U.S. stock Exxon by about $100 billion.

The stock's fall may be attributed to a dumping of assets as investors prepare for a likely rise in capital gains and dividends taxes as part of a program to cut the U.S. deficit. Also part of the supposed deal is a round of government spending cuts, however high-income taxpayers are expected to take the brunt of the increases.

Because of Apple's meteoric rise, investors could be looking to sell the stock now to protect against the feared capital gains tax bumps by locking in earnings to offset the higher rates next year. The current 15 percent tax on dividends and capital gains is scheduled to reset by the end of the year, and will change to the 35 percent rate levied on normal income.

It appears that uncertainty over how the government will handle the so-called fiscal cliff is dissuading investors from picking up Apple stock at its current relatively undervalued price.

Once legislators decide on a future plan and the U.S. fiscal outlook is solidified, Apple shares are likely to start gaining traction once again, as many analysts still see the stock as being worth between $700 to $850.
post #2 of 128
Ridiculous. All stockholders who want to churn their holdings will hopefully pay more taxes, including me if I decide to sell any of my stock holding. If I hold stock, the increase in tax on capital affects me not at all.

It's not as though owning stock has any beneficial on the company or real investments to improve a company's productivity. That comes out of a company's revenue, not stock value.
post #3 of 128
I don't believe a word of this. Afaik, capital gains rates are supposed to go from 15% to 20% (not 35%). That can't explain the 25% drop.

I think it has to do, rightly or wrongly, with the market's perception that -- and an ironic one, at that -- Tim Cook is doing a lousy job of the supply chain and not making enough to fill demand.
post #4 of 128

People don't expect Apple to grow as much, or their fast growth feels like old news. Or Android taking over by a large amount. Who knows. 

 

I'm glad I didn't buy into the hype. Buy, buy, buy!!!

 

Who knows. Psychology is a hard thing to understand.

 

Could be the fiscal cliff and all of that psychobabble. Fear.

 

Apple went down more than most?

post #5 of 128
Utter nonsense
post #6 of 128
Quote:
Originally Posted by anantksundaram View Post

I don't believe a word of this. Afaik, capital gains rates are supposed to go from 15% to 20% (not 35%). That can't explain the 25% drop.
I think it has to do, rightly or wrongly, with the market's perception that -- and an ironic one, at that -- Tim Cook is doing a lousy job of the supply chain and not making enough to fill demand.

The guy that made Apple's supply chain function so smoothly and efficiently despite their recordbreaking growth and success that landed Cook the position as CEO... is now gonna fail because Cook is CEO. Ironic, indeed.

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #7 of 128
Clearly, the stock is being manipulated by hedge fund managers and other big boys to give them a buying opportunity. It should be illegal, but these guys are the top donors to both parties, so we all have to sit by and witness this theft.
post #8 of 128
There are a lot of factors (and fear is a powerful one).

At the end of the day, if you accept that Apple's growth will inevitably slow but that they'll continue to be in business for another 5 years, then the stock is simply undervalued and now is a decent time to buy.

Sure, the stock might drop another 10% ... so perhaps you can try to perfectly time the absolute bottom (good luck to you), but over any reasonable long-term investor's horizon, you'll come out ahead.
post #9 of 128
Apple's growth is only expanding and this drop deserves and SEC and DOJ Investigation into stock manipulation.

This is a simple pump and dump and rebuy a stronger position before the HDTV hits the markets.
post #10 of 128

It's annoying when analysts try to reduce major stock drops to single factors. Potential for capital gains hikes is probably going to cause some people to sell, but that is a temporary effect. Even if they're locking in gains now, they will not just hold simply due to higher capital gains tax on future gains.

post #11 of 128
@anantksundaram is correct, the capital gains rate is due to reset to 20%, not 35% as Mikey Campbell stated in the article, unless the rate is renewed.
post #12 of 128
Quote:
Originally Posted by anantksundaram View Post

I don't believe a word of this. Afaik, capital gains rates are supposed to go from 15% to 20% (not 35%). That can't explain the 25% drop.

I think it has to do, rightly or wrongly, with the market's perception that -- and an ironic one, at that -- Tim Cook is doing a lousy job of the supply chain and not making enough to fill demand.

It is of course multiple factors, but for me personally I come out ahead on taxes (15/20% Federal, 10/13% CA) by selling if the stock is up less than 25-30% next year. With AAPL at its current levels, selling today seems pretty stupid, but if you sold at $600+ you likely came out ahead realizing long term gains in 2012. Most people don't really understand the math there.

People who expect to not sell AAPL for the next three years for any reason are and were always better off holding and ignoring tax implications.
post #13 of 128
The Democrats strike again. They won't be happy until they can turn their Great Recession into a Great Depression. Liberal Democrats were never happier than under FDR.

And there's no question that's what's happening. The three state in the worst economic shape--California, Illinois and New York, are heavily Democratic. And Detroit, perhaps the worst major city in the country, hasn't elected anyone but liberal Democrats in half a century.

Keep in mind another factor for Apple's stock fall. Many of those with Apple 'stuff' already have an older model. In this dismal Obama economy, they're going to be delaying upgrades.
post #14 of 128
Quote:
Originally Posted by SolipsismX View Post

The guy that made Apple's supply chain function so smoothly and efficiently despite their recordbreaking growth and success that landed Cook the position as CEO... is now gonna fail because Cook is CEO. Ironic, indeed.

Problem is not too many people know that. My buddy said yesterday "Apple is done" and I told him he should buy now because Apple's quarterly report in January is going to be astronomical. The iPhone 5 is 2 months ago and in most cases there's still a 2-3 week wait. People just don't get that Apple is unlike all other companies.
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post #15 of 128
Quote:
Originally Posted by anantksundaram View Post

I don't believe a word of this. Afaik, capital gains rates are supposed to go from 15% to 20% (not 35%). That can't explain the 25% drop.
I think it has to do, rightly or wrongly, with the market's perception that -- and an ironic one, at that -- Tim Cook is doing a lousy job of the supply chain and not making enough to fill demand.

Yes, and perhaps that explains the Dow dropping from around 13, 800 to about 12, 500 in the same time period Apple's stock dropped? There is no way the market actually thinks Cook is doing a poor job. He has increased sales every quarter he has been at the helm and always meets Apple's own self guidance. It isn't his fault if sometimes market expectations are simply unrealistic.

Further, there is no such thing as investing anymore. Investing is when you believe in a company and put your money into it to 1) help the company, and 2) get a return. Nowadays, however, brokerages loan out your shares to people betting against your investment thereby putting an incentive on those people to actively try to make the stock go down. That isn't investing. Shorting should be illegal as it undermines legitimate investing, and the true investors often times aren't aware their stock is being loaned out.
post #16 of 128
Quote:
Originally Posted by Inkling View Post

The Democrats strike again. They won't be happy until they can turn their Great Recession into a Great Depression. Liberal Democrats were never happier than under FDR.
And there's no question that's what's happening. The three state in the worst economic shape--California, Illinois and New York, are heavily Democratic. And Detroit, perhaps the worst major city in the country, hasn't elected anyone but liberal Democrats in half a century.
Keep in mind another factor for Apple's stock fall. Many of those with Apple 'stuff' already have an older model. In this dismal Obama economy, they're going to be delaying upgrades.

I don't know where you get your facts from but New York isn't in bad economic shape, and ummm isn't Arnold a Republican? What has he done to California? And how has Florida fared under good 'ol Jeb Bush?
"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #17 of 128
Quote:
Originally Posted by TBell View Post

Yes, and perhaps that explains the Dow dropping from around 13, 800 to about 12, 500 in the same time period Apple's stock dropped? There is no way the market actually thinks Cook is doing a poor job. He has increased sales every quarter he has been at the helm and always meets Apple's own self guidance. It isn't his fault if sometimes market expectations are simply unrealistic.
Further, there is no such thing as investing anymore. Investing is when you believe in a company and put your money into it to 1) help the company, and 2) get a return. Nowadays, however, brokerages loan out your shares to people betting against your investment thereby putting an incentive on those people to actively try to make the stock go down. That isn't investing. Shorting should be illegal as it undermines legitimate investing, and the true investors often times aren't aware their stock is being loaned out.

All the amateur day traders are killing what the stock market is about. Buying one minute, selling the next and vice versa.
"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #18 of 128
Quote:
Originally Posted by dasanman69 View Post


I don't know where you get your facts from but New York isn't in bad economic shape, and ummm isn't Arnold a Republican? What has he done to California? And how has Florida fared under good 'ol Jeb Bush?

1. You might check the current activities of Gov Cuomo in New York; apparently his maneouvre room on taxation is becoming severely constrained.

2. Jerry Brown became Governor of California in 2010. His last budget was short by tens of billions, and three or four of his cities are entering bankruptcy.

3. Charlie Crist succeeded Jeb Bush in Jan 2007, and was subsequently replaced by Rick Scott in 2011.

 

Cheers

post #19 of 128
Quote:
Originally Posted by TBell View Post

Yes, and perhaps that explains the Dow dropping from around 13, 800 to about 12, 500 in the same time period Apple's stock dropped?

I am sure you know enough math to know that it's nowhere near a 25% decline (since that would put the Dow at 10,350).
post #20 of 128
Quote:
Originally Posted by TBell View Post

Shorting should be illegal as it undermines legitimate investing.....

Betting on bad news should be illegal!? What next? Newspapers should be legislated out of business? Whining should be made illegal? Sadness should be outlawed? 1rolleyes.gif
post #21 of 128
Quote:
Originally Posted by minicapt View Post

1. You might check the current activities of Gov Cuomo in New York; apparently his maneouvre room on taxation is becoming severely constrained.
2. Jerry Brown became Governor of California in 2010. His last budget was short by tens of billions, and three or four of his cities are entering bankruptcy.
3. Charlie Crist succeeded Jeb Bush in Jan 2007, and was subsequently replaced by Rick Scott in 2011.

Cheers

Yes but both California and Florida were both in trouble before their current governors took office. Funny how this whole economic downturn started with a Republican in office and now we're supposed to believe a Republican will lead us out. The rich need to stop hoarding their wealth in order for the trickle down effect to work, I'd rather just give it to the middle class and let them do what they do best and spend that money which creates jobs.
"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #22 of 128
Quote:
Editor's Note: This article has been modified to reflect the expected 2013 reversion to the 20 percent U.S. capital gains tax of 2003. This article incorrectly stated that the rate would increase to 35 percent.

As of this writing, the note above has been added but the article is still incorrect.

post #23 of 128
Quote:
Originally Posted by dasanman69 View Post


Yes but both California and Florida were both in trouble before their current governors took office. Funny how this whole economic downturn started with a Republican in office and now we're supposed to believe a Republican will lead us out. The rich need to stop hoarding their wealth in order for the trickle down effect to work, I'd rather just give it to the middle class and let them do what they do best and spend that money which creates jobs.

California's legislature has been Democrat for more than two decades, which is why Big Arnie's accomplishments were rather less than expectations. New York's problems are because it's Assembly has been dominated by the Democrats for a similar period of time. And the current national downtown began with the swearing in of a Democrat-lead House of representatives in January of 2006. President Bush's "woeful economic record" is the direct result of Democrat intransigence before Jan 2006 and deliberate Democrat malevolent unco-opertion after. Where Florida fits could use a fuller explanation.

The rich are not hoarding their wealth, they are avoiding mischievous levies from a Federal establishment intent on fleecing them of honest gains. Arbitrary redistribution of wealth is a doctrine of abject failure because, as Baroness Thatcher pointed out, you will run out of other people's money.

 

Cheers

post #24 of 128
Quote:
Originally Posted by Inkling View Post

The Democrats strike again. They won't be happy until they can turn their Great Recession into a Great Depression. Liberal Democrats were never happier than under FDR.
And there's no question that's what's happening. The three state in the worst economic shape--California, Illinois and New York, are heavily Democratic. And Detroit, perhaps the worst major city in the country, hasn't elected anyone but liberal Democrats in half a century.
Keep in mind another factor for Apple's stock fall. Many of those with Apple 'stuff' already have an older model. In this dismal Obama economy, they're going to be delaying upgrades.


You are over simplifying complex issues. More importantly, you are to your own detriment treating politics as a sport. The reality is there are both good democrats and good republicans. In addition, the US would greatly benefit from more than a two party system being that complex issues shouldn't be confined to merely two perspectives that are trying to make the other look bad while gaining power.

California, Illinois, New York, and Detroit are in the worst economic shape for a variety of reasons. First, controlling immigration is not a racial matter. It is an economic matter. When the US started we needed lots of workers to build the nation. There was no shortage of work. Now there is a shortage. It makes no sense to allow new people to enter the country when the people paying taxes that are already here are struggling to find work. Current policies allow immigrants to come in illegally. Most go to places like the cities you mention. Once there the States are forced by a Supreme Court decision to provide health care, schooling, and welfare. In other words, tax payers subsidize the cost to provide services for millions of people who came here illegally. Look at Countries like Norway, Sweden, or Finland with strong immigration polices. They are doing fairly well in this tough economy because they are controlling the population size.

Second, while the states you mention are in poor economic shape this can be attributed to population size. Chicago, New York, and Los Angeles are the most populated cites in the Country. Again, under Court rulings the states have to provide services such as schooling to everyone. Moreover, these states are the most populated because that is where most of the work was located. The work relocated, but the people remained.

Third, the top ten poorest states are Republican strong holds. This is based on the last US Census. You would think if Republican policies are the way to go those states would be doing pretty good economically, but not so much.

Fourth, the system worked much better when Republicans and Democrats controlled various government bodies thereby forcing them to work together to get things done and things happened slowly but the parties did compromise. Mitch McConnell said after the first President Obama election that his number one goal wasn't fixing the economy but to make sure President Obama wasn't reelected. He meant it. Over the last four years the Tea Party faction of the Republican Party refused to compromise on anything and insisted that the suppose to be temporary Bush Tax Cuts had to be extended as a condition for any other legislation to be passed. They filibustered over the majority vote consistently. Even the Republican Senate leader Boehner was deeply frustrated at times. The filibuster used to be a useful tool. If one congress person strongly disagreed with a bill he or she could go to the House or Senate Floor and hold up a bill by pleading to other members of the respective chambers to change their votes. Once the congress person gave up the floor, the majority vote would win the day. Now an elected member of congress merely has to say he or she is filibustering and the bill is defeated unless two third of the body of congress can override the filibuster. So one person can without explanation over ride the will of the majority. Again, the Tea Party did this repeatedly. Very little got passed. Even Reagan understood every once in a while a tax increase was a necessity to spur economic growth. Yet, many Republican signed a written oath prepared by a private lobbying entity swearing that they would never raise taxes no matter what. That is simply irresponsible. Further, this is despite the US tax rate for the wealthiest people in our Country being the lowest it has ever been.

Fifth, ironically the supposed temporary Bush tax break was intended to spur job growth. Instead, 2.1 million jobs were lost since they were implemented. Trickle down economics that many Republicans favor simply do not work. The inverse is true. A well off middle class spends money for their families thereby creating a demand for jobs. By the way, understanding that is how Roosevelt got the US out of the great depression. He created well paying government jobs and public work jobs. The people used the money to buy things from private companies, which in turn created more jobs.

Sixth, both the Republicans and Democrats sold the US out when they passed the North American Free Trade Agreement. Since the founding of our Country, it was understood import tariffs had to be imposed on Countries that had an unfair trade advantage. For instance, China subsidizes both its materials and work force. Moreover, it doesn't hold the same values towards humans that western countries hold thereby giving it another unfair advantage. So, we taxed these type of Countries goods being imported to protect american manufacturing and workers. The taxes from those jobs is what helped the country flourish both on the federal and local level. With NAFTA, we allowed Chinese goods to flow through Canada and Mexico without taxation thereby providing companies the motivation to relocate manufacturing overseas. The loss of the jobs and the associated taxes is why governments, especially local governments, are struggling having to downsize readily available services that have been available the 46 years I have been on the planet.

If you want the good times to roll again, it would be easy. Step one, repeal NAFTA. US politicians should worry about americans first. US workers shouldn't have to compete with countries like China who's economy is not compatible with our own. I am not saying we should not sell good made in places like China, just that they should be taxed to take away the economic advantage. Our country's founding fathers understood the importance of the import tax to protect american manufacturing and materials. Step two, tighten immigration. The more people you have, the more work you have to create. Three, change filibustering to how it used to be. A congress person can hold a bill up by speaking directly to the american people from the senate or house floor, but at the end of the day a simple majority wins. This would help clear up some current grid lock.

Cheers. By the way, even though I largely vote democrat, I consider myself to be an independent. I will also point out that Illinois, California, and New York are States where people with the highest level of education and the highest wealth earners live.
Edited by TBell - 11/16/12 at 7:07pm
post #25 of 128
I don't know why no one is stating the obvious which is apple stocks are in a significant part a mom and pop stock and they need money for Christmas gifts...
post #26 of 128
Quote:
Originally Posted by mrrodriguez View Post

I don't know why no one is stating the obvious which is apple stocks are in a significant part a mom and pop stock and they need money for Christmas gifts...

Why wouldn't they just take the dividends?
post #27 of 128
Quote:
Originally Posted by minicapt View Post

The rich are not hoarding their wealth, they are avoiding mischievous levies from a Federal establishment intent on fleecing them of honest gains. Arbitrary redistribution of wealth is a doctrine of abject failure because, as Baroness Thatcher pointed out, you will run out of other people's money.

Cheers

The problem with your view is it doesn't acknowledge two things. First, the tax rate for those earning over $250, 000 is the lowest it has ever been. It was even before the supposed temporary Bush tax breaks were imposed. Moreover, the super wealthy have far more deductions available to them then most folks. So, while I agree the federal government wastes money, the rich are hardly being fleeced in any historical context.

Second, there seems to be this new found mind set that the wealthy are completely self made. They often times leave out their public schooling, use of publicly funded institutions of higher education, libraries, roads, etc. We have a tiered tax system so those who have benefitted the most from the american system can pay a little more in taxes to give the next person an equal chance of achieving the so called american dream.

Since you are fond of Brits, I will quote you another. "Taxes are the price we pay to live in a civil society." Oliver Wendell Holmes Jr. I will take good old Wendell over Thatcher any day.
post #28 of 128
Quote:
Originally Posted by TBell View Post

I will also point out that Illinois, California, and New York are States where people with the highest level of education and the highest wealth earners live.

And they're blue states. Just goes to show that many very rich people aren't afraid to vote against self interest.
"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #29 of 128
Quote:
Originally Posted by dasanman69 View Post


Just goes to show that many very rich people aren't afraid to vote against self interest.

I doubt that's how they got rich in the first place.

 

I see no reason why they should suddenly discover self-loathing.

post #30 of 128
Thank you for providing common sense on this. You are one of only writers out there at understand this very fundamental thing.
post #31 of 128
Quote:
dissuading investors from picking up Apple stock at its current relatively undervalued price.

 

Relatively Undervalued? According to whom? The market sets the value, and according to the market, Apple was over-valued, not under.

post #32 of 128
Originally Posted by Cash907 View Post
…according to the market, Apple was over-valued, not under.

 

Sure, if you ignore the P/E.

Originally Posted by asdasd

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Originally Posted by asdasd

This is Appleinsider. It's all there for you but we can't do it for you.
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post #33 of 128
It just seems like yesterday when AAPL raced to $200 only to drop to $80 a short time later. The sky was falling. Apple was finished. End of story for a tech company that showed so much promise.

... and then it rose to $700.
na na na na na...
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na na na na na...
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post #34 of 128
How is this relevant? If a capital gains tax would lower the market price of the stock, wouldn't that affect any stock that is reasonably expected to gain value over?
post #35 of 128

deleted


Edited by MacRulez - 1/28/13 at 8:35pm
post #36 of 128

Sep 21?

iPhone 5

post #37 of 128
Apple continues to innovate and improve their products. While dell and hp churn out the same old crap, but now with win8. Once Apple captures the enterprise, it's all over.
post #38 of 128
Maybe the market is reacting to how the company is doing without Steve. There's been a lot of mistakes and very little being done about them. The product lines are turning into a mess with updates taking longer and then delays in delivery. If we're seeing the future of Apple, we will soon be talking about the good ol' days in the not too distant future.
post #39 of 128
I feel very unhappy about apple which is so good but affected by this !!!

I suggest USA government to charge those heavily for their escaping intentionally
post #40 of 128
Quote:
Originally Posted by Tallest Skil View Post

Sure, if you ignore the P/E.

It's not a simple topic. I already read a lot about Apple. If I was going to invest in AAPL right now, I would be examining their fundamentals to a much closer degree. There are a lot of things that aren't as simple as you might like, such as the way they report sales. They report sales as a combined figure of both units sold directly to end customers and units sold to wireless carriers. This can affect some of their numbers. If carriers reduce their orders due to existing stock, it affects these numbers. Obviously I wouldn't expect that on any given products during their respective launch quarters. I'd want to look at possible carriers that might take on the iphone or provide mobile service for ipad users. I'd want to know more about their launch cycles in different countries. Right now I read a lot about them, just not to that degree. Simply reducing it to current P/E ratio isn't much in the way of research if you're buying a lot of them at current pricing. Your bare minimum purchase is likely to be in the five figure range. I think that warrants real research.
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