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Shares of Apple hit $100 as Morgan Stanley provides strong endorsement to investors - Page 2

post #41 of 73
Quote:
Originally Posted by Marvin View Post


The future cashflows of course being entirely unknown, making present valuations highly speculative. Not to mention the lack of correlation between the earnings amounts and the valuation amounts.

 

Everything is speculation and educatated guesses.  The ones who make the most correct guesses make money.  The ones who understand the business, competition, and markets will make the most money.

 

There is a corrolation between earnings and valuation amounts in the mid and long term.  Short term flucuations are normal.

 

Thus I present this chart showing the DIRECT relationship between earnings growth and Stock price.

 

post #42 of 73
Quote:
Originally Posted by crazy_mac_lover View Post


All of this can be calculated when Aapl is at $500 . I don't think Apple has true growth . The true reason is the big investors cheated enough shares from small investors . So AAPL rises.


That makes no sense. 

 

You don't need to 'think', there are true facts and measures of financial performance that you can check.  If you did any checking you would see apple has had plenty of growth and while one can not predict the future, a certain amount of growth is nearly assured. 

post #43 of 73
Quote:
Originally Posted by crazy_mac_lover View Post


All of this can be calculated when Aapl is at $500 . I don't think Apple has true growth . The true reason is the big investors cheated enough shares from small investors . So AAPL rises.

 

What kind of trash is this.

 

Apple grew earnings almost 12% last quarter YoY.

 

Thats larger earnings growth than Google FYI

post #44 of 73
Quote:
Originally Posted by Sacto Joe View Post

Quote:
Originally Posted by OriginalG View Post


"The previous historical record for top market cap belonged to Microsoft, whose market value topped out at
$616.3 billion
in December 1999"

That doesn't make sense. Apple has about 10% less (equivalent) shares than it did when it hit its previous ATH. It's got about 6 billion shares now, so figure about 6.5 billion. at $100/share, that would make its market cap then $650 billion or thereabouts. Of course, we aren't taking inflation into account....

Actually, AAPL has 5.9 billion shares outstanding.
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post #45 of 73
Quote:
Originally Posted by Rogifan View Post

Getting close to $600B market cap. What was the highest Microsoft got to back in the day?

pretty much just a perception number.  It's hardly a reality.

 

Profits are hard cash.  real, and indisputable.

 

BTW, Apple already hit 600B Cap... (April 2012... and went to nearly 660B in September 2012 )*     So... Yawn.   

 

and to answer your question.  MS hit 619B (in 1999 USD),  So, you missed your chance to celebrate the passing of MS the first time....

 

 

*Stock BuyBacks have lowered the number of shares in play, hence the reason why the stock price is higher (post split) yet the Market Cap is still lower than in 2012.

post #46 of 73
Quote:
Originally Posted by sog35 View Post

Quote:
Originally Posted by "Apple 
[" url="/t/181882/shares-of-apple-hit-100-as-morgan-stanley-provides-strong-endorsement-to-investors#post_2581312"]
 

I'm not one of those crazy conspiracy theorists and pessimists who constantly preach doom and gloom, but I too believe that what goes up must come down, and the bull market has been going on for many years now.

I don't have 100% of my cash in the market either, but when the next crash comes, I will be ready, and I will be entering with all of my reserves.

We've been in a massive Bull Market for almost 6 years.

The S&P500 has gone up 150% Since Jan 2009
The NASDAQ is up 150% Since Jan 2009

I agree we are due for a correction.  I think it will be 10-20% drop in the next 12 months.

I've already sold half of my Mutual Funds and rolled them into cash.
I also sold alot of my Apple shares because of this.  I'm still holding 200 shares of Apple.
If we see a correction all boats will drop including Platinum companies like Apple.  When that happens I will load up the truck with Apple shares again as long as the fundamentals are still strong.

Unless you can tell us why, this is nonsense. You may be right by chance, but there's no rational way to predict that, or the time frame in which something like that will/could happen. The forward PE ratio on the market is a little higher than historical averages but not by much. The CAPE (Shiller-Campbell measure) is much higher than historical averages, but that has been so for a while (and Shiller has been crying wolf for a good while now).
post #47 of 73
And right on cue, Ming-Chi Kuo is out with another report suggesting the mythical "iWatch" might be delayed until 2015 because of manufacturing difficulties.
post #48 of 73
Quote:
Originally Posted by Marvin View Post

Quote:
Originally Posted by sog35 View Post

If you are doing it right you value the stock at the present value of future cash flows.

The future cashflows of course being entirely unknown, making present valuations highly speculative. Not to mention the lack of correlation between the earnings amounts and the valuation amounts.

Of course the future is unknown. But that does not mean that people don't form expectations about the future, and put their money where their expectations are. To think that the stock price is anything other than the capitalized value today of risk-adjusted, expected future cash flows (as sog35 noted) is delusional.

People value and trade assets today based on their expectations about the future. Period.
post #49 of 73
Quote:
Originally Posted by sog35 View Post

We've been in a massive Bull Market for almost 6 years.

The S&P500 has gone up 150% Since Jan 2009
The NASDAQ is up 150% Since Jan 2009

I agree we are due for a correction.  I think it will be 10-20% drop in the next 12 months.

What is the % increase if you move the from date to Jan 2008?
post #50 of 73
Quote:
Originally Posted by Slurpy View Post

Where's Constable Odo? Has he apologized yet for his thousands of ranting posts demanding Cook's head and claiming the stock had nowhere to go but down, when it was @ $400, if Cook stayed?

No, of course he hasn't. On the internet, you never have to take back, or be held accountable for anything. Just bash away, then when proven wrong, pretend like nothing happened.
 

 

I am tempted to pile on, but I won't.

post #51 of 73
Quote:
Originally Posted by sog35 View Post
 

 

You are wrong.

 

EPS profit growth was negative when the stock was $500

 

You need to get an education on investing.

 

Below is a chart that shows the direction relationship between Stock price and earnings growth.

 

 

 

Hopes of growth is what drives a stock price. The bigger the hope, the bigger the P/E gets. Look at Tesla, FB, Twitter. People will tend to oversell on a stock that suddenly shows negative growth. In that case, it could become a great buy opportunity. This is what Carl Ihcan saw when the stock was below $400 so he move in big time.

 

Since Apple has a low P/E, its moves on actual growth or lack of growth.  Apple is not trade like a growth stock, it trades like a utility stock, which means Apple will have to show growth in the short or mid term. We are now seing it move on hopes of great new products, but it could revert quickly if the jan 2015 earnings and sales are not as high has expected. The market wont tolerate lower than expected results like it does for stocks like amazon, netflix, FB,  Tesla, ...Apple will have to deliver results that match the hopes of investors to sustain its price.


Edited by herbapou - 8/19/14 at 12:08pm
post #52 of 73
Quote:
Originally Posted by anantksundaram View Post


Unless you can tell us why, this is nonsense. You may be right by chance, but there's no rational way to predict that, or the time frame in which something like that will/could happen. The forward PE ratio on the market is a little higher than historical averages but not by much. The CAPE (Shiller-Campbell measure) is much higher than historical averages, but that has been so for a while (and Shiller has been crying wolf for a good while now).

 

The last time we had a 150% increase in the S&P/Nasdaq/Dow in 5 years we saw a crash.

 

Look at the 30 year trend line for the S&P500.  We should be at 1600 or 1700 not close to 2000.

 

I'm sorry but the Market Makers make MORE money when stocks tank then when they explode up.

 

I'm not calling for a massive drop like 2000 or 2007 but 15-20%

post #53 of 73
Quote:
Originally Posted by KingOfSomewhereHot View Post
 

 

Except that the current share price takes into account how many shares are available to be traded. (hence, "total market cap" isn't really affected by how many shares are available.) 

Your inflation point is a good one though.

Market capitalization is found by multiplying total shares times share price. It very much IS "affected by how many shares are available". The shares need to be "normalized", but  that's just a matter of dividing by 7. The shares have been reduced by around 10%. That's just a fact. If the (normalized) price per share is the same, and the share count is lower, then by definition the market cap is lower.

post #54 of 73
Quote:
Originally Posted by Sacto Joe View Post
 

Market capitalization is found by multiplying total shares times share price. It very much IS "affected by how many shares are available". The shares need to be "normalized", but  that's just a matter of dividing by 7. The shares have been reduced by around 10%. That's just a fact. If the (normalized) price per share is the same, and the share count is lower, then by definition the market cap is lower.

 

You are right , to get back to its "real" all time high, the stock needs to move to around $110. That being said, the "official" all time high is $100.73

post #55 of 73
Quote:
Originally Posted by herbapou View Post
 

 

 

Hopes of growth is what drives a stock price. The bigger the hope, the bigger the P/E gets. Look at Tesla, FB, Twitter. People will tend to oversell on a stock that suddenly shows negative growth. In that case, it could become a great buy opportunity. This is what Carl Ihcan saw when the stock was below $400 so he move in big time.

 

Since Apple has a low P/E, its moves on actual growth or lack of growth.  Apple is not trade like a growth stock, it trades like a utility stock, which means Apple will have to show growth in the short or mid term. We are now seing it move on hopes of great new products, but it could revert quickly if the jan 2015 earnings and sales are not as high has expected. The market wont tolerate lower than expected results like it does for stocks like amazon, netflix, FB,  Tesla, ...Apple will have to deliver results that match the hopes of investors to sustain its price.

 

But Tesla/FB/Twitters valuations are still based on present value of future cash flows.

 

They are expecting to generate exponentially larger cash flows in future years.  Will there guesses be correct?  If they are they will make a boat load of money.

 

Name me one company who made no profits in the long-term yet still had a huge market cap?  In the long term (10-30 years) the bottom line is making profits.

 

The only company that I can think of that has made very little profits in the long term and still has a big market cap is Amazon

post #56 of 73
Quote:
Originally Posted by herbapou View Post
 

 

You are right , to get back to its "real" all time high, the stock needs to move to around $110. That being said, the "official" all time high is $100.73

 

Nope. 

 

You need to adjust for dividends also.  Which would put it at $96

 

You are talking about all time high Market Capitalization not share price.

post #57 of 73
Quote:
Originally Posted by BUSHMAN4 View Post

Huberty has a respectable track record and makes a good case for an 'outperform' rating
One thing huberty left out is 'Apple Loyalty' which will create demand

 

 

Quote:
Originally Posted by SpamSandwich View Post


Until relatively recently she's had an abysmal track record. Look up her history with Phillip Elmer DeWitt, who keeps track of Apple analyst performance. I think Shaw Wu no longer covers Apple. He was terrible.

yeah you beat me to it, she is horrible and so horrible I am now afraid she put the evil eye on Apple and it is going to go down.

post #58 of 73
Quote:
Originally Posted by Maestro64 View Post
 

 

 

yeah you beat me to it, she is horrible and so horrible I am now afraid she put the evil eye on Apple and it is going to go down.

 

Profits will determine Apple's fate.

No silly voodoo curse BS.

 

If Apple continues to grow profits at 15-20% we see $150 in 2015

post #59 of 73
Quote:
Originally Posted by sog35 View Post
 

 

Profits will determine Apple's fate.

No silly voodoo curse BS.

 

If Apple continues to grow profits at 15-20% we see $150 in 2015

My point was she always been on the opposite of the direction apples was heading the past year she was saying to get out since it was going down now she saying get in since it is going up.

 

Honestly, Apple could be $200B income company in 2015 and it will not see $150. the market is not going to award a company the title of a $1T value company. Just may opinion at this point, just do not see it happening.

post #60 of 73
At the heart of the matter is growth in total return over time as a percentage. I owned AAPL from October 2008 to June 2012 and enjoyed share price growth at an average rate of slightly less than 60 percent per year, compounded. That was the time period when Apple disrupted a host of major industries with innovative products - hardware, software, services and an ecosystem that tied everything together.

Apple is still at the forefront in the marketplace and innovation, but the disruptive phase of its corporate history may be largely completed. Growth in total investment return (market price + dividends) should still be healthy, but there's zero likelihood of matching the phenomenal rates of increase that prevailed a few years ago. Anyone today who thinks AAPL will help them get rich quick is begging to be disappointed. Look instead to a solid value company focused on user experience, well-managed, growing sales, maintaining healthy operating margins across its businesses, continuing a strategic path to preserve its leadership and earning better-than-average market price appreciation.

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post #61 of 73
Quote:
Originally Posted by anantksundaram View Post

To think that the stock price is anything other than the capitalized value today of risk-adjusted, expected future cash flows (as sog35 noted) is delusional.

I wasn't taking issue with the basis of the price, I was saying that statement you just basically repeated is completely open-ended and not deterministic as you are trying to make out. Risk-adjusted can mean any risk you dream up, expected future cash flows can be any cash flows from any unannounced products or any unit volume for any highly probable products. You're saying the same things as sog35 but your future assessments will be different.

Here Katy Huberty says an iWatch is $17.5b in year 1:
http://www.businessinsider.com/iwatch-sales-estimate-from-morgan-stanley-2014-2
Here someone says $9b:
http://www.forbes.com/sites/petercohan/2014/08/15/will-iwatch-add-9-billion-to-apples-top-line/
Here Ming Chi Kuo say $50b year 1 based on 50 million $1,000 watches:
http://www.pfhub.com/analyst-ming-chi-kuo-claims-apple-inc-aapl-iwatch-will-cost-thousands-of-dollars-527/
Here Ming says just 3 million units in year 1:
http://appleinsider.com/articles/14/07/31/apple-likely-to-ship-only-3-million-iwatch-units-this-year-analyst-ming-chi-kuo-says
Here he says it's delayed:
http://appleinsider.com/articles/14/08/19/continued-production-issues-may-force-apple-to-delay-iwatch-until-2015-analyst-ming-chi-kuo-claims

People who make a success in a volatile system always say they're the ones who've figured it out and it makes complete sense if you're just smart enough. See the quote above from Sog35:

"The ones who understand the business, competition, and markets will make the most money."

This is the same guy who wanted Tim Cook demoted in favor of Elon Musk:

http://forums.appleinsider.com/t/161813/incoming-apple-retail-chief-angela-ahrendts-to-be-named-dame-of-the-british-empire#post_2464677

Elon Musk who runs a company valued at over $32b while making a $74m loss in 2013. The language used to try and convince people that it's about understanding business and deterministic assessments of earnings is just a facade. What it's really about is fooling investors, that's what people playing the game want. They don't want people like Tim Cook who do know how to run a successful business operation with record earnings time and time again, they want the lies and the hype to drive returns. They're the same people who preferred Steve Jobs' stage show because it was filled with hype.

Let's say the price fell to $75 ($443b market cap, still the highest in the world) next week, why would that valuation amount be incorrect and what difference would it make to Apple's operation? Apple's earnings next quarter could be $9b, why would a $443b market cap be undervaluing the company?
post #62 of 73
Quote:
Originally Posted by sog35 View Post

 

The last time we had a 150% increase in the S&P/Nasdaq/Dow in 5 years we saw a crash.

 

Look at the 30 year trend line for the S&P500.  We should be at 1600 or 1700 not close to 2000.

 

I'm sorry but the Market Makers make MORE money when stocks tank then when they explode up.

 

I'm not calling for a massive drop like 2000 or 2007 but 15-20%

I don't wish to repeat myself. Suffice it to say that you are posting as though fundamentals don't matter. This, after -- correctly -- talking about value being nothing more, nothing less than the capitalization of expected future cash flows.

 

That's bizarre.

post #63 of 73
Quote:
Originally Posted by Marvin View Post
 
Quote:
Originally Posted by anantksundaram View Post

To think that the stock price is anything other than the capitalized value today of risk-adjusted, expected future cash flows (as sog35 noted) is delusional.

I wasn't taking issue with the basis of the price, I was saying that statement you just basically repeated is completely open-ended and not deterministic as you are trying to make out. Risk-adjusted can mean any risk you dream up, expected future cash flows can be any cash flows from any unannounced products or any unit volume for any highly probable products. You're saying the same things as sog35 but your future assessments will be different.

Here Katy Huberty says an iWatch is $17.5b in year 1:
http://www.businessinsider.com/iwatch-sales-estimate-from-morgan-stanley-2014-2
Here someone says $9b:
http://www.forbes.com/sites/petercohan/2014/08/15/will-iwatch-add-9-billion-to-apples-top-line/
Here Ming Chi Kuo say $50b year 1 based on 50 million $1,000 watches:
http://www.pfhub.com/analyst-ming-chi-kuo-claims-apple-inc-aapl-iwatch-will-cost-thousands-of-dollars-527/
Here Ming says just 3 million units in year 1:
http://appleinsider.com/articles/14/07/31/apple-likely-to-ship-only-3-million-iwatch-units-this-year-analyst-ming-chi-kuo-says
Here he says it's delayed:
http://appleinsider.com/articles/14/08/19/continued-production-issues-may-force-apple-to-delay-iwatch-until-2015-analyst-ming-chi-kuo-claims

People who make a success in a volatile system always say they're the ones who've figured it out and it makes complete sense if you're just smart enough. See the quote above from Sog35:

"The ones who understand the business, competition, and markets will make the most money."

This is the same guy who wanted Tim Cook demoted in favor of Elon Musk:

http://forums.appleinsider.com/t/161813/incoming-apple-retail-chief-angela-ahrendts-to-be-named-dame-of-the-british-empire#post_2464677

Elon Musk who runs a company valued at over $32b while making a $74m loss in 2013. The language used to try and convince people that it's about understanding business and deterministic assessments of earnings is just a facade. What it's really about is fooling investors, that's what people playing the game want. They don't want people like Tim Cook who do know how to run a successful business operation with record earnings time and time again, they want the lies and the hype to drive returns. They're the same people who preferred Steve Jobs' stage show because it was filled with hype.

Let's say the price fell to $75 ($443b market cap, still the highest in the world) next week, why would that valuation amount be incorrect and what difference would it make to Apple's operation? Apple's earnings next quarter could be $9b, why would a $443b market cap be undervaluing the company?

At some point, all I can do is shrug my shoulders and say, it's a free country. You're welcome to believe whatever you wish.

post #64 of 73
Quote:
Originally Posted by Sacto Joe View Post

Market capitalization is found by multiplying total shares times share price. It very much IS "affected by how many shares are available". The shares need to be "normalized", but  that's just a matter of dividing by 7. The shares have been reduced by around 10%. That's just a fact. If the (normalized) price per share is the same, and the share count is lower, then by definition the market cap is lower.

Quote:
Originally Posted by herbapou View Post

You are right , to get back to its "real" all time high, the stock needs to move to around $110. That being said, the "official" all time high is $100.73

Quote:
Originally Posted by sog35 View Post

Nope. 

You need to adjust for dividends also.  Which would put it at $96

You are talking about all time high Market Capitalization not share price.
This isn't rocket science. Market capitalization has nothing to do with dividends. The previous high AAPL market cap was about $650 billion. Someone else posted that the stock count is now down to 5.9 billion. To hit the same market cap with 5.9 billion shares, the stock would have to be (650/5.9=) ~$110.17 share.

Where dividends come in is in estimating what the stock was "worth" to an individual long term holder. Since mid-2012, Apple has issued $3.84 worth of dividends per (split adjusted) share. Thus, anyone owning stock that is "worth" $100 and who has owned that stock since mid-2012 has stock that, to him, is "worth" $103.84.

Of even more interest is the net positive effect of Apple's stock buybacks. If one thinks of Apple's cash as "potential dividends", and computes what the "potential plus delivered dividends" per share are worth today versus what they were worth per share back in 2012, that amount has grown over 20%. And yet - we find ourselves with the stock price being exactly the same as it was two years ago.

Hmm. More potential dividend value, same stock price: Sounds like the definition of a bargain....
post #65 of 73
Quote:
Originally Posted by Kibitzer View Post

At the heart of the matter is growth in total return over time as a percentage. I owned AAPL from October 2008 to June 2012 and enjoyed share price growth at an average rate of slightly less than 60 percent per year, compounded. That was the time period when Apple disrupted a host of major industries with innovative products - hardware, software, services and an ecosystem that tied everything together.

Apple is still at the forefront in the marketplace and innovation, but the disruptive phase of its corporate history may be largely completed. Growth in total investment return (market price + dividends) should still be healthy, but there's zero likelihood of matching the phenomenal rates of increase that prevailed a few years ago. Anyone today who thinks AAPL will help them get rich quick is begging to be disappointed. Look instead to a solid value company focused on user experience, well-managed, growing sales, maintaining healthy operating margins across its businesses, continuing a strategic path to preserve its leadership and earning better-than-average market price appreciation.

 

The problem with your thinking is you are not putting RISK as part of the equation.

 

Yes, Apple stock grew exponentially from Oct 2008 - June 2012.  But you need to take into consideration where Apple was in Oct 2008.  There stock could have easily have gone down 60% instead of up.  Apple was not the power house it is today.  Also remember you bought during the financial crisis so all stocks were discounted for the simple fact that we could have had a total market collapse.  Risk vs Reward.  You cannot get a huge reward without huge risk.

 

Apple's stock right now is a much safer bet than in Oct 2008.  The world economy is in much better shape than in 2008.  Apple is a powerhouse with amazing leverage.  You can still get returns of 10-20% a year with dividends.  Forget getting rich quick.  A few put huge money in a growing stock and make it.  But the other 99% get destroyed.  Its far better to play a more conservative game and slowly grow your portfolio with solid company's and diversification.

post #66 of 73
Quote:
Originally Posted by anantksundaram View Post
 

I don't wish to repeat myself. Suffice it to say that you are posting as though fundamentals don't matter. This, after -- correctly -- talking about value being nothing more, nothing less than the capitalization of expected future cash flows.

 

That's bizarre.

 

In the LONG RUN stock prices are based on expected future cash flows.

 

But in the short term they are not.  When I'm talking about a market wide dip I'm talking about a short term correction.  I see a 15-20% dip in the broad market and then a recovery in 12-36 months. 

 

But the biggest reason for the dip will be the end or phasing out of QE.  With interest rates rising and the money press slowing down I can see investment moving to cash/real estate/metals and out of stocks.

post #67 of 73
Quote:
Originally Posted by sog35 View Post

The problem with your thinking is you are not putting RISK as part of the equation.

Yes, Apple stock grew exponentially from Oct 2008 - June 2012.  But you need to take into consideration where Apple was in Oct 2008.  There stock could have easily have gone down 60% instead of up.  Apple was not the power house it is today.  Also remember you bought during the financial crisis so all stocks were discounted for the simple fact that we could have had a total market collapse.  Risk vs Reward.  You cannot get a huge reward without huge risk.

Apple's stock right now is a much safer bet than in Oct 2008.  The world economy is in much better shape than in 2008.  Apple is a powerhouse with amazing leverage.  You can still get returns of 10-20% a year with dividends.  Forget getting rich quick.  A few put huge money in a growing stock and make it.  But the other 99% get destroyed.  Its far better to play a more conservative game and slowly grow your portfolio with solid company's and diversification.

Oh, please. Just because I didn't say the magic word "risk" doesn't mean that I didn't take it into account in late 2008. AAPL's share price collapsed by more than a third in Sept. 2008 alone during the financial meltdown. RISK WAS EVERYWHERE. The country was going to hell in a hand basket, but citizens weren't going without their iPhones, because sales of the 3G continued climbing through the roof. Apple was debt-free. Risk is always comparative, and at the time APPL was one of the least-risky in the investment universe. If it went, the whole country would have been putting its head between its legs and kissing its ass goodbye. But within one year AAPL stock had entirely recovered from the September 2008 panic and from then it was off to the races. Other stocks were still slogging their way out of the muck. Risk you say? Spare me the college classroom definitions of risk. Approach risk the way Warren Buffett looks at risk, and find opportunities where and when no one else is looking. In 2008, there were enormous risks that camouflaged enormous opportunities. AAPL today offers good opportunities in less risky circumstances ... and everybody is looking.

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post #68 of 73
Quote:
Originally Posted by sog35 View Post

 

But the biggest reason for the dip will be the end or phasing out of QE.  

LOL. You think that the market does not know -- but you and I do -- it's being phased out? Or, it knows, and it's not factoring it into prices? Why?

post #69 of 73
Quote:
Originally Posted by Kibitzer View Post


Oh, please. Just because I didn't say the magic word "risk" doesn't mean that I didn't take it into account in late 2008. AAPL's share price collapsed by more than a third in Sept. 2008 alone during the financial meltdown. RISK WAS EVERYWHERE. The country was going to hell in a hand basket, but citizens weren't going without their iPhones, because sales of the 3G continued climbing through the roof. Apple was debt-free. Risk is always comparative, and at the time APPL was one of the least-risky in the investment universe. If it went, the whole country would have been putting its head between its legs and kissing its ass goodbye. But within one year AAPL stock had entirely recovered from the September 2008 panic and from then it was off to the races. Other stocks were still slogging their way out of the muck. Risk you say? Spare me the college classroom definitions of risk. Approach risk the way Warren Buffett looks at risk, and find opportunities where and when no one else is looking. In 2008, there were enormous risks that camouflaged enormous opportunities. AAPL today offers good opportunities in less risky circumstances ... and everybody is looking.

 

You didn't bring up RISK.

You only brought up a potential of MASSIVE REWARD.

That was your error, not mine.

 

Do you know how many iPhones Apple sold in the first half of 2008?

Less than 4 million iPhones.  They had no iPad, and very little app revenue.

Do you seriously think 2008 Apple was not 10x more risky than Apple 2014?

 

In 2008 the iPhone was a fraction of a fraction of the smartphone market.  Today the iPhone dominates.

post #70 of 73
Quote:
Originally Posted by anantksundaram View Post
 

LOL. You think that the market does not know -- but you and I do -- it's being phased out? Or, it knows, and it's not factoring it into prices? Why?

 

everyone is trying to hold on as long as possible.  Why not when the market is returning 20%+

 

once QE ends officially you will see a massive run to the exits.  By then it will be too late.  It would be wise to exit BEFORE the massive crowd does.

 

By exiting early I may be sacrificing 5% gains in the next few months.  But that's far better than getting hit with 20% loss

post #71 of 73
Quote:
Originally Posted by sog35 View Post
 

 

You didn't bring up RISK.

You only brought up a potential of MASSIVE REWARD.

That was your error, not mine.

Eh? There is no "potential" of massive reward. Not anymore. That happened, but that was in the past, and that was a happy result, not an expectation, when I bought AAPL in 2008. I would have been delighted to have doubled my money over the 42 months I had the stock. I never expected to quintuple it. Conversely, I would not have been desolate had I lost half my investment.

 

But (sigh) ... I made quite a bit of money on AAPL. All you seem to be good at is making words, reinforcing the adage that money talks and you-know-what walks.

 

P.S. Are you sure you're not Constable Odo - reincarnated?

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

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I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

Reply
post #72 of 73
Quote:
Originally Posted by sog35 View Post

In the LONG RUN stock prices are based on expected future cash flows.

But in the short term they are not.

That doesn't make sense. Cash flow and what a company does changes over time so future expectations keep changing, which makes them all short-term. Mid-2006, Apple was at under $10, now it's at $100. That's in just 8 years (is that what you'd call long-term?). Are you suggesting it was possible to predict the iPhone would arrive in 2007 and subsequently iPad in 2010 and multiply the stock by 10?

Apple's net income in 2006 was $1.9b ($19.3b revenue) for the entire year and the stock was around $10.
In 2013, the net income was $37b ($171b revenue) and the stock is at $100.

It seems to me that stock valuations follow revenue more closely than net income, which makes some sense but very flawed if the net margins are low and never improve. It would help explain why Amazon is valued so highly as they have $74b revenue for 2013.

Were people expecting in 2006 that Apple would be making nearly 20x their earnings within 7 years? Of course not. Not even after the iPhone arrived because it was really expensive and they decided to cut the price $200 and it didn't have the App Store:

https://www.apple.com/pr/library/2007/09/05Apple-Sets-iPhone-Price-at-399-for-this-Holiday-Season.html

If it was so predictable, why is Morgan Stanley, which handles trillions of dollars of assets only able to project with an accuracy of -25% to +33% within 12 months?



Here's another projection just for comparison of accuracy:



They can't even tell for certain if it will go up or down in 12 months. Nobody can. There are probabilities to make educated guesses but they are still guesses. They'll come out with a new iPhone soon, it'll sell pretty well but no certainty on if the unit volume will grow significantly nor that if it does grow that the margins won't fall. There's no certainty of Apple's current stock price already being too high or too low because it's not a number based directly on what they're doing, it's a number based on how traders think they will do i.e how much is Apple worth to them, not how much is Apple worth based on how much money they make now. As you keep saying, it's about future earnings which you can't tell just like you couldn't tell back in 2006.
post #73 of 73
Quote:
Originally Posted by Marvin View Post


That doesn't make sense. Cash flow and what a company does changes over time so future expectations keep changing, which makes them all short-term. Mid-2006, Apple was at under $10, now it's at $100. That's in just 8 years (is that what you'd call long-term?). Are you suggesting it was possible to predict the iPhone would arrive in 2007 and subsequently iPad in 2010 and multiply the stock by 10?

Apple's net income in 2006 was $1.9b ($19.3b revenue) for the entire year and the stock was around $10.
In 2013, the net income was $37b ($171b revenue) and the stock is at $100.

It seems to me that stock valuations follow revenue more closely than net income, which makes some sense but very flawed if the net margins are low and never improve. It would help explain why Amazon is valued so highly as they have $74b revenue for 2013.

Were people expecting in 2006 that Apple would be making nearly 20x their earnings within 7 years? Of course not. Not even after the iPhone arrived because it was really expensive and they decided to cut the price $200 and it didn't have the App Store:

https://www.apple.com/pr/library/2007/09/05Apple-Sets-iPhone-Price-at-399-for-this-Holiday-Season.html

If it was so predictable, why is Morgan Stanley, which handles trillions of dollars of assets only able to project with an accuracy of -25% to +33% within 12 months?



Here's another projection just for comparison of accuracy:



They can't even tell for certain if it will go up or down in 12 months. Nobody can. There are probabilities to make educated guesses but they are still guesses. They'll come out with a new iPhone soon, it'll sell pretty well but no certainty on if the unit volume will grow significantly nor that if it does grow that the margins won't fall. There's no certainty of Apple's current stock price already being too high or too low because it's not a number based directly on what they're doing, it's a number based on how traders think they will do i.e how much is Apple worth to them, not how much is Apple worth based on how much money they make now. As you keep saying, it's about future earnings which you can't tell just like you couldn't tell back in 2006.

How true and I beat is we go back to her chart from August of 2012 it did not show the probability of other analysis take a crap on the stock and driving from 700 to 380 in 6 months. You picture is exactly what they are doing in the back room.

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