Of course it relates to the dividend - whenever a firm pays a divided the market cap drops by a related amount, normally a little under the dividend amount.
If Exxon hadn't been paying dividends all these years they'd have even more cash than they do, and an appropriately larger market cap. Alternatively if Apple was paying out a dividend its market cap would be growing less quickly.
You're confusing the ex-dividend price with what actually drives stock prices in the long-run, i.e., the company's fundamentals. In the case of XOM (or any other oil company), as has been pointed out to you, it is essentially a bet on oil prices. (Your argument would only be true if XOM's cash flows were expected to remain flat or decline from here on.)
Apple still hasn't cracked the living room and they're working to insert themselves in the Credit/Debit payment processing chain ($13T in card purchases last year) with NFC enabled iOS devices. I think there's a bit of room yet to run.
Quote:
Originally Posted by cvaldes1831
There's more room to run in the BRIC countries too: Brazil, Russia, India, China.
Good points.
But the declining cash flows from iPods could slow the rate of growth somewhat.
You're confusing the ex-dividend price with what actually drives stock prices in the long-run, i.e., the company's fundamentals. In the case of XOM (or any other oil company), as has been pointed out to you, it is essentially a bet on oil prices. (Your argument would only be true if XOM's cash flows were expected to remain flat or decline from here on.)
No - I'm not confusing it at all. When comparing the returns of two firms over any period you have to include dividends. Any decent stock price history system will include both the dividends and the splits in order to present total returns. You have two time-series, one of stock prices and one of corporate actions.
If XOM had retained an additional 100billion dollars in cash that would certainly increase it's current valuation, perhaps not by 100billion, but by a considerable amount. I don't know how much XOM has paid in dividends over the last few decades, but I imagine it's a fair amount.
XOMs stock price obviously correlates to oil prices, it also correlates to their untapped reserves, it correlates to the cost of their extraction, it correlates to their retained cash, it correlates to lots of things.
Even if you ignored all of that the correct question isn't 'which company has the greatest market cap', but 'which company has created the most shareholder value'. For that you not only want the full value of the dividends paid, you have to consider that value after being reinvested.
If this page comes through intact, we can see where some of the inequality lies. Some of the stocks that were way up today don't deserve to be. Some deserve to have gone down!
Unless people buy more computers than they do fuel, I smell a bubble.
I'm grateful for how well my AAPL stock is doing, but it's getting kinda out there....
Apple has a massive growth potential. Think of all the poor people who still think a PC running Windows is modern technology ... they will move over in the end ... or those with those crappy cheap Android devices! Years of growth still to come. Then there is the next thing Apple will come out with that will no doubt be mocked and ridiculed by Apple haters as it goes super nova and causes tons of copy cats. Have faith ... AAPL $1,000
But the declining cash flows from iPods could slow the rate of growth somewhat.
iPod's decline is not only factored in by Apple it is planned by Apple. They have already replaced iPod with iPhones and iPads. Any iPods they still sell are a bonus.
I'm not a professional investment counselor, and the old rule of thumb that if you hear a stock tip from your barber it's too late may well apply here, but my own hunch is that AAPL will continue to rise through at least the end of this year.
That's a variation on the old JP Morgan 1929 story, where he supposedly said that he knew it was time to sell when he started getting stock tips from his shoeshine boy.
Never take investment advise from internet postings, including this one.
Don't undervalue yourself. A few weeks back I interpreted your hand-wringing over Apple's P/E ratio as a buy signal. I've been closing out the option positions I opened back then the last two days. Many thanks.
Quote:
Originally Posted by Dr Millmoss
That's a variation on the old JP Morgan 1929 story, where he supposedly said that he knew it was time to sell when he started getting stock tips from his shoeshine boy.
Don't undervalue yourself. A few weeks back I interpreted your hand-wringing over Apple's P/E ratio as a buy signal. I've been closing out the option positions I opened back then the last two days. Many thanks.
Apple is doing well because they have the highest margins in the industry. Meanwhile, there's a substantial segment of the market that continues to shop on price. Always will be. Apple doesn't care about those customers, and ignoring them obviously hasn't hurt their bottom line. Pursuing such customers would mean joining the "race to the bottom", not a game Apple plays.
In short: there is a growth cap inherent in Apple's positioning. Unless the income distribution curve shifts radically, or Apple starts dropping prices, saturation will eventually become evident.
For iPhone, perhaps, for iPad almost certainly not. The iPad is not being priced as a premium product, which is why none of the android makers have been able to meaningfully undercut it. Apple's margins there are because of the tremendous comparative volume.
As to whether Apple will choose to play further down the income distribution curve for iPhone, that's not yet clear - just because it hasn't yet doesn't mean it definitely won't.
Apple is doing well because they have the highest margins in the industry. Meanwhile, there's a substantial segment of the market that continues to shop on price. Always will be. Apple doesn't care about those customers, and ignoring them obviously hasn't hurt their bottom line. Pursuing such customers would mean joining the "race to the bottom", not a game Apple plays.
In short: there is a growth cap inherent in Apple's positioning. Unless the income distribution curve shifts radically, or Apple starts dropping prices, saturation will eventually become evident.
Regarding income, I recall hearing here that China was a waste of time for the same reasons. Sometimes people save up or figure out paying twice as much is worth it in the long run.
Also Apple can make low end product that are way better, look at the iPad, it came in so low no one can compete! I agree Apple will never make 'cheap' product but they can make damn good inexpensive ones. Apple TV is almost a give away and it is amazing.
Even if you ignored all of that the correct question isn't 'which company has the greatest market cap', but 'which company has created the most shareholder value'. For that you not only want the full value of the dividends paid, you have to consider that value after being reinvested.
1) Changing the question to suit your answer is plain silly.
2) There's not much to ignore in your first three paras. As an aside, past shareholder payouts have nothing to do with the stock price, which are based on the expected future evolution of fundamentals.
Here's a simple question: Tomorrow, if XOM were to announce an increase its dividends, do you think it is more likely that its stock price would rise or fall?
A small request: Please refrain from making bombastic statements about things which you do not seem to have thought through well.
iPod's decline is not only factored in by Apple it is planned by Apple. They have already replaced iPod with iPhones and iPads. Any iPods they still sell are a bonus.
I am sure it as been factored in by Apple.
The issue is whether it has been by analysts and markets. Perhaps it has been by the latter, but I am not not sure about the former - and this article is about an analyst making a price forecast.
Apple has a massive growth potential. Think of all the poor people who still think a PC running Windows is modern technology ... they will move over in the end ... or those with those crappy cheap Android devices! Years of growth still to come. Then there is the next thing Apple will come out with that will no doubt be mocked and ridiculed by Apple haters as it goes super nova and causes tons of copy cats. Have faith ... AAPL $1,000
This is more like it. The second computer revolution has barely just begun, and this time it's being led by the ones who should have led the first time around.
Comments
Of course it relates to the dividend - whenever a firm pays a divided the market cap drops by a related amount, normally a little under the dividend amount.
If Exxon hadn't been paying dividends all these years they'd have even more cash than they do, and an appropriately larger market cap. Alternatively if Apple was paying out a dividend its market cap would be growing less quickly.
You're confusing the ex-dividend price with what actually drives stock prices in the long-run, i.e., the company's fundamentals. In the case of XOM (or any other oil company), as has been pointed out to you, it is essentially a bet on oil prices. (Your argument would only be true if XOM's cash flows were expected to remain flat or decline from here on.)
That's a very good point.
No, it's not. Unless you can perhaps provide an explanation.
Apple still hasn't cracked the living room and they're working to insert themselves in the Credit/Debit payment processing chain ($13T in card purchases last year) with NFC enabled iOS devices. I think there's a bit of room yet to run.
There's more room to run in the BRIC countries too: Brazil, Russia, India, China.
Good points.
But the declining cash flows from iPods could slow the rate of growth somewhat.
Apple Death Knell #56
You're confusing the ex-dividend price with what actually drives stock prices in the long-run, i.e., the company's fundamentals. In the case of XOM (or any other oil company), as has been pointed out to you, it is essentially a bet on oil prices. (Your argument would only be true if XOM's cash flows were expected to remain flat or decline from here on.)
No - I'm not confusing it at all. When comparing the returns of two firms over any period you have to include dividends. Any decent stock price history system will include both the dividends and the splits in order to present total returns. You have two time-series, one of stock prices and one of corporate actions.
If XOM had retained an additional 100billion dollars in cash that would certainly increase it's current valuation, perhaps not by 100billion, but by a considerable amount. I don't know how much XOM has paid in dividends over the last few decades, but I imagine it's a fair amount.
XOMs stock price obviously correlates to oil prices, it also correlates to their untapped reserves, it correlates to the cost of their extraction, it correlates to their retained cash, it correlates to lots of things.
Even if you ignored all of that the correct question isn't 'which company has the greatest market cap', but 'which company has created the most shareholder value'. For that you not only want the full value of the dividends paid, you have to consider that value after being reinvested.
I would say yes, but then again I don't know much about stock.
If this page comes through intact, we can see where some of the inequality lies. Some of the stocks that were way up today don't deserve to be. Some deserve to have gone down!
http://markets.money.cnn.com/secure/watchlist/Index.asp
Your link wants me to sign in, so I'm not sure what point you were making with it.
I don't know what stocks deserve to do, only what they actually do.
Unless people buy more computers than they do fuel, I smell a bubble.
I'm grateful for how well my AAPL stock is doing, but it's getting kinda out there....
Apple has a massive growth potential. Think of all the poor people who still think a PC running Windows is modern technology ... they will move over in the end ... or those with those crappy cheap Android devices! Years of growth still to come. Then there is the next thing Apple will come out with that will no doubt be mocked and ridiculed by Apple haters as it goes super nova and causes tons of copy cats. Have faith ... AAPL $1,000
Good points.
But the declining cash flows from iPods could slow the rate of growth somewhat.
iPod's decline is not only factored in by Apple it is planned by Apple. They have already replaced iPod with iPhones and iPads. Any iPods they still sell are a bonus.
I'm not a professional investment counselor, and the old rule of thumb that if you hear a stock tip from your barber it's too late may well apply here, but my own hunch is that AAPL will continue to rise through at least the end of this year.
That's a variation on the old JP Morgan 1929 story, where he supposedly said that he knew it was time to sell when he started getting stock tips from his shoeshine boy.
Never take investment advise from internet postings, including this one.
Don't undervalue yourself. A few weeks back I interpreted your hand-wringing over Apple's P/E ratio as a buy signal. I've been closing out the option positions I opened back then the last two days. Many thanks.
That's a variation on the old JP Morgan 1929 story, where he supposedly said that he knew it was time to sell when he started getting stock tips from his shoeshine boy.
Precisely.
Don't undervalue yourself. A few weeks back I interpreted your hand-wringing over Apple's P/E ratio as a buy signal. I've been closing out the option positions I opened back then the last two days. Many thanks.
Never was a response of "whatever" more deserved.
The income distribution curve disagrees.
Apple is doing well because they have the highest margins in the industry. Meanwhile, there's a substantial segment of the market that continues to shop on price. Always will be. Apple doesn't care about those customers, and ignoring them obviously hasn't hurt their bottom line. Pursuing such customers would mean joining the "race to the bottom", not a game Apple plays.
In short: there is a growth cap inherent in Apple's positioning. Unless the income distribution curve shifts radically, or Apple starts dropping prices, saturation will eventually become evident.
For iPhone, perhaps, for iPad almost certainly not. The iPad is not being priced as a premium product, which is why none of the android makers have been able to meaningfully undercut it. Apple's margins there are because of the tremendous comparative volume.
As to whether Apple will choose to play further down the income distribution curve for iPhone, that's not yet clear - just because it hasn't yet doesn't mean it definitely won't.
The income distribution curve disagrees.
Apple is doing well because they have the highest margins in the industry. Meanwhile, there's a substantial segment of the market that continues to shop on price. Always will be. Apple doesn't care about those customers, and ignoring them obviously hasn't hurt their bottom line. Pursuing such customers would mean joining the "race to the bottom", not a game Apple plays.
In short: there is a growth cap inherent in Apple's positioning. Unless the income distribution curve shifts radically, or Apple starts dropping prices, saturation will eventually become evident.
Regarding income, I recall hearing here that China was a waste of time for the same reasons. Sometimes people save up or figure out paying twice as much is worth it in the long run.
Also Apple can make low end product that are way better, look at the iPad, it came in so low no one can compete! I agree Apple will never make 'cheap' product but they can make damn good inexpensive ones. Apple TV is almost a give away and it is amazing.
Even if you ignored all of that the correct question isn't 'which company has the greatest market cap', but 'which company has created the most shareholder value'. For that you not only want the full value of the dividends paid, you have to consider that value after being reinvested.
1) Changing the question to suit your answer is plain silly.
2) There's not much to ignore in your first three paras. As an aside, past shareholder payouts have nothing to do with the stock price, which are based on the expected future evolution of fundamentals.
Here's a simple question: Tomorrow, if XOM were to announce an increase its dividends, do you think it is more likely that its stock price would rise or fall?
A small request: Please refrain from making bombastic statements about things which you do not seem to have thought through well.
iPod's decline is not only factored in by Apple it is planned by Apple. They have already replaced iPod with iPhones and iPads. Any iPods they still sell are a bonus.
I am sure it as been factored in by Apple.
The issue is whether it has been by analysts and markets. Perhaps it has been by the latter, but I am not not sure about the former - and this article is about an analyst making a price forecast.
Apple has a massive growth potential. Think of all the poor people who still think a PC running Windows is modern technology ... they will move over in the end ... or those with those crappy cheap Android devices! Years of growth still to come. Then there is the next thing Apple will come out with that will no doubt be mocked and ridiculed by Apple haters as it goes super nova and causes tons of copy cats. Have faith ... AAPL $1,000
This is more like it. The second computer revolution has barely just begun, and this time it's being led by the ones who should have led the first time around.