I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.
Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.
Perhaps I sound a bit more negative than I actually mean to but every word is true.
Since this is the polar opposite of what I was told last night (and told I was a complete idiot for agreeing with), I'm going to have to assume that there isn't a single person on Earth with the faintest idea how the stock market works, and we have placed our entire civilization in the hands of an automated system that isn't smart enough to double check the addition of an extra zero to a number.
What if someone has $800 to invest? 1 share at $540 or 14 at $54. Or if they have an investment plan where they invest $400 per month. Or any other scenario. Not to mention that even if they have $2700 to invest. For some people, buying only 5 shares of something seems strange.
I agree that it's not that big a deal, but it certainly keeps some small investors out. And given the way the institutions are beating the stock around, having a larger share of small investors would probably not be a bad thing.
Okay... so Apple does a 10 to 1 split and you have $400 a month to spend... how does buying 7 shares make a person feel if buying 5 shares makes them feel strange.
The situation won't change much for that many people unless Apple does a 25 to 1 split.
I know what you are saying but, I'm sorry, I think that anyone who doesn't feel that good about buying 1 to 5 shares at $540 each might want to think about investing in mutual funds.
Okay... so Apple does a 10 to 1 split and you have $400 a month to spend... how does buying 7 shares make a person feel if buying 5 shares makes them feel strange.
Because I was talking about $400 a month. So they'd be buying 7 shares a month - which for most people would be a reasonable investment. People do understand time payments and time purchases. In a year, they'd have 90 shares. At $540 per share, they'd have 9.
I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.
Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.
Perhaps I sound a bit more negative than I actually mean to but every word is true.
+1
I took a corporate finance class a while back, and the fella running it said more or less the same thing.
I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.
Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.
Perhaps I sound a bit more negative than I actually mean to but every word is true.
Since this is the polar opposite of what I was told last night (and told I was a complete idiot for agreeing with), I'm going to have to assume that there isn't a single person on Earth with the faintest idea how the stock market works, and we have placed our entire civilization in the hands of an automated system that isn't smart enough to double check the addition of an extra zero to a number.
Sadly so. And once something becomes entrenched in our civilization, it's near impossible to replace/remove it.
Apple's low P/E ratio and stock price doesn't bother me one bit. The type of stock manipulations we've been seeing are one of the major reasons why Steve was so focused on hoarding cash. Companies with plenty of cash care very little about this type of stock price fluctuation and wild movements in market capitalization. Huge market caps are great, even necessary, if a company needs to raise capital to finance day-to-day and long term operations.
Apple, however doesn't need to raise capital through the sale of stock, therefore, these types of shorting strategies do very little to shape how Apple goes about its business. They have over $120bn in cash. They netted over 13bn in quarterly profit for Q1 2012, an increase over the 6bn for the prior year's quarter. Will they more than double y-o-y again? Probably not; but on January 23rd, they'll likely report net profit of over $20bn for Q1 2013.
Cash is king. The cash, not the market cap, allows Apple to focus so much on its own business plan and (largely) ignore Wall Street analysts and large institutional investors.
Worse prices and higher commissions? I think you should really think about what you are saying or maybe you should stay away from trading stocks.
Most brokers charge higher fees for partial lot transactions... say $20 instead of $12-15. On prices, a partial lot "market" order will have a significant premium ($0.10 minimum per share, but I have seen as much as $0.50), and non-market orders have a hard chance executing.
None of this is a big deal if you are deciding to buy one share and hold it for a decade, but if you are looking to make a 15% profit on your $1,150 investment in two shares of AAPL, you are going to need the stock to go up 19%. If you invest like the market as a whole, only half your transactions are going to be profitable, so you really need to see an even higher return.
Not a problem for me, and I openly admit to profiting from the current situation. But, back when I bought my first shares of AAPL, the fact that it split when it hit $100 made it easier to invest a thousand dollars here or there.
Since this is the polar opposite of what I was told last night (and told I was a complete idiot for agreeing with), I'm going to have to assume that there isn't a single person on Earth with the faintest idea how the stock market works, and we have placed our entire civilization in the hands of an automated system that isn't smart enough to double check the addition of an extra zero to a number.
And more so, amateurs (like myself) trying to get an edge in a "professional" market only increases my risk. I'm more like a caveman... Apple make good stuff, Apple sell enough stuff, Apple good leadership, Apple good financial footing. Play large swings, not small ones...keep skin in the game at all times. Sell some when absurdly high and pray that it drops, then buy even more using gains from previous sell. I'll leave the professional moves for the professionals. I'm just a damn caveman.
Not entirely true. The high share price favors bigger players, especially in terms of options. It might not impact the company's financials, but it does impact retail investing.
Yeah but retail is what about 7% ownership of AAPL? And the number of people who cant afford $550 a share is minuscule. In reality you are looking to gain a fraction of a percent in extra AAPL owners. So small it would not even register.
Plus, who the hell buys AAPL without leverage nowadays? Nobody I know. With leverage you only need to stump up (minimum of) 15% of the share value ($83 + $10 trading fee).
ah, Constable, you seem to believe the stock market is based on rational economic investment, like the P/E ratio. but fact is most market "investors" are in fact really "speculators" who operate mainly on the Greater Fool theory (i just hope someone will pay more than i did), and volume trading is more and more driven by robot programs designed to react to the short term speculative patterns they generate.
so we have stocks with ridiculous P/E ratios, like notably Amazon, that are deemed "good investments" by analysts anyway based on nothing but bullshit "future growth" anticipation - i.e., wishful thinking - because there are enough Greater Fools to prop it up. but Apple stock, with a solid genuine long term investment-grade P/E ratio based on actual current performance, doesn't move up dramatically because that is not the "investment criteria" these "investors" - speculators - care about. they only care about how its price will move very short term - it's always just "in play" for them.
so we will now see the usual speculative pattern: Apple stock will rise 10-20% in the next two weeks leading up to the 23rd earnings report. then, if it is anything less than sensational (therefore "disappointing") it will drop about 5% the week afterward.
folks, the stock market is bullshit. people call themselves "investors," but most are not. they are short term speculators trying to game the set up. don't be another Greater Fool.
Worse prices and higher commissions? I think you should really think about what you are saying or maybe you should stay away from trading stocks.
Most brokers charge higher fees for partial lot transactions... say $20 instead of $12-15. On prices, a partial lot "market" order will have a significant premium ($0.10 minimum per share, but I have seen as much as $0.50), and non-market orders have a hard chance executing.
None of this is a big deal if you are deciding to buy one share and hold it for a decade, but if you are looking to make a 15% profit on your $1,150 investment in two shares of AAPL, you are going to need the stock to go up 19%. If you invest like the market as a whole, only half your transactions are going to be profitable, so you really need to see an even higher return.
Not a problem for me, and I openly admit to profiting from the current situation. But, back when I bought my first shares of AAPL, the fact that it split when it hit $100 made it easier to invest a thousand dollars here or there.
People for whom commissions are material should probably find a discount broker like Scottrade, who charges $7 per trade.
There is no higher fee for partial lots. Years ago, when prices were quoted in fractions rather than decimals, there was a 1/8 of a dollar premium.
Nobody should ever place a market order. When you do, you are inviting the market maker to overcharge you. Place limit orders. They will either get executed at the price you want (or better) or nothing will happen.
Maybe a stock split would help. Some of those stocks you referenced though are grossly over priced. Think about it MS has delivered one blunder after another and is seeing significant slide in sales. I can even argue that Apple is overpriced, especially going into 2013 when cash will become scarce with all the new taxes about to be implemented. 2013 will be a rough year for most businesses as people adjust to far lower wages and try to digest what will be proper and wise investment decisions for the coming years.
So you have the unknown of the economy in 2013 but you also have a massive exposure when investing in Apple. Their product line is stagnate and extremely narrow. At least now they have two different iPhones on the market, but they still are exposed to the risk of debuting a device that isn't well received. The same thing applies to the IPods, Macs and tablets, the lack of diversification in these line ups can lead to extremely bad performance from one quarter to the next if something goes wrong with a product. We will likely see some evidence of this with the iMac release fiasco and Apples inability to ship enough iPhones to meet demand. Currently the only place Apple has a reasonably diversified hardware line is with the Mac Books. So to put it simply Apple is a high risk investment, one screw up, a little trip here or there can significantly impact earnings.
I know I've gotten shot down for this before but Apple really needs to pull head from behind with respect to the product line up, to diversify and address stagnation. They also need to address their pricing structure that still to this day drives more customers away than it attracts. IPod has done some good in addressing the perception that Apples products are for the elite and wealthy but they have turned that good will around with high priced iPhones. This is a third issue that stands on its own, Apples appearance in the publics eye is still one of a seller of high priced items that don't really deserve that price tag. You can argue about that all you want but Apples pricing approach in the last few years has done more harm than good. This is especially the case after the company has recovered from their darker times and have actually become extremely successful. If your customers start to think they are being taken advantage of then loyalty and good will with your customer base goes out the window. Take one good long look at iPad pricing and explain why simple flash upgrades cost so much on these machines, such schemes will lead to customers easily pulled away by competing products.
Now these are just three points, there are probably more but to put it simply Apple is a risky investment. It is an investment that attracts the wrong sorts of investors thus leading to volatility and manipulation. It is not a place to go if you are a conservative investor. Finally P/E isn't everything in an investment. Most people would consider MS to be a terrible investment right now yet as you point out its P/E is higher. So in a nut shell Apples P/E is so low because for many investors it is a terrible playground to be playing in. Basically Apple is a house of cards that can come tumbling down when any one card has a bit of trouble. Combine that with this question; what is Apples underlying value?
Can anyone explain why Apple's current P/E is so damn low compared to its historical levels? Why should it be lower than Microsoft's and even Cisco's? It's been dropping for years. Isn't there anything Apple can do to reverse that trend. I've owned Apple for years and even despite the introduction of the iPhone and iPad, Apple's P/E keeps getting lower and lower. The more products Apple sells, the lower the P/E gets. What makes it so different from other companies in this respect? I could understand if Apple's sales have stagnated, but they haven't. The P/E should have at least leveled out at some point.
I'm not sure how buying 10 shares at $540 makes anyone feel any better than buying 1 share at $540.
If someone can't afford to buy one share then they shouldn't even be considering buying stocks.
jmho
No one is going to buy Apple at one share at a time. At least not anybody with a plan for investing in their future. Frankly high share prices means your stock ends up being primarily owned by people that you really don't want owning your stock. That is the people who speculate and have short term goals. When your companies management is driven by investors with short term goals that only care about the next quarter, you have problems. This seems to be a huge problem for Apple right now.
Their product line is stagnate and extremely narrow. At least now they have two different iPhones on the market, but they still are exposed to the risk of debuting a device that isn't well received. The same thing applies to the IPods, Macs and tablets, the lack of diversification in these line ups can lead to extremely bad performance from one quarter to the next if something goes wrong with a product. We will likely see some evidence of this with the iMac release fiasco and Apples inability to ship enough iPhones to meet demand. Currently the only place Apple has a reasonably diversified hardware line is with the Mac Books. So to put it simply Apple is a high risk investment, one screw up, a little trip here or there can significantly impact earnings.
They also need to address their pricing structure that still to this day drives more customers away than it attracts. IPod has done some good in addressing the perception that Apples products are for the elite and wealthy but they have turned that good will around with high priced iPhones. This is a third issue that stands on its own, Apples appearance in the publics eye is still one of a seller of high priced items that don't really deserve that price tag. You can argue about that all you want but Apples pricing approach in the last few years has done more harm than good.
Take one good long look at iPad pricing and explain why simple flash upgrades cost so much on these machines, such schemes will lead to customers easily pulled away by competing products.
It is an investment that attracts the wrong sorts of investors thus leading to volatility and manipulation. It is not a place to go if you are a conservative investor. Finally P/E isn't everything in an investment. Most people would consider MS to be a terrible investment right now yet as you point out its P/E is higher. So in a nut shell Apples P/E is so low because for many investors it is a terrible playground to be playing in. Basically Apple is a house of cards that can come tumbling down when any one card has a bit of trouble. Combine that with this question; what is Apples underlying value?
Each of your points have some merit, but definitely not as apocalyptic as you're described. Damn...any company public or private has similar risks (including banks). Case in point, give me an example of any other company that has addressed all your 3 points to your satisfaction. And what's their stock performance over the last 3 years?
Seriously, you need to tone it down, or risk losing credibility.
I'm very aware of Apple's volatility...but I'm convinced that is has nothing to do with your 3 points.
What if someone has $800 to invest? 1 share at $540 or 14 at $54. Or if they have an investment plan where they invest $400 per month. Or any other scenario. Not to mention that even if they have $2700 to invest. For some people, buying only 5 shares of something seems strange.
It is a significant problem and certainly keeps many investors away from Apple.
I agree that it's not that big a deal, but it certainly keeps some small investors out.
Actually it is a big deal! Why; because it skews your investor profile. Let's put it this way, not all large scale investors have a companies best interests at heart. If your owners end up being primarily those that have short term interests they can force you into very very bad business decisions. I've personally have seen this happen at a company I work for, if all your investors are concerned about is short term quarter to quarter results it can dramatically impact the management team. There are a lot of ugly people working on Wall Street that are there only to line their own pockets as quickly as possible. The last thing you want is for the majority of your stock holders to be these people, because without long term planning a company can not succeed.
And given the way the institutions are beating the stock around, having a larger share of small investors would probably not be a bad thing.
Exactly! Though here institutional investors may not be a bad thing, it depends upon the institution. I don't want to paint a picture here where every investor is evil. This isn't the case, however you don't want the majority of your investors being the evil ones.
The problem with this is that just about everybodies retirement is based on the stock market.
As to the greater fool theory, there may be an aspect to that. I do believe that there is a rational element to the stock market that takes ownership in a company seriously. That is as an owner you expect to share in the profits of a company and invest accordingly.
Speculation is a reality though and as I've stated before the last thing a public company needs is for to much of the stock to end up in the hands of speculators. In a nut shell it is really beginning to look like Apple has this problem as there is too much volatility and obvious manipulation going on. This comes back to the issue that high stock prices generate, which can lead to far to much stock being held by the wrong sorts of investors.
In any event this so called greater fool theory is really an explanation for simpletons. Many people have invested in Apple because they believe in their products and services offered up. That is they saw potential and wanted to own a piece of a company they believed had a future. That really has nothing to do with this greater fool theory and frankly such a theory is an insult to any investor that tries to build a respectable portfolio.
ah, Constable, you seem to believe the stock market is based on rational economic investment, like the P/E ratio. but fact is most market "investors" are in fact really "speculators" who operate mainly on the Greater Fool theory (i just hope someone will pay more than i did), and volume trading is more and more driven by robot programs designed to react to the short term speculative patterns they generate.
so we have stocks with ridiculous P/E ratios, like notably Amazon, that are deemed "good investments" by analysts anyway based on nothing but bullshit "future growth" anticipation - i.e., wishful thinking - because there are enough Greater Fools to prop it up. but Apple stock, with a solid genuine long term investment-grade P/E ratio based on actual current performance, doesn't move up dramatically because that is not the "investment criteria" these "investors" - speculators - care about. they only care about how its price will move very short term - it's always just "in play" for them.
so we will now see the usual speculative pattern: Apple stock will rise 10-20% in the next two weeks leading up to the 23rd earnings report. then, if it is anything less than sensational (therefore "disappointing") it will drop about 5% the week afterward.
folks, the stock market is bullshit. people call themselves "investors," but most are not. they are short term speculators trying to game the set up. don't be another Greater Fool.
This article will explain why Apple is being Hammered, It is purely based on the numbers forget the fact that Apple is putting more money in the bank than any other company. They just to do like the fact Apple's margin are dropping, If you compare Apples number to any number of company they are doing far better, but they are not number in market share on phone or PC, Table yes, but there is concern they may not hold up either. Wall Street type only look at Market Share and margin, they will forgive your low margins as long as you are selling more than anyone else. They can no understand company who sell less for higher price unless they have the highest Margin on the block of any of their competitors. So the investment community figure it was time to make Money on shorting Apple and driving it price down, so they made money on the way up and the way down.
Can anyone explain why Apple's current P/E is so damn low compared to its historical levels? Why should it be lower than Microsoft's and even Cisco's? It's been dropping for years. Isn't there anything Apple can do to reverse that trend. I've owned Apple for years and even despite the introduction of the iPhone and iPad, Apple's P/E keeps getting lower and lower. The more products Apple sells, the lower the P/E gets. What makes it so different from other companies in this respect? I could understand if Apple's sales have stagnated, but they haven't. The P/E should have at least leveled out at some point.
I would agree that Apple is owned wholly by the short term mind sets, however, unlike many company who are in the same situation Apple tend not to listen to Wall Street about how to run their business. I too worked for companies who got jerked around by Wall Street telling them they did not like the various ratios and such so each quarter the company had a new plan to fix the ratio. They spent more time fixing ratios than selling products to their customer and it kill the business. I am afraid that if Cook begin doing things to fix the ratios Apple will die a slow death again. He will be the new Scully after Jobs.
I am not sure why people keep thinking spitting the stock will help, it will not, it just devalues the company every time it splits. It just dilutes every share and make it that much harder for each share to increase. Honestly, unless you bought into Apple when it was below $100 it not worth getting in now. You know a stock that is $10 today in a company who is doing well will double to $20 faster than a stock in a similar company at $100 going to $200. Instead of buying more shares of Apple at $550 why not by a stock at $10 you get more and have a better chance of that stock doubling than Apple hitting $1000.
Quote:
Originally Posted by wizard69
No one is going to buy Apple at one share at a time. At least not anybody with a plan for investing in their future. Frankly high share prices means your stock ends up being primarily owned by people that you really don't want owning your stock. That is the people who speculate and have short term goals. When your companies management is driven by investors with short term goals that only care about the next quarter, you have problems. This seems to be a huge problem for Apple right now.
No one is going to buy Apple at one share at a time. At least not anybody with a plan for investing in their future. Frankly high share prices means your stock ends up being primarily owned by people that you really don't want owning your stock. That is the people who speculate and have short term goals. When your companies management is driven by investors with short term goals that only care about the next quarter, you have problems. This seems to be a huge problem for Apple right now.
Comments
Originally Posted by silverpraxis
I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.
Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.
Perhaps I sound a bit more negative than I actually mean to but every word is true.
Since this is the polar opposite of what I was told last night (and told I was a complete idiot for agreeing with), I'm going to have to assume that there isn't a single person on Earth with the faintest idea how the stock market works, and we have placed our entire civilization in the hands of an automated system that isn't smart enough to double check the addition of an extra zero to a number.
Quote:
Originally Posted by jragosta
What if someone has $800 to invest? 1 share at $540 or 14 at $54. Or if they have an investment plan where they invest $400 per month. Or any other scenario. Not to mention that even if they have $2700 to invest. For some people, buying only 5 shares of something seems strange.
I agree that it's not that big a deal, but it certainly keeps some small investors out. And given the way the institutions are beating the stock around, having a larger share of small investors would probably not be a bad thing.
Okay... so Apple does a 10 to 1 split and you have $400 a month to spend... how does buying 7 shares make a person feel if buying 5 shares makes them feel strange.
The situation won't change much for that many people unless Apple does a 25 to 1 split.
I know what you are saying but, I'm sorry, I think that anyone who doesn't feel that good about buying 1 to 5 shares at $540 each might want to think about investing in mutual funds.
Because I was talking about $400 a month. So they'd be buying 7 shares a month - which for most people would be a reasonable investment. People do understand time payments and time purchases. In a year, they'd have 90 shares. At $540 per share, they'd have 9.
Quote:
Originally Posted by silverpraxis
I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.
Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.
Perhaps I sound a bit more negative than I actually mean to but every word is true.
+1
I took a corporate finance class a while back, and the fella running it said more or less the same thing.
Quote:
Originally Posted by Tallest Skil
Originally Posted by silverpraxis
I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.
Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.
Perhaps I sound a bit more negative than I actually mean to but every word is true.
Since this is the polar opposite of what I was told last night (and told I was a complete idiot for agreeing with), I'm going to have to assume that there isn't a single person on Earth with the faintest idea how the stock market works, and we have placed our entire civilization in the hands of an automated system that isn't smart enough to double check the addition of an extra zero to a number.
Sadly so. And once something becomes entrenched in our civilization, it's near impossible to replace/remove it.
Apple, however doesn't need to raise capital through the sale of stock, therefore, these types of shorting strategies do very little to shape how Apple goes about its business. They have over $120bn in cash. They netted over 13bn in quarterly profit for Q1 2012, an increase over the 6bn for the prior year's quarter. Will they more than double y-o-y again? Probably not; but on January 23rd, they'll likely report net profit of over $20bn for Q1 2013.
Cash is king. The cash, not the market cap, allows Apple to focus so much on its own business plan and (largely) ignore Wall Street analysts and large institutional investors.
None of this is a big deal if you are deciding to buy one share and hold it for a decade, but if you are looking to make a 15% profit on your $1,150 investment in two shares of AAPL, you are going to need the stock to go up 19%. If you invest like the market as a whole, only half your transactions are going to be profitable, so you really need to see an even higher return.
Not a problem for me, and I openly admit to profiting from the current situation. But, back when I bought my first shares of AAPL, the fact that it split when it hit $100 made it easier to invest a thousand dollars here or there.
Quote:
Originally Posted by Tallest Skil
Since this is the polar opposite of what I was told last night (and told I was a complete idiot for agreeing with), I'm going to have to assume that there isn't a single person on Earth with the faintest idea how the stock market works, and we have placed our entire civilization in the hands of an automated system that isn't smart enough to double check the addition of an extra zero to a number.
And more so, amateurs (like myself) trying to get an edge in a "professional" market only increases my risk. I'm more like a caveman... Apple make good stuff, Apple sell enough stuff, Apple good leadership, Apple good financial footing. Play large swings, not small ones...keep skin in the game at all times. Sell some when absurdly high and pray that it drops, then buy even more using gains from previous sell. I'll leave the professional moves for the professionals. I'm just a damn caveman.
Quote:
Originally Posted by aaarrrgggh
Not entirely true. The high share price favors bigger players, especially in terms of options. It might not impact the company's financials, but it does impact retail investing.
Yeah but retail is what about 7% ownership of AAPL? And the number of people who cant afford $550 a share is minuscule. In reality you are looking to gain a fraction of a percent in extra AAPL owners. So small it would not even register.
Plus, who the hell buys AAPL without leverage nowadays? Nobody I know. With leverage you only need to stump up (minimum of) 15% of the share value ($83 + $10 trading fee).
so we have stocks with ridiculous P/E ratios, like notably Amazon, that are deemed "good investments" by analysts anyway based on nothing but bullshit "future growth" anticipation - i.e., wishful thinking - because there are enough Greater Fools to prop it up. but Apple stock, with a solid genuine long term investment-grade P/E ratio based on actual current performance, doesn't move up dramatically because that is not the "investment criteria" these "investors" - speculators - care about. they only care about how its price will move very short term - it's always just "in play" for them.
so we will now see the usual speculative pattern: Apple stock will rise 10-20% in the next two weeks leading up to the 23rd earnings report. then, if it is anything less than sensational (therefore "disappointing") it will drop about 5% the week afterward.
folks, the stock market is bullshit. people call themselves "investors," but most are not. they are short term speculators trying to game the set up. don't be another Greater Fool.
People for whom commissions are material should probably find a discount broker like Scottrade, who charges $7 per trade.
There is no higher fee for partial lots. Years ago, when prices were quoted in fractions rather than decimals, there was a 1/8 of a dollar premium.
Nobody should ever place a market order. When you do, you are inviting the market maker to overcharge you. Place limit orders. They will either get executed at the price you want (or better) or nothing will happen.
So you have the unknown of the economy in 2013 but you also have a massive exposure when investing in Apple. Their product line is stagnate and extremely narrow. At least now they have two different iPhones on the market, but they still are exposed to the risk of debuting a device that isn't well received. The same thing applies to the IPods, Macs and tablets, the lack of diversification in these line ups can lead to extremely bad performance from one quarter to the next if something goes wrong with a product. We will likely see some evidence of this with the iMac release fiasco and Apples inability to ship enough iPhones to meet demand. Currently the only place Apple has a reasonably diversified hardware line is with the Mac Books. So to put it simply Apple is a high risk investment, one screw up, a little trip here or there can significantly impact earnings.
I know I've gotten shot down for this before but Apple really needs to pull head from behind with respect to the product line up, to diversify and address stagnation. They also need to address their pricing structure that still to this day drives more customers away than it attracts. IPod has done some good in addressing the perception that Apples products are for the elite and wealthy but they have turned that good will around with high priced iPhones. This is a third issue that stands on its own, Apples appearance in the publics eye is still one of a seller of high priced items that don't really deserve that price tag. You can argue about that all you want but Apples pricing approach in the last few years has done more harm than good. This is especially the case after the company has recovered from their darker times and have actually become extremely successful. If your customers start to think they are being taken advantage of then loyalty and good will with your customer base goes out the window. Take one good long look at iPad pricing and explain why simple flash upgrades cost so much on these machines, such schemes will lead to customers easily pulled away by competing products.
Now these are just three points, there are probably more but to put it simply Apple is a risky investment. It is an investment that attracts the wrong sorts of investors thus leading to volatility and manipulation. It is not a place to go if you are a conservative investor. Finally P/E isn't everything in an investment. Most people would consider MS to be a terrible investment right now yet as you point out its P/E is higher. So in a nut shell Apples P/E is so low because for many investors it is a terrible playground to be playing in. Basically Apple is a house of cards that can come tumbling down when any one card has a bit of trouble. Combine that with this question; what is Apples underlying value?
No one is going to buy Apple at one share at a time. At least not anybody with a plan for investing in their future. Frankly high share prices means your stock ends up being primarily owned by people that you really don't want owning your stock. That is the people who speculate and have short term goals. When your companies management is driven by investors with short term goals that only care about the next quarter, you have problems. This seems to be a huge problem for Apple right now.
Quote:
Originally Posted by wizard69
Their product line is stagnate and extremely narrow. At least now they have two different iPhones on the market, but they still are exposed to the risk of debuting a device that isn't well received. The same thing applies to the IPods, Macs and tablets, the lack of diversification in these line ups can lead to extremely bad performance from one quarter to the next if something goes wrong with a product. We will likely see some evidence of this with the iMac release fiasco and Apples inability to ship enough iPhones to meet demand. Currently the only place Apple has a reasonably diversified hardware line is with the Mac Books. So to put it simply Apple is a high risk investment, one screw up, a little trip here or there can significantly impact earnings.
They also need to address their pricing structure that still to this day drives more customers away than it attracts. IPod has done some good in addressing the perception that Apples products are for the elite and wealthy but they have turned that good will around with high priced iPhones. This is a third issue that stands on its own, Apples appearance in the publics eye is still one of a seller of high priced items that don't really deserve that price tag. You can argue about that all you want but Apples pricing approach in the last few years has done more harm than good.
Take one good long look at iPad pricing and explain why simple flash upgrades cost so much on these machines, such schemes will lead to customers easily pulled away by competing products.
It is an investment that attracts the wrong sorts of investors thus leading to volatility and manipulation. It is not a place to go if you are a conservative investor. Finally P/E isn't everything in an investment. Most people would consider MS to be a terrible investment right now yet as you point out its P/E is higher. So in a nut shell Apples P/E is so low because for many investors it is a terrible playground to be playing in. Basically Apple is a house of cards that can come tumbling down when any one card has a bit of trouble. Combine that with this question; what is Apples underlying value?
Each of your points have some merit, but definitely not as apocalyptic as you're described. Damn...any company public or private has similar risks (including banks). Case in point, give me an example of any other company that has addressed all your 3 points to your satisfaction. And what's their stock performance over the last 3 years?
Seriously, you need to tone it down, or risk losing credibility.
I'm very aware of Apple's volatility...but I'm convinced that is has nothing to do with your 3 points.
Exactly! Though here institutional investors may not be a bad thing, it depends upon the institution. I don't want to paint a picture here where every investor is evil. This isn't the case, however you don't want the majority of your investors being the evil ones.
As to the greater fool theory, there may be an aspect to that. I do believe that there is a rational element to the stock market that takes ownership in a company seriously. That is as an owner you expect to share in the profits of a company and invest accordingly.
Speculation is a reality though and as I've stated before the last thing a public company needs is for to much of the stock to end up in the hands of speculators. In a nut shell it is really beginning to look like Apple has this problem as there is too much volatility and obvious manipulation going on. This comes back to the issue that high stock prices generate, which can lead to far to much stock being held by the wrong sorts of investors.
In any event this so called greater fool theory is really an explanation for simpletons. Many people have invested in Apple because they believe in their products and services offered up. That is they saw potential and wanted to own a piece of a company they believed had a future. That really has nothing to do with this greater fool theory and frankly such a theory is an insult to any investor that tries to build a respectable portfolio.
This article will explain why Apple is being Hammered, It is purely based on the numbers forget the fact that Apple is putting more money in the bank than any other company. They just to do like the fact Apple's margin are dropping, If you compare Apples number to any number of company they are doing far better, but they are not number in market share on phone or PC, Table yes, but there is concern they may not hold up either. Wall Street type only look at Market Share and margin, they will forgive your low margins as long as you are selling more than anyone else. They can no understand company who sell less for higher price unless they have the highest Margin on the block of any of their competitors. So the investment community figure it was time to make Money on shorting Apple and driving it price down, so they made money on the way up and the way down.
http://seekingalpha.com/article/1070841-apple-gross-margin-conundrum-explained?source=yahoo
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Originally Posted by Constable Odo
Can anyone explain why Apple's current P/E is so damn low compared to its historical levels? Why should it be lower than Microsoft's and even Cisco's? It's been dropping for years. Isn't there anything Apple can do to reverse that trend. I've owned Apple for years and even despite the introduction of the iPhone and iPad, Apple's P/E keeps getting lower and lower. The more products Apple sells, the lower the P/E gets. What makes it so different from other companies in this respect? I could understand if Apple's sales have stagnated, but they haven't. The P/E should have at least leveled out at some point.
I would agree that Apple is owned wholly by the short term mind sets, however, unlike many company who are in the same situation Apple tend not to listen to Wall Street about how to run their business. I too worked for companies who got jerked around by Wall Street telling them they did not like the various ratios and such so each quarter the company had a new plan to fix the ratio. They spent more time fixing ratios than selling products to their customer and it kill the business. I am afraid that if Cook begin doing things to fix the ratios Apple will die a slow death again. He will be the new Scully after Jobs.
I am not sure why people keep thinking spitting the stock will help, it will not, it just devalues the company every time it splits. It just dilutes every share and make it that much harder for each share to increase. Honestly, unless you bought into Apple when it was below $100 it not worth getting in now. You know a stock that is $10 today in a company who is doing well will double to $20 faster than a stock in a similar company at $100 going to $200. Instead of buying more shares of Apple at $550 why not by a stock at $10 you get more and have a better chance of that stock doubling than Apple hitting $1000.
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Originally Posted by wizard69
No one is going to buy Apple at one share at a time. At least not anybody with a plan for investing in their future. Frankly high share prices means your stock ends up being primarily owned by people that you really don't want owning your stock. That is the people who speculate and have short term goals. When your companies management is driven by investors with short term goals that only care about the next quarter, you have problems. This seems to be a huge problem for Apple right now.
Quote:
Originally Posted by wizard69
No one is going to buy Apple at one share at a time. At least not anybody with a plan for investing in their future. Frankly high share prices means your stock ends up being primarily owned by people that you really don't want owning your stock. That is the people who speculate and have short term goals. When your companies management is driven by investors with short term goals that only care about the next quarter, you have problems. This seems to be a huge problem for Apple right now.
Huh?