Wrong. Apple is in an unusual position. It's stock is extremely undervalued and it has a ton of cash, with more being generated by the minute. Buying back its own stock is tantamount to investing in itself. The result is to decrease the share count, which increases the potential dividend return of the remaining shares.
Very, very few companies are ever in a position to pull this off.
Edit: There is also the tax issue. When Apple cuts a dividend check, taxes become applicable on the dividend. When it buys back its own shares, there is no tax.
You may wish to reread his post a couple of more times to try and understand it. Especially the "theoretically" and "supply and demand" parts.
As an aside, and just so that you are 'theoretically' consistent, I assume you were a fan of iCahn's arrogant assault on Apple, where he went after Apple to not only use up all its cash, but even borrow money, to fund its buybacks?
(Buybacks are obviously more tax-efficient, but taxes are irrelevant to this discussion).
Yup. But sell Monday, and buy back cheap on Wednesday.
I've been long since 2004, but still haven't had the balls though.
Jason, I also don't have the stones to sell on Monday.
I'll just let it ride....
I'm not selling. Institutional investment has been on the rise. I'm hopeful we will see a lite more stability than we did in the past. If it drops I will just add to my position. Dividend reinvestment on the AAPL in my 401k has been freaking awesome, let alone the stocks raw performance.
I just made my first investment in the stock market about three weeks ago. (My only other experience was with mutual funds for my retirement account).
I used as much of our savings (as my wife would let me) to buy APPL stock (and nothing else). It's gained me 7.18% in those three weeks. That's awesome...what I expected!
I want to stick it out long term but I get the feeling that I should sell near the event and buy back later. It's hard to know what to do because I want to simultaneously cash in on the gains but I don't want to give up on the huge long term potential that I think is possible in Apple's upcoming products.
It's interesting how different people's opinions on Apple's future can be. I think they are very unique. I love their products.
I just made my first investment in the stock market about three weeks ago. (My only other experience was with mutual funds for my retirement account).
I used as much of our savings (as my wife would let me) to buy APPL stock (and nothing else). It's gained me 7.18% in those three weeks. That's awesome...what I expected!
I want to stick it out long term but I get the feeling that I should sell near the event and buy back later. It's hard to know what to do because I want to simultaneously cash in on the gains but I don't want to give up on the huge long term potential that I think is possible in Apple's upcoming products.
It's interesting how different people's opinions on Apple's future can be. I think they are very unique. I love their products.
It is far from my place to try and give you any investment advice whatsoever, but you should perhaps think about the tax and transaction cost implications of getting in and out (and hoping to get back in) so quickly.
It is far from my place to try and give you any investment advice whatsoever, but you should perhaps think about the tax and transaction cost implications of getting in and out (and hoping to get back in) so quickly.
It is far from my place to try and give you any investment advice whatsoever, but you should perhaps think about the tax and transaction cost implications of getting in and out (and hoping to get back in) so quickly.
There are obviously tax implications for a stock held short term vs longer than a year, but I don't think that the transaction cost is anything to worry about. The fee is pretty cheap at most discount brokers. I pay only $7 per trade on Scottrade, and even if you trade many times per day, that's peanuts.
Unless somebody's portfolio consists of only 10 shares of Apple, then the transaction fee is not really a big deal when making trades.
You may wish to reread his post a couple of more times to try and understand it. Especially the "theoretically" and "supply and demand" parts.
As an aside, and just so that you are 'theoretically' consistent, I assume you were a fan of iCahn's arrogant assault on Apple, where he went after Apple to not only use up all its cash, but even borrow money, to fund its buybacks?
(Buybacks are obviously more tax-efficient, but taxes are irrelevant to this discussion).
Nothing wrong with borrowing money to fund a buyback. Apple pays a little over 2% per share in the form of a dividend. If it cost Apple 3% in interest to borrow the money, then the actual cost is about 1% to borrow the money for the buyback. But all 3% of the interest is tax deductible. I can see Apple making money on their buyback, even if AAPL don't go above the buyback price. Better than using money they have overseas. There, they would have to pay the 35% corporate tax (minus any foreign tax already paid) if they use it to buyback shares of AAPL.
Every time I have tried to predict the market with aapl I get it wrong. Once I sold my stock at 30 expecting the usual drop after earnings release. Apples earnings beat the market and finally convinced them that the iPod was the real thing. The stock jumped up and did dip for over 6 months. I finally bought back in at 70. I'm still up nearly 11 fold but would nave been 25 fold up if I hadn't of sold.
Hehe ... wish I had bought all then, I added much more later.
By the way, my gut still tells me iWatch is a name for a technology not one product. The 'watch' part being a verb not a noun. I just don't see Apple spending all this time and effort on one bracelet gizmo. I suspect iWatch is a massive end to end technology with SDKs coming soon that will fulfill a dream of Steve's. I also suspect in ten years this will be the largest revenue earning part of Apple's vast and expanding portfolio of products.
my gut still tells me iWatch is a name for a technology not one product. The 'watch' part being a verb not a noun. I just don't see Apple spending all this time and effort on one bracelet gizmo. I suspect iWatch is a massive end to end technology with SDKs coming soon that will fulfill a dream of Steve's. I also suspect in ten years this will be the largest revenue earning part of Apple's vast and expanding portfolio of products.
They've made trademark applications so there's at least some assurance they are going to use that term:
Watch as in observe rather than wristwatch is an interesting idea but I don't think the word would be the best choice to cover a technology meant to encompass all sorts of wearables. That SDK would more likely be Healthkit.
Between the sapphire, Jony Ive's mention of new materials, Tim's mention of a new category and the wrist being interesting and Samsung making a watch out of nowhere (they are parts suppliers for Apple), the patents on wrist wearables, there's quite a lot of evidence pointing to them just making a watch.
I don't think it will take over the iPhone in terms of profitability.
Wrong. Apple is in an unusual position. It's stock is extremely undervalued and it has a ton of cash, with more being generated by the minute. Buying back its own stock is tantamount to investing in itself. The result is to decrease the share count, which increases the potential dividend return of the remaining shares.
Very, very few companies are ever in a position to pull this off.
Edit: There is also the tax issue. When Apple cuts a dividend check, taxes become applicable on the dividend. When it buys back its own shares, there is no tax.
Echoing SpamSandwich here - nice to see ya here at AI!
A welcome balance to the Pro-Trolls* and their fetish for Provocation-Posts in recent months.
Regardless of the Swatch objections, Apple was granted the TM... maybe because it doesn't infringe on Swatch's territory?
Watch as in observe rather than wristwatch is an interesting idea but I don't think the word would be the best choice to cover a technology meant to encompass all sorts of wearables. That SDK would more likely be Healthkit.
If HealthKit is the only thing "iWatch" is. How do you wrap CarPlay, HomeKit, PayKit, HealthKit, TouchID into ONE category? What would you name that?
Between the sapphire, Jony Ive's mention of new materials,
Could be any material to create the iWatch "chip sets"... or to attach to other wearable items and accessories.
Tim's mention of a new category and the wrist being interesting
Yup... new category... and "wrist being interesting" in the same southern tone as, "well that's nice". Could it be sarcasm?
and Samsung making a watch out of nowhere (they are parts suppliers for Apple),
See Relic's post from a couple of days ago. Samsung has been making watches for ages. The return to "let's make it smart" idea actually may have come from Google meetings or seeing Pebble and saying, "we can do that"... for all we know.
the patents on wrist wearables,
Most surely the device that Apple makes... but it will be a drop in the bucket and certainly not be the device that takes over iPhones or iPads. The enabling chip set though is a whole 'nother ball game.
there's quite a lot of evidence pointing to them just making a watch.
And there's a whole lot of evidence from their recent hires that there doing something with fashion in mind. I don't think it's just for new iOS covers to be honest.
I don't think it will take over the iPhone in terms of profitability.
The "thing" or iWatch you and a number of others are envisioning? I don't either. It's possibly just an enabler device to show what the potential of iWatch really is worth as an eco-system. The money and profits will still come from iOS devices and Macs, because the eco-sytem will be exclusive to Apple. and you'll need something, like an App Center" to control the iWatch sensors.
I wrote earlier today a reply post to digitalclips if you care to take a look. I have some wild ideas, I know... but I bet some of them are on the mark. I would like to see what you think about the points I made. Curiousity
I'm in with digitalclips' main idea: this isn't only about a silly watch or modern smart-timepiece. Apple thinks too big for such a trinket to be worth their while, and have too many brainiacs to let something like that even get traction within the company. For the exact same reasons as many have rightly criticized here and across the web, and why "the other guys" are failing so badly with their initiatives.
Google actually comes closest to what this "new game in town" is all about with Android Wear. Flawed execution doesn't make taking a closer look at what they're aiming at a bit eye-opening.
Nothing wrong with borrowing money to fund a buyback. Apple pays a little over 2% per share in the form of a dividend. If it cost Apple 3% in interest to borrow the money, then the actual cost is about 1% to borrow the money for the buyback. But all 3% of the interest is tax deductible. I can see Apple making money on their buyback, even if AAPL don't go above the buyback price. Better than using money they have overseas. There, they would have to pay the 35% corporate tax (minus any foreign tax already paid) if they use it to buyback shares of AAPL.
Nothing wrong at all with financing a repurchase with a reasonable amount of debt (as, indeed, Apple has done). My question was different: whether that would mean, taken to the extreme, that iCahn's aggressive $150B repurchase proposal -- which Apple rejected -- made sense (to the person to whom I was asking the question).
My larger point, in the original reply to SS's post -- about which some people (not SS!) seemed to get super thin-skinned -- was really that such financial decisions area a matter of balance. And that there are pros and cons to the company wandering off too much in one direction or the other.
There are obviously tax implications for a stock held short term vs longer than a year, but I don't think that the transaction cost is anything to worry about. The fee is pretty cheap at most discount brokers. I pay only $7 per trade on Scottrade, and even if you trade many times per day, that's peanuts.
Unless somebody's portfolio consists of only 10 shares of Apple, then the transaction fee is not really a big deal when making trades.
He did not say how many he bought. If he's going to be buying, then selling, and then buying again every few weeks, the transaction costs will pile up, and the returns will be lower. Not as much as with having to pay taxes.
you guys sure like using "frenzy" and "fever pitch". got anything to back up your claims? simply seeing apple mentioned in the news - as it is every day over and over -
The stock price has gone up considerably recently, not based on immediate financials, but based on speculation that Apple will have even more astronomical sales at some point in the future. Even so 'frenzy' is probably a strong word for the buying currently going on. The challenge, as always, is going to be for Apple's actual performance to match valuation based on future expectations.
If you've been paying attention the last few years, apple stock has not taken a precipitous dive after a major announcement. I don't expect it to this year, either.
I'm up 40% on my last purchase. It's freakin' awesome!
I guess you were asleep in January and June 2013, I bought before each Quarterly announcement thinking good numbers would mean good returns, but NO Wall Street decided to beat them up. It wasn't until September 2013 that they started to show positive.
I'm also long, my initial $13 shares (current cost basis $0.46) makes my portfolio very over weight, but I still bought several hundred more shares 8/8 and it's already up over 8%. Where will it be by the 9th??
Yes there are tax consequences selling short term in a regular brokerage account but I'm building a retirement IRA account so taxes on dividends and short term capital gains do not come into the picture. So working on a decent retirement pension based on dividends also been slowly rolling over Traditional to Roth so withdrawals are tax free.
Where are all the Android trolls from last year predicting Apple is sliding into the toilet?
Oh they’re still out there. Most of ‘em got blocked here on AI so they don’t think it’s worth it anymore, but c|net, MacRumors, MarketWatch, etc. are infested with them. “Only stupid people buy Apple products” is still the mantra but they have changed their doomsday meme from “tomorrow” to “any day now.” The more AAPL gains the stupider people get seems to be their mindset these days.
Oh they’re still out there. Most of ‘em got blocked here on AI so they don’t think it’s worth it anymore, but c|net, MacRumors, MarketWatch, etc. are infested with them. “Only stupid people buy Apple products” is still the mantra ....
LOL. Spot on. A lot of them have also migrated to the tech sections of NYT and WSJ. The latter is particularly infested.
I just made my first investment in the stock market about three weeks ago. (My only other experience was with mutual funds for my retirement account).
I used as much of our savings (as my wife would let me) to buy APPL stock (and nothing else). It's gained me 7.18% in those three weeks. That's awesome...what I expected!
I want to stick it out long term but I get the feeling that I should sell near the event and buy back later. It's hard to know what to do because I want to simultaneously cash in on the gains but I don't want to give up on the huge long term potential that I think is possible in Apple's upcoming products.
It's interesting how different people's opinions on Apple's future can be. I think they are very unique. I love their products.
If the shares are in your retirement account just sell what you borrowed, make the wife happy, and keep the 8-15% gain as an FREE AAPL nest egg and let it slowly appreciate with dividends. If it's like my case I borrowed from my IRA mutual funds (have 60 days to return amount with out charges) will make the short term gains w/o tax consequences repay the fund what was borrowed and invest gains in 4% + funds or equities or just leave it as a cash reserve for the next market pull back.
Comments
You may wish to reread his post a couple of more times to try and understand it. Especially the "theoretically" and "supply and demand" parts.
As an aside, and just so that you are 'theoretically' consistent, I assume you were a fan of iCahn's arrogant assault on Apple, where he went after Apple to not only use up all its cash, but even borrow money, to fund its buybacks?
(Buybacks are obviously more tax-efficient, but taxes are irrelevant to this discussion).
I'm not selling. Institutional investment has been on the rise. I'm hopeful we will see a lite more stability than we did in the past. If it drops I will just add to my position. Dividend reinvestment on the AAPL in my 401k has been freaking awesome, let alone the stocks raw performance.
I used as much of our savings (as my wife would let me) to buy APPL stock (and nothing else). It's gained me 7.18% in those three weeks. That's awesome...what I expected!
I want to stick it out long term but I get the feeling that I should sell near the event and buy back later. It's hard to know what to do because I want to simultaneously cash in on the gains but I don't want to give up on the huge long term potential that I think is possible in Apple's upcoming products.
It's interesting how different people's opinions on Apple's future can be. I think they are very unique. I love their products.
It is far from my place to try and give you any investment advice whatsoever, but you should perhaps think about the tax and transaction cost implications of getting in and out (and hoping to get back in) so quickly.
Absolutely right.
It is far from my place to try and give you any investment advice whatsoever, but you should perhaps think about the tax and transaction cost implications of getting in and out (and hoping to get back in) so quickly.
There are obviously tax implications for a stock held short term vs longer than a year, but I don't think that the transaction cost is anything to worry about. The fee is pretty cheap at most discount brokers. I pay only $7 per trade on Scottrade, and even if you trade many times per day, that's peanuts.
Unless somebody's portfolio consists of only 10 shares of Apple, then the transaction fee is not really a big deal when making trades.
You may wish to reread his post a couple of more times to try and understand it. Especially the "theoretically" and "supply and demand" parts.
As an aside, and just so that you are 'theoretically' consistent, I assume you were a fan of iCahn's arrogant assault on Apple, where he went after Apple to not only use up all its cash, but even borrow money, to fund its buybacks?
(Buybacks are obviously more tax-efficient, but taxes are irrelevant to this discussion).
Nothing wrong with borrowing money to fund a buyback. Apple pays a little over 2% per share in the form of a dividend. If it cost Apple 3% in interest to borrow the money, then the actual cost is about 1% to borrow the money for the buyback. But all 3% of the interest is tax deductible. I can see Apple making money on their buyback, even if AAPL don't go above the buyback price. Better than using money they have overseas. There, they would have to pay the 35% corporate tax (minus any foreign tax already paid) if they use it to buyback shares of AAPL.
It is not at all shabby. ????
Hehe ... wish I had bought all then, I added much more later.
By the way, my gut still tells me iWatch is a name for a technology not one product. The 'watch' part being a verb not a noun. I just don't see Apple spending all this time and effort on one bracelet gizmo. I suspect iWatch is a massive end to end technology with SDKs coming soon that will fulfill a dream of Steve's. I also suspect in ten years this will be the largest revenue earning part of Apple's vast and expanding portfolio of products.
They've made trademark applications so there's at least some assurance they are going to use that term:
http://www.telegraph.co.uk/technology/apple/10808222/Apple-iWatch-Swatch-objects-to-trademark.html
Watch as in observe rather than wristwatch is an interesting idea but I don't think the word would be the best choice to cover a technology meant to encompass all sorts of wearables. That SDK would more likely be Healthkit.
Between the sapphire, Jony Ive's mention of new materials, Tim's mention of a new category and the wrist being interesting and Samsung making a watch out of nowhere (they are parts suppliers for Apple), the patents on wrist wearables, there's quite a lot of evidence pointing to them just making a watch.
I don't think it will take over the iPhone in terms of profitability.
Echoing SpamSandwich here - nice to see ya here at AI!
A welcome balance to the Pro-Trolls* and their fetish for Provocation-Posts in recent months.
* No need to name names... you know who you are.
Regardless of the Swatch objections, Apple was granted the TM... maybe because it doesn't infringe on Swatch's territory?
If HealthKit is the only thing "iWatch" is. How do you wrap CarPlay, HomeKit, PayKit, HealthKit, TouchID into ONE category? What would you name that?
Could be any material to create the iWatch "chip sets"... or to attach to other wearable items and accessories.
Yup... new category... and "wrist being interesting" in the same southern tone as, "well that's nice". Could it be sarcasm?
See Relic's post from a couple of days ago. Samsung has been making watches for ages. The return to "let's make it smart" idea actually may have come from Google meetings or seeing Pebble and saying, "we can do that"... for all we know.
Most surely the device that Apple makes... but it will be a drop in the bucket and certainly not be the device that takes over iPhones or iPads. The enabling chip set though is a whole 'nother ball game.
And there's a whole lot of evidence from their recent hires that there doing something with fashion in mind. I don't think it's just for new iOS covers to be honest.
The "thing" or iWatch you and a number of others are envisioning? I don't either. It's possibly just an enabler device to show what the potential of iWatch really is worth as an eco-system. The money and profits will still come from iOS devices and Macs, because the eco-sytem will be exclusive to Apple. and you'll need something, like an App Center" to control the iWatch sensors.
I wrote earlier today a reply post to digitalclips if you care to take a look. I have some wild ideas, I know... but I bet some of them are on the mark. I would like to see what you think about the points I made. Curiousity
I'm in with digitalclips' main idea: this isn't only about a silly watch or modern smart-timepiece. Apple thinks too big for such a trinket to be worth their while, and have too many brainiacs to let something like that even get traction within the company. For the exact same reasons as many have rightly criticized here and across the web, and why "the other guys" are failing so badly with their initiatives.
Google actually comes closest to what this "new game in town" is all about with Android Wear. Flawed execution doesn't make taking a closer look at what they're aiming at a bit eye-opening.
Nothing wrong at all with financing a repurchase with a reasonable amount of debt (as, indeed, Apple has done). My question was different: whether that would mean, taken to the extreme, that iCahn's aggressive $150B repurchase proposal -- which Apple rejected -- made sense (to the person to whom I was asking the question).
My larger point, in the original reply to SS's post -- about which some people (not SS!) seemed to get super thin-skinned -- was really that such financial decisions area a matter of balance. And that there are pros and cons to the company wandering off too much in one direction or the other.
(Add).
He did not say how many he bought. If he's going to be buying, then selling, and then buying again every few weeks, the transaction costs will pile up, and the returns will be lower. Not as much as with having to pay taxes.
you guys sure like using "frenzy" and "fever pitch". got anything to back up your claims? simply seeing apple mentioned in the news - as it is every day over and over -
The stock price has gone up considerably recently, not based on immediate financials, but based on speculation that Apple will have even more astronomical sales at some point in the future. Even so 'frenzy' is probably a strong word for the buying currently going on. The challenge, as always, is going to be for Apple's actual performance to match valuation based on future expectations.
I guess you were asleep in January and June 2013, I bought before each Quarterly announcement thinking good numbers would mean good returns, but NO Wall Street decided to beat them up. It wasn't until September 2013 that they started to show positive.
I'm also long, my initial $13 shares (current cost basis $0.46) makes my portfolio very over weight, but I still bought several hundred more shares 8/8 and it's already up over 8%. Where will it be by the 9th??
Yes there are tax consequences selling short term in a regular brokerage account but I'm building a retirement IRA account so taxes on dividends and short term capital gains do not come into the picture. So working on a decent retirement pension based on dividends also been slowly rolling over Traditional to Roth so withdrawals are tax free.
Where are all the Android trolls from last year predicting Apple is sliding into the toilet?
Oh they’re still out there. Most of ‘em got blocked here on AI so they don’t think it’s worth it anymore, but c|net, MacRumors, MarketWatch, etc. are infested with them. “Only stupid people buy Apple products” is still the mantra but they have changed their doomsday meme from “tomorrow” to “any day now.” The more AAPL gains the stupider people get seems to be their mindset these days.
LOL. Spot on. A lot of them have also migrated to the tech sections of NYT and WSJ. The latter is particularly infested.
If the shares are in your retirement account just sell what you borrowed, make the wife happy, and keep the 8-15% gain as an FREE AAPL nest egg and let it slowly appreciate with dividends. If it's like my case I borrowed from my IRA mutual funds (have 60 days to return amount with out charges) will make the short term gains w/o tax consequences repay the fund what was borrowed and invest gains in 4% + funds or equities or just leave it as a cash reserve for the next market pull back.