It's never a good idea to confuse luck with skill, but hey, it's your money...
(Add: Oh, I've got quite a bit in AAPL too -- got in early and held on -- but my portfolio is better diversified. Many other parts of the portfolio have done as well, if not better. But like I said, each to his own.)
As well if not better? Nothing has done as well in the very long term. If you're making 1mo-2yr trades it's possible in the short term. And if you're doing better than AAPL on average, you should become a professional trader because none of them do.
With Janet Yellen, and not a few others, making comments about the equity market being overvalued, I imagine Institutional investors are unlikely to be thinking it's a propitious time to be throwing a few more hundred billion into Apple.
With Janet Yellen, and not a few others, making comments about the equity market being overvalued, I imagine Institutional investors are unlikely to be thinking it's a propitious time to be throwing a few more hundred billion into Apple.
Beyond the core issue of the Fed being a dangerous institution for America, both Yellin and Bernanke are Keynesian disasters.
Most car dealers will not let you put a car (or even a deposit) on a credit card. They don't want to pay the fees. I've tried - thought I would get a free trip out of buying a car.
Poor wording on my part: what I really mean is "net income generated by Apple's non-financial (or operating) assets". I simply shortened it to "operating assets". My apologies.
Hope the meaning is clearer now.
Fair enough. This point goes straight to the heart of what Icahn is arguing, so I thought it was important to keep it straight.
How should non-operating assets (aka, cash) be valued by investors? My view is that cash is an abstraction to investors. They don't get any direct value from it, unless the company pays it out as dividends or uses it to buy back shares. Otherwise that cash might as well be on Mars.
Icahn is saying the cash can be viewed like a discount to the stock price, which is hardly surprising given his position on buybacks. In theory, if Apple used all of its current cash to buy back shares, the float would be reduced by around 20%. Accordingly EPS would grow by that much, and if PE remained constant, the share price would increase proportionally. Again this argument seems a bit abstract, since we know companies just don't do that sort of thing. Investors also don't generally discount a stock for cash assets any more than they mark it up for debt, since neither has a direct impact on the balance sheet (except for income from investments and debt service).
This isn't the end of his argument, though. He also argues that PE would be increased if the markets begin to value Apple as a growth story, which he feels they should be doing. Combining the two is where he gets to his ultimate valuation. Agree or not, at least he's articulated a detailed argument with assumptions we can examine and debate.
It's ultimately demand for shares that moves a stock higher. Regardless of how good a company is, it still needs more buyers for its shares than sellers to move a stock. So, the question is, where is that demand coming from? Most institutions and mutual funds have strict rules rules regarding how much of a stock they can hold as a percent of the total monies managed. Many of these have hit those limits.
Nothing wrong at all with the rich getting richer as long as the poor don't get poorer. Unless someone else's improvement in well-being makes you envious (even when your own has improved).
I'm ok with the poor getting poorer, as long as I am on the other side of the fence, and if I qualify as one of the rich. There has been too much grumbling from the poor recently and I am not a fan of class warfare that certain people engage in.
Also, I don't know why so many people constantly whine about Carl Icahn. The way I see it is that he and I agree on one thing at least, and that is that Apple should be worth more than it currently is. I've always thought that, so I am ok with anything that moves AAPL higher and brings it closer to what it's truly worth.
The stock markets are an auction. For every seller of shares, there is always a buyer, and vice-versa. The entire purpose of the stock exchanges is to keep sellers and buyers in balance.
Most car dealers will not let you put a car (or even a deposit) on a credit card. They don't want to pay the fees. I've tried - thought I would get a free trip out of buying a car.
The last car I leased, I used my credit card. Buying the car doesn't interest me.
only idiots on the street think Apple is over-weighted by institutions.
It is basic FUD. Such as.....
1. Apple is to reliant on iPhone
2. Market cap is too big
3. Products will be commoditized
ect, ect, ect.
all steam pies of shit
Whatever. I was responding to the supply and demand stock argument, which is bogus, but it seems to be a common bogosity because nobody seems to teach Stock Markets 101.
I have 10,924 Apple Shares, PLUS 266 Options (Jan-2015 85 strike approx) PLUS several Roths/Iras allocated about 90% to Apple Stock.
I have listened to the nonsense / "smart talk" from the genius posters above (responding to Mr. Icahn's comments) for around 4 years - as I have literally made millions on Apple .. I knew Jobs set up once in generation company - talent - mindset - and that he set us up for the future with Mr. Cook.
A 15 multiple for a company so set with talent, Jobs' mindset, implimented by Cook and approved - without backing up cash... is a joke.. with such growth obviously ahead in China/India - and frankly everywhere with items not even pinched (pending TV, Applewatch not even rolled out to stores ... likely Sept given over the top growth).
I am a good numbers guy - finance - NYU Tax Lawyer.
Apple is once in a lifetime. 80% of my holdings - thank you Tim. Follow that with Disney, Starbucks and Facebook - this is the portfolio of a lifetime ... the core being Apple.
Carl - you are so right on.
Today, my 7700 AAPL shares topped $1m in value ($78.34/share cost basis).
I'm also sitting on 175 debit call spreads with a max value of $10 against a net cost average of around $5, and with the highest short side strike at $130, expiration dates out to next January. Those are all very likely to produce a nice chunk of trading profit this year, to the tune of 175*100*5 = $87,500.
Add to that 10 long August $120 calls and 15 long Oct $120 calls, both of which began life as debit call spreads ($120/130), but I since closed the short sides when the stock dipped below $125 recently. Could put back on the short sides to create very profitable spreads or just let the long calls run. Think I'll let the call run for a bit longer.
I'm also short 20 January $110 Puts ($14k potential profit I'm all but guaranteed to net), 10 January $115 short Puts (another $5500 profit coming this year) and 3 August $125 short Puts that are looking good too (another $2500 profit if those expire worthless).
This is no surprise here since he is one of Apple's largest shareholders and one of the wealthiest people alive. The problem comes when a company starts to not live up to his expectations. He then oftentimes get ride of the CEO and brings in his own board because they are not taking his product or service suggestions. The next step is breaking up the company and selling it to private investment banks to make himself billions of dollars. This is why most companies hate to see him buy up lots of their stock. Him suggesting future Apple products means they better do it or start looking elsewhere for employment.
You do realize that if all the cash is used to buy back shares, all that is left is the operating assets, right?
Considering that cash produces nearly zero income currently, and all (well, almost all) of the E in thecurrent PE ratio comes from operating assets, what will change once the cash is paid out (and the $24.44 deducted from the share price)? Why would the earnings multiple of the operating assets suddenly jump post-cash?!
Because then each dollar invested in the shares buys more of the operating business and less non-performing cash. There's a good argument to be made that Apple trades at a lower multiple than KO, for example, because each dollar invested in Apple represents only about 80 cents invested in the operating business and 20 cents invested in non-performing cash. And so the overall multiple you get reflects this. By giving back all the cash, either as a special dividend (not tax efficient) or by repurchasing shares, not only does the denominator in the P/E equation go up, sending the shares higher, but the shares would also then be considered a more efficient allocation of investment capital, as each dollar invested in the business buys a full dollar of the operating business. This would tend to take the foot off the neck of the P/E, allowing it to rise.
People here (probably you too) get pissed off when Wall Street clowns and the media spread FUD and BS lies about Apple being doomed. Now someone like Ichan explains his support for the company and you get offended? Tell me what Ichan said that is not true or reasonable.
What is unreasonable is the valuation of Apple at this point and Ichan is 100% correct.
Comments
If Apple does in fact have an Apple Car in the works, my wallet is ready.
You have $100,000+ in your wallet?
This guy needs to just shut up already. It's trading at what it is because that's what it is.
As well if not better? Nothing has done as well in the very long term. If you're making 1mo-2yr trades it's possible in the short term. And if you're doing better than AAPL on average, you should become a professional trader because none of them do.
My wallet contains my credit card.
With Janet Yellen, and not a few others, making comments about the equity market being overvalued, I imagine Institutional investors are unlikely to be thinking it's a propitious time to be throwing a few more hundred billion into Apple.
Beyond the core issue of the Fed being a dangerous institution for America, both Yellin and Bernanke are Keynesian disasters.
He's the ultimate cheerleader for AAPL (as long as he's not trying to short it), but even he can't seem to move the stock much. It's baffling.
It's up 1.33% as of 1:48pm EDT. And there is no other reason except his comments.
Having said that, even if he's completely correct, this is stock manipulation just as much as if he said Apple sucks and he was shorting the stock.
My wallet contains my credit card.
Most car dealers will not let you put a car (or even a deposit) on a credit card. They don't want to pay the fees. I've tried - thought I would get a free trip out of buying a car.
Poor wording on my part: what I really mean is "net income generated by Apple's non-financial (or operating) assets". I simply shortened it to "operating assets". My apologies.
Hope the meaning is clearer now.
Fair enough. This point goes straight to the heart of what Icahn is arguing, so I thought it was important to keep it straight.
How should non-operating assets (aka, cash) be valued by investors? My view is that cash is an abstraction to investors. They don't get any direct value from it, unless the company pays it out as dividends or uses it to buy back shares. Otherwise that cash might as well be on Mars.
Icahn is saying the cash can be viewed like a discount to the stock price, which is hardly surprising given his position on buybacks. In theory, if Apple used all of its current cash to buy back shares, the float would be reduced by around 20%. Accordingly EPS would grow by that much, and if PE remained constant, the share price would increase proportionally. Again this argument seems a bit abstract, since we know companies just don't do that sort of thing. Investors also don't generally discount a stock for cash assets any more than they mark it up for debt, since neither has a direct impact on the balance sheet (except for income from investments and debt service).
This isn't the end of his argument, though. He also argues that PE would be increased if the markets begin to value Apple as a growth story, which he feels they should be doing. Combining the two is where he gets to his ultimate valuation. Agree or not, at least he's articulated a detailed argument with assumptions we can examine and debate.
It's ultimately demand for shares that moves a stock higher. Regardless of how good a company is, it still needs more buyers for its shares than sellers to move a stock. So, the question is, where is that demand coming from? Most institutions and mutual funds have strict rules rules regarding how much of a stock they can hold as a percent of the total monies managed. Many of these have hit those limits.
Nothing wrong at all with the rich getting richer as long as the poor don't get poorer. Unless someone else's improvement in well-being makes you envious (even when your own has improved).
I'm ok with the poor getting poorer, as long as I am on the other side of the fence, and if I qualify as one of the rich. There has been too much grumbling from the poor recently and I am not a fan of class warfare that certain people engage in.
As for what Icahn has said today, I don't mind! AAPL is up today, and that's what counts!
Also, I don't know why so many people constantly whine about Carl Icahn. The way I see it is that he and I agree on one thing at least, and that is that Apple should be worth more than it currently is. I've always thought that, so I am ok with anything that moves AAPL higher and brings it closer to what it's truly worth.
this is false and typical FUD
Suffice to say, it's a common misunderstanding.
The stock markets are an auction. For every seller of shares, there is always a buyer, and vice-versa. The entire purpose of the stock exchanges is to keep sellers and buyers in balance.
Most car dealers will not let you put a car (or even a deposit) on a credit card. They don't want to pay the fees. I've tried - thought I would get a free trip out of buying a car.
The last car I leased, I used my credit card. Buying the car doesn't interest me.
so its okay to keep spreading lies?
only idiots on the street think Apple is over-weighted by institutions.
It is basic FUD. Such as.....
1. Apple is to reliant on iPhone
2. Market cap is too big
3. Products will be commoditized
ect, ect, ect.
all steam pies of shit
Whatever. I was responding to the supply and demand stock argument, which is bogus, but it seems to be a common bogosity because nobody seems to teach Stock Markets 101.
I have 10,924 Apple Shares, PLUS 266 Options (Jan-2015 85 strike approx) PLUS several Roths/Iras allocated about 90% to Apple Stock.
I have listened to the nonsense / "smart talk" from the genius posters above (responding to Mr. Icahn's comments) for around 4 years - as I have literally made millions on Apple .. I knew Jobs set up once in generation company - talent - mindset - and that he set us up for the future with Mr. Cook.
A 15 multiple for a company so set with talent, Jobs' mindset, implimented by Cook and approved - without backing up cash... is a joke.. with such growth obviously ahead in China/India - and frankly everywhere with items not even pinched (pending TV, Applewatch not even rolled out to stores ... likely Sept given over the top growth).
I am a good numbers guy - finance - NYU Tax Lawyer.
Apple is once in a lifetime. 80% of my holdings - thank you Tim. Follow that with Disney, Starbucks and Facebook - this is the portfolio of a lifetime ... the core being Apple.
Carl - you are so right on.
Today, my 7700 AAPL shares topped $1m in value ($78.34/share cost basis).
I'm also sitting on 175 debit call spreads with a max value of $10 against a net cost average of around $5, and with the highest short side strike at $130, expiration dates out to next January. Those are all very likely to produce a nice chunk of trading profit this year, to the tune of 175*100*5 = $87,500.
Add to that 10 long August $120 calls and 15 long Oct $120 calls, both of which began life as debit call spreads ($120/130), but I since closed the short sides when the stock dipped below $125 recently. Could put back on the short sides to create very profitable spreads or just let the long calls run. Think I'll let the call run for a bit longer.
I'm also short 20 January $110 Puts ($14k potential profit I'm all but guaranteed to net), 10 January $115 short Puts (another $5500 profit coming this year) and 3 August $125 short Puts that are looking good too (another $2500 profit if those expire worthless).
Life riding the Apple train is good these days.
You do realize that if all the cash is used to buy back shares, all that is left is the operating assets, right?
Considering that cash produces nearly zero income currently, and all (well, almost all) of the E in the current PE ratio comes from operating assets, what will change once the cash is paid out (and the $24.44 deducted from the share price)? Why would the earnings multiple of the operating assets suddenly jump post-cash?!
Because then each dollar invested in the shares buys more of the operating business and less non-performing cash. There's a good argument to be made that Apple trades at a lower multiple than KO, for example, because each dollar invested in Apple represents only about 80 cents invested in the operating business and 20 cents invested in non-performing cash. And so the overall multiple you get reflects this. By giving back all the cash, either as a special dividend (not tax efficient) or by repurchasing shares, not only does the denominator in the P/E equation go up, sending the shares higher, but the shares would also then be considered a more efficient allocation of investment capital, as each dollar invested in the business buys a full dollar of the operating business. This would tend to take the foot off the neck of the P/E, allowing it to rise.
I am neither offended nor pissed off.