sacto joe

Woke up at 4:00 AM with this thought:

It suddenly all makes sense. Apple has to have been out of the market for some time, principally because they wanted at all costs to avoid any appearance of taking advantage of this down market. And that absence in turn explains why Apple dropped so precipitously, and then refused to rebound.

But hi-ho, look where that leaves them now! They’ve literally pre-announced their earnings, because they waited until the quarter was over – which means they aren’t subjected to the requirement to hold off buying AAPL in advance of earnings!

And THAT means that not only are they going to be back in the market, but they are going to be back in with a vengeance – just when AAPL bottoms out with news of a (fairly moderate, all things considered) earnings miss. And not only that, but they’re back in the market when most of the short term profiteers have been wrung out of AAPL. And finally, they have inadvertently kept their powder dry to the tune of at least $130 B, which means that over the next three full months Apple can buy back AAPL until the cows come home!

Folks, if I wasn’t on fixed income, I’d be buying AAPL like crazy during this dip, because it’s now practically a sure bet Apple will be!

tzeshan said:

anantksundaram said:

tzeshan said:

India is poorer than China. No doubt about it. 

Your perception of the obvious is just phenomenal. 

No doubt about it. 

Just wondering why Apple wants to pursuit a poor market. Tell me does BMW or Lexus produce  cars in India? 

Um, China used to be a “poor country” too. Apple knows very well indeed what it is doing. Apple is, as is their wont, playing the long game. Watch in wonder as the years unfold....

Just posted this on https://www.ped30.com/2018/12/12/trade-war-zacks-apple/ :

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Completely off-topic, but here’s a link posted today on Braeburn Group that is very much Apple-related:

https://abcnews.go.com/Health/apple-watch-told-46-year-man-irregular-heartbeat/story?id=59726093

This story is about a 46 year old man who found out via his Apple Watch that he had a-fib. It struck a chord with me because I also found out via my Apple Watch that I had a-fib and atrial flutter. In this man’s case it was because he just tried out the new ECG capability for the heck of it. In my case, it was the Watch’s heart rate monitor that alerted me that I had a racing heart.

But there’s a bit more in my case to the story. I was scheduled for a procedure called atrial ablation this coming Monday, and in prep for that went through a special heart scan test. In the process of THAT test, I found out this morning that I also have a hiatal hernia. That will require yet another surgery, and must be done before the heart procedure.

So directly or indirectly, Apple is responsible for diagnosing two serious health issues of mine over the past few months. Apple is taking care of me in more ways than just being a stockholder….

Thanks, Apple!

One note of caution:

I do have a-fib. I found out just recently (my Apple Watch caught an abnormally high heart rate), and will be undergoing a procedure called atrial ablation very soon now. I just tested the Apple Watch approach. The first reading I got did not show a-fib (sinus rhythm). The second reading, I made sure not to touch my left hand with my right and only touch the crown. It caught the a-fib. Tried it again, purposefully touching my other hand. Sinus rhythm. One more time, being careful not to touch my other hand. A-fib.

JWSC said:

1) Since when did the bean counters of Wall Street understand how to value AAPL?  Answer: Never.
2) Share buy-backs are NOT blowing profit.  Under the right circumstances (modest PE ratio and steady earnings) they are a great way to maintain and enhance shareholder value.  ‘Momentum’ investors will never get that and that’s OK because, frankly, those guys are fools with too much of other people’s money to play craps with.

Exactly. Think about it this way: Mr. Market gives zero value for Apple's cash because it's considered "dead money". That's just a fact.

Think of Apple as a pie (And yes, it's an Apple pie....). In buying back shares, Apple is basically removing the number of slices the pie is cut up into. Any given slice/share that remains owns a larger percentage of the pie. Apple has already bought back about 30% of the company. When (not if) it buys back 50%, then every person who held onto their AAPL since back when the buybacks started will suddenly have 2X the percentage interest in Apple.

Now, that's not "free" money. Apple's real value (and not the fake value Mr. Market uses) is comprised in part of it's cash. Spending it to buy it's own stock basically depletes Apple of part of it's "ready cash". So this is really just converting one kind of value for another kind. But with less shares for a given "float", all things being equal, the price of the shares should go up by about the amount of the invested cash, assuming a steady overall value. It actually goes up more than that because the overall value of Apple keeps increasing, to the point where it is far beyond what most people ever expected it to be.

However, some pundits say that buying back shares doesn't impact the price of AAPL. Well, it's an opinion. But is it true? Reducing the share count with buybacks juices EPS. It turns out that, for AAPL, the change in EPS is practically linear over the last 10-11 years, and may even be accelerating a little bit over the last year. More importantly, if you check out the change in price of Apple over the last 10-11 years and look at the change in EPS (Earnings Per Share) over that same time period, then the two are generally paralleling one another. (Also running in parallel is RPS [Revenue Per Share], but that's another story....)  Therefore, we can say with some conviction that, over a long stretch of time, EPS is what's driving the stock price.

Finally, and this is the fun part, selloffs in AAPL like the present one mean that Apple can get much better bang per buck, and thus can buy back more stock for a given "investment".

For  long term investors, the bottom line is that they can pretty much ignore the ups of AAPL, and buy during the many AAPL downs. Their AAPL investment is not only safe but continually growing at a decent clip. That's pretty great for old folks like me that are living on their fixed incomes.