Dave
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"It's tough to make predictions, especially about the future." Yogi Berra
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Post by Dave on Nov 23, 2020 2:54:00 GMT -8
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Dave
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"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,090
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Post by Dave on Nov 23, 2020 3:06:52 GMT -8
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,090
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Post by Dave on Nov 23, 2020 4:12:54 GMT -8
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Dave
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"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,090
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Post by Dave on Nov 23, 2020 4:16:12 GMT -8
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chinacat
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AAPL Long since 2006
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Post by chinacat on Nov 23, 2020 5:23:18 GMT -8
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bud777
fire starter
Posts: 1,352
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Post by bud777 on Nov 23, 2020 8:48:44 GMT -8
I seriously doubt that Microsoft is capable of modifying its software to run on M1. They have demonstrated for years that they do not have a controlled software development process. Hacking to fulfill the latest vaporware promise has led to an uncontrollable mess of legacy code requiring them to add layer upon layer of "technology" to hide it from developers. The only way we will see Windows running on M1 is if Apple provides some kind of "x86 hidden in the chip" solution. But what do I know? I still program in machine language.
This is a huge gamble from Apple. I see it as a threat to any opportunity to move into the enterprise space. I do not care how good or slick or fast the processor is. I care about how my existing systems run on it. It's the software, stupid, and most of that is undocumented, written by people who have long retired. There is a reason that 60% of the systems in use today were written in COBOL.
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Dave
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"It's tough to make predictions, especially about the future." Yogi Berra
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Post by Dave on Nov 23, 2020 9:02:29 GMT -8
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chinacat
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AAPL Long since 2006
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Post by chinacat on Nov 23, 2020 9:24:24 GMT -8
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JDSoCal
Member
Aspiring oligarch
Posts: 4,182
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Post by JDSoCal on Nov 23, 2020 10:03:02 GMT -8
I seriously doubt that Microsoft is capable of modifying its software to run on M1. They have demonstrated for years that they do not have a controlled software development process. Hacking to fulfill the latest vaporware promise has led to an uncontrollable mess of legacy code requiring them to add layer upon layer of "technology" to hide it from developers. The only way we will see Windows running on M1 is if Apple provides some kind of "x86 hidden in the chip" solution. But what do I know? I still program in machine language. This is a huge gamble from Apple. I see it as a threat to any opportunity to move into the enterprise space. I do not care how good or slick or fast the processor is. I care about how my existing systems run on it. It's the software, stupid, and most of that is undocumented, written by people who have long retired. There is a reason that 60% of the systems in use today were written in COBOL. I am not convinced that Apple wants to compete for the razor margin enterprise, where the #1 concern for customers is low price? Others who are more articulate than I have demonstrated that Apple's high margin model in consumer electronics - where customers are spending their own money on themselves and their families to enhance their lives with insanely great products - won't fly in the workplace where managers and execs most often buy with company funds based on what platform is cheapest and just good enough to accomplish their mundane, dehumanizing tasks (e.g., TPS Reports and their cover sheets). The race to the bottom for workstations is a model that is great for Microsoft - which doesn't sell the workstations but gets an OS software license on each one, plus expensive applications suites - but not so good for PC makers competing solely on price, especially as the cloud begins to replace local storage. Compare, Apple and its high hardware margins and free software. Apple might always be a niche player in the workplace (by design), aimed at graphics and other sectors where high performance, not cheap clones, is important. My question is, if Apple really wants to make a big splash in consumer computers, will they design their own discrete GPUs? A significant increase in framerates in video games is one differentiator that could spike Mac sales. Another reason Apple designing its own elegant development framework is a great idea - Mac-specific video game ports.
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Post by duckpins on Nov 23, 2020 11:00:22 GMT -8
Not sure I would bet on inflation increasing with an oil glut. That is lead weight to rising prices.
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Post by duckpins on Nov 23, 2020 11:02:03 GMT -8
First people in the pond get eaten bye the crocs.
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Post by duckpins on Nov 23, 2020 11:19:25 GMT -8
Apple has been underperforming both the Dow and the Cubes since the split basically. Does this represent PE compression or is it an opportunity as the new phones and macs head for the shelves? Since Banker Joe's election the bank stocks are doing well. Not a surprise but for how long with the loans in real estate and energy being the worst Covid investments possible. The market should rise into the T-Day holiday. But these are unusual times.
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Post by archibaldtuttle on Nov 23, 2020 11:55:50 GMT -8
It's concerning. The market is doing fine, but AAPL is suffering.
A few things are happening at the same time. The "rotation away from tech" narrative. Part of that is the "vaccines will bring general recovery so tech isn't as valuable" narrative. Tech has done well during COVID because of all the ways people and business are still spending on tech while they're home.
The concerning thing about that is, maybe AAPL's PE was only inflated to 30+ because of COVID... maybe when the world goes back to normal, AAPL's PE will also... AAPL's historical PE sub-20 would not be pretty right now.
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chinacat
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AAPL Long since 2006
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Post by chinacat on Nov 23, 2020 12:39:23 GMT -8
I don’t expect things in the workspace to go completely back to how they were before the pandemic. I think that both employers and employees have found that remote work can work quite well for some jobs and some people. For one example, the phenomenal uptake of Zoom means that both sides are much more comfortable with remote meeting attendance. The possible savings from reduced office space is one trade-off that some employers will be glad to make. The virtual office won’t work everywhere, but it will be embraced by some.
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chinacat
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AAPL Long since 2006
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Post by chinacat on Nov 23, 2020 12:50:40 GMT -8
It's concerning. The market is doing fine, but AAPL is suffering. We must not lose sight of the phenomenal increase in AAPL in the last six months. A bit of a breather has been long overdue, and the split was a convenient marking point. Let’s see where we stand after the holidays, and the delayed release of this year’s Fall product bonanza could bode well for a better than normal first quarter in 2021.
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Post by duckpins on Nov 23, 2020 12:59:44 GMT -8
What is troubling is Apple is the worst performing stock in some groups, like those with cash. Even JNJ is outperforming it today and it is the 2nd worst stock-one with unlimited asbestos liability that only true believers would buy.
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Post by archibaldtuttle on Nov 23, 2020 14:03:24 GMT -8
Yeah my point is that the inflation of AAPL’s PE into the 30s might not be a permanent readjustment — it could be temporary and go back to its historical levels as the economy goes back to normal.
Despite Apple firing on all cylinders, as usual.
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Post by archibaldtuttle on Nov 23, 2020 14:13:07 GMT -8
Heres a chart of AAPL's PE ratio over the last 5 years. It only popped above 30 this summer. It was executing on all cylinders a year ago too, so executing on all cylinders doesn't mean it will necessarily be priced above 30. A PE of 20 would send this puppy back to $65 per share. Dangerous.
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chinacat
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AAPL Long since 2006
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Post by chinacat on Nov 23, 2020 15:59:47 GMT -8
IMHO, the jump in PE did not come out of the blue, but rather from recognition of two things, the leveraging of their great products into a bountiful set of services that provide reliable and growing revenues, plus the superb leadership of Tim Cook. Apple is now one of the great aspirational brands in the world.
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Post by duckpins on Nov 23, 2020 16:29:16 GMT -8
Definitely can not be ignored. The PE expansion has been called for by Cramer for years. And he is...unpredictable and hard to know his motives. Apple has long been the best brand in the world for some time. After the iMac, iPod, iPhone etc. it couldn't get much more reverence. I remember Steve talking to Mossberg when Apple passed MSFT in market cap. Just a few years after a near default. Steve just said Yeah, isn't that something? The stock price can come under pressure from people who own 10 million shares suddenly finding themselves with 40 million. Easy to sell when the number is going up. I saw a talking head on Bloomberg claiming Apple would underperform for 10 years. Now there is a seer if there ever was one. My feeling is biotech and banks can only outperform tech for so long. We will see.
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4aapl
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Post by 4aapl on Nov 23, 2020 17:43:20 GMT -8
The stock price can come under pressure from people who own 10 million shares suddenly finding themselves with 40 million. Easy to sell when the number is going up. I like to think that people, or fund managers, that own that many shares have a bit more experience and knowledge than to let a simple split affect their attitude this way. OTOH, there are many that are closer to traders than just looking at LTBH, so if they consistently followed that methodology I wouldn't fault them for selling off some shares. But that's due to timing/pricing, not some arbitrary number that doesn't really matter. Then again, people were trying to hoard TP from Costco again today. As a bigger family that goes through it at a decent clip, and who lives a little further away so we have to make a trip out of it, we did pick up a pack. FWIW, we later went over to HD and bought a pair of toilets. In case you had any false information on the matter, there was not a corresponding run on toilets.
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Post by archibaldtuttle on Nov 23, 2020 21:08:23 GMT -8
IMHO, the jump in PE did not come out of the blue, but rather from recognition of two things, the leveraging of their great products into a bountiful set of services that provide reliable and growing revenues, plus the superb leadership of Tim Cook. Apple is now one of the great aspirational brands in the world. I recall many times during Tim Cook’s reign that Apple was doing incredibly well on product and services, meanwhile we were on this board complaining that Apple’s PE was 18 or whatever. I hope it doesn’t happen again, but it might.
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chinacat
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AAPL Long since 2006
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Post by chinacat on Nov 24, 2020 7:14:20 GMT -8
IMHO, the jump in PE did not come out of the blue, but rather from recognition of two things, the leveraging of their great products into a bountiful set of services that provide reliable and growing revenues, plus the superb leadership of Tim Cook. Apple is now one of the great aspirational brands in the world. I recall many times during Tim Cook’s reign that Apple was doing incredibly well on product and services, meanwhile we were on this board complaining that Apple’s PE was 18 or whatever. I hope it doesn’t happen again, but it might. Well, perhaps “incredibly well” in the context of the time, but the number of services and the world-wide reach were not at the scale they are today, IMHO, but perhaps I am wrong. I’ll see if I can back up those feelings with numbers.
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Post by Lstream on Nov 24, 2020 7:55:22 GMT -8
I recall many times during Tim Cook’s reign that Apple was doing incredibly well on product and services, meanwhile we were on this board complaining that Apple’s PE was 18 or whatever. I hope it doesn’t happen again, but it might. Well, perhaps “incredibly well” in the context of the time, but the number of services and the world-wide reach were not at the scale they are today, IMHO, but perhaps I am wrong. I’ll see if I can back up those feelings with numbers. I will be interested if you find anything. However, I think the PE expansion was primarily driven by a change in sentiment. Perhaps combined with big money having less alternatives for relative safety and liquidity. Have we broken the sentiment trap, that had us stuck with an unjustifiably cheap PE for so long? Don’t know.
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chinacat
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Post by chinacat on Nov 24, 2020 10:01:15 GMT -8
Well, perhaps “incredibly well” in the context of the time, but the number of services and the world-wide reach were not at the scale they are today, IMHO, but perhaps I am wrong. I’ll see if I can back up those feelings with numbers. I will be interested if you find anything. However, I think the PE expansion was primarily driven by a change in sentiment. Perhaps combined with big money having less alternatives for relative safety and liquidity. Have we broken the sentiment trap, that had us stuck with an unjustifiably cheap PE for so long? Don’t know. So what do you think drove the change in sentiment?
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4aapl
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Post by 4aapl on Nov 24, 2020 10:20:54 GMT -8
Well, perhaps “incredibly well” in the context of the time, but the number of services and the world-wide reach were not at the scale they are today, IMHO, but perhaps I am wrong. I’ll see if I can back up those feelings with numbers. I will be interested if you find anything. However, I think the PE expansion was primarily driven by a change in sentiment. Perhaps combined with big money having less alternatives for relative safety and liquidity. Have we broken the sentiment trap, that had us stuck with an unjustifiably cheap PE for so long? Don’t know. Sentiment has changed, in a variety of ways. One is based on market cap, with the common comparison to how a small boat can adjust or accelerate a lot quicker than a giant tanker. Another is in product lines, with different product types having different profit margins, along with upfront costs, moats, and all that. There's perceived likely consistency of earnings, where ongoing income streams balance out other ups and downs. And there's income stream diversity, with a wider net of streams not having as much trouble if one falters or changes. I also still think there are people against Apple going back to the Mac vs PC stage. Like in Politics, if you are that set in your ways, it is hard to make a change. Macs were down to the low single percentages at one point. That carries over to investors. There are a lot of investment choices out there, so choosing to pass on one can be pretty easy, even if in the long term retrospective look, AAPL has had a hell of a run. But from the PE perspective, while it has grown a lot (just as it previously lost a lot, going from ~60 down to under 10 at the worst times), the safety factor is that it is on par with multiple competitors. There's never an exact comparison, and there are still some outliers (by huge amounts), but in comparing to the comparables it doesn't seem like AAPL is overpriced. Everything could be overpriced, with a sinking tide lowering all ships, but that's a different wall of worry item than one that would be AAPL specific. As to world-wide reach, it could be true in some ways, but overall the "international sales as a % of revenue" has stayed fairly solid over the past 11 years that I have written down. There were a few minor outliers, particularly in 2010, where Q3 was 52%. Then a few years later, in 2015 Q2, it was up to 69%. But overall it looks to average out to the low 60's, and in 2020 it looks like it averaged to around 60.5%. World-wide reach may have grown, but it has stayed roughly in sync with domestic sales, over the past 11 years. EDIT: Services, OTOH, is a whole different thing. The category wasn't even called out previously (I have nothing written down before Q3 2017), and now was just 14.55B of the 64.7B total revenue. But with margins of ~60%, that category has close to double the margins of the average revenue for the company, and thus contributes greatly to the EPS figures. That, and the underlying growth that is worth around twice as much as growth in other categories, is huge. How many years out do you look at? How many years out does the average AAPL investor, especially if they are just part of an index? That arbitrage can really juice things. (And yes, with the RSI having dropped nearly to 40, especially as the xmas season nears, I was starting to get tempted to pick up a little something. Or make a decent sized option purchase, looking out 3 months to 2 years)
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chinacat
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Post by chinacat on Nov 25, 2020 8:35:01 GMT -8
IMHO, the jump in PE did not come out of the blue, but rather from recognition of two things, the leveraging of their great products into a bountiful set of services that provide reliable and growing revenues, plus the superb leadership of Tim Cook. Apple is now one of the great aspirational brands in the world. I recall many times during Tim Cook’s reign that Apple was doing incredibly well on product and services, meanwhile we were on this board complaining that Apple’s PE was 18 or whatever. I hope it doesn’t happen again, but it might. Apple Doubled Services Revenue In Just Three Years, And That’s Before Arcade And TV+ Kick In. Here are the PE numbers: Apple PE Ratio 2006-2020 | AAPL. Currently 35 with a strong rise in the past couple of years.
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walterwhite
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"I am the one who knocks!"... Albuquerque, NM
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Post by walterwhite on Nov 25, 2020 11:45:40 GMT -8
Heres a chart of AAPL's PE ratio over the last 5 years. It only popped above 30 this summer. It was executing on all cylinders a year ago too, so executing on all cylinders doesn't mean it will necessarily be priced above 30. A PE of 20 would send this puppy back to $65 per share. Dangerous.
spot on!! and note how your chart shows AAPL twice in the past 5 years traded at a p/e of 10-12 (first full half of 2016 and early 2019)
yeah in jan 2019 many of us were buying hand and fist, some levered through calls/or margin... making fun of sponge and his prognostications, at a time when trade war and a one-quarter weakness in china were the biggest issues....
at a p/e of 12 AAPL would fall to $40 (from $115 here).... which would be a shocking fall from ath's at $138, over 70% fall! (higher than gfc, right?).... not saying it'll happen, but it could!
we ignore or cheer the split, but it has real psychological implications even on the best investors... how many people forget to 'multiply/divide by four'? the $142 low in 2019 (which many of us used as a back-up-the-truck moment) is $35.50 in today's terms. today's unimpressive $115 is $460 pre-split... how many of you had a $460 target in january? how about in march mid-covid?
archibaldtuttle you're raising important questions that any concentrated aapl investor should ask.
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walterwhite
Member
"I am the one who knocks!"... Albuquerque, NM
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Post by walterwhite on Nov 25, 2020 11:54:34 GMT -8
I recall many times during Tim Cook’s reign that Apple was doing incredibly well on product and services, meanwhile we were on this board complaining that Apple’s PE was 18 or whatever. I hope it doesn’t happen again, but it might. Well, perhaps “incredibly well” in the context of the time, but the number of services and the world-wide reach were not at the scale they are today, IMHO, but perhaps I am wrong. I’ll see if I can back up those feelings with numbers.
i think you're wrong. apple has had the reach and scale since 2015 at least (post china mobile rollout and samsung competition fading away)... and their numbers show it...
so revenue is up from $234b in 2015 to $274b in 2020... up 17% okaaayyyy 17% cumulative in 5 years? that's not impressive, we would laugh if it was amazon or microsoft! they handily beat apple:
those two graphs show a consistent uptrend (exponential in amazon's case)... while apple clearly shows an inflection & slowdown from 2015
but now to the stock... revenue up 17% in 5 years, and stock is up like 300% (400% from 2016 lows)
i don't really know how to resolve this; it's no fault of apple's... they're executing flawlessly. the stock just ran ahead of itself. i don't know where a 'good' level is anymore, but it ain't $150
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chinacat
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Post by chinacat on Nov 25, 2020 13:12:44 GMT -8
Well, perhaps “incredibly well” in the context of the time, but the number of services and the world-wide reach were not at the scale they are today, IMHO, but perhaps I am wrong. I’ll see if I can back up those feelings with numbers.
i don't really know how to resolve this; it's no fault of apple's... they're executing flawlessly. the stock just ran ahead of itself. i don't know where a 'good' level is anymore, but it ain't $150
I agree that the stock got ahead of itself. The spurt from 350 to 500 during the summer was breathtaking. I for one am not surprised that it has basically been static or down a bit since then, post-split. But the Fall releases have been strong, although delayed. My major concern is in the effect economic malaise (people’s jobs, not the markets) could have on sales of same, even if the economic profile of Apple customers is lighter on the blue collar workers who have been hardest hit.
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