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 Mar 12, 2021 3:13:42 GMT -8
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Post by archibaldtuttle on Mar 12, 2021 5:14:28 GMT -8
The reason for the AAPL selloff is potentially very simple, and something I raised a month ago, which is that AAPL’s valuation in terms of its PE ratio has been very high compared to historical levels. Even now after this selloff, the valuation is high compared to how AAPL has been valued in the past. See this chart of the PE ratio ycharts.com/companies/AAPL/pe_ratioApple as a company was doing really well right before the pandemic. The PE ratio that the market gave it was around 25. If AAPL corrects back down to a PE of 25, we would have a lot further to fall.
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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 Mar 12, 2021 5:47:56 GMT -8
The reason for the AAPL selloff is potentially very simple, and something I raised a month ago, which is that AAPL’s valuation in terms of its PE ratio has been very high compared to historical levels. Even now after this selloff, the valuation is high compared to how AAPL has been valued in the past. See this chart of the PE ratio ycharts.com/companies/AAPL/pe_ratioApple as a company was doing really well right before the pandemic. The PE ratio that the market gave it was around 25. If AAPL corrects back down to a PE of 25, we would have a lot further to fall. Thank you Archibaldtuttle, I remember when you warned us about the PE being inflated, and I understand and agree, but going through the correction sure does hurt. Maybe Mr. Market will just snatch that bandage off and get it over with.
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chinacat
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Post by chinacat on Mar 12, 2021 6:00:06 GMT -8
The reason for the AAPL selloff is potentially very simple, and something I raised a month ago, which is that AAPL’s valuation in terms of its PE ratio has been very high compared to historical levels. Even now after this selloff, the valuation is high compared to how AAPL has been valued in the past. See this chart of the PE ratio ycharts.com/companies/AAPL/pe_ratioApple as a company was doing really well right before the pandemic. The PE ratio that the market gave it was around 25. If AAPL corrects back down to a PE of 25, we would have a lot further to fall. You may be right, but Apple is not that company any more. The expansion of their services businesses has not only provided new revenue opportunities, but also made it less tied to the timing of new iPhone releases. Unfortunately, Mr. Market has not yet completely digested these changes. BWDIK
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Post by archibaldtuttle on Mar 12, 2021 6:12:56 GMT -8
The trend towards services was clear in January 2020 too. None of us can say what PE range the market will eventually settle on for Apple. I hope it’s above the historical range but we have no way of knowing.
But it feels like AAPL at 32 PE is still a lot riskier than AAPL was at 15 PE.
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chinacat
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Post by chinacat on Mar 12, 2021 6:28:39 GMT -8
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Post by Lstream on Mar 12, 2021 7:06:58 GMT -8
The trend towards services was clear in January 2020 too. None of us can say what PE range the market will eventually settle on for Apple. I hope it’s above the historical range but we have no way of knowing. But it feels like AAPL at 32 PE is still a lot riskier than AAPL was at 15 PE. Well it is pretty easy to post doom and gloom about the company every time there is a dip. Or to cling to historical PE numbers that value AAPL at less than half of other leading tech companies. Doesn’t mean there is any value in “I told you so”.
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4aapl
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Post by 4aapl on Mar 12, 2021 7:40:37 GMT -8
The trend towards services was clear in January 2020 too. None of us can say what PE range the market will eventually settle on for Apple. I hope it’s above the historical range but we have no way of knowing. But it feels like AAPL at 32 PE is still a lot riskier than AAPL was at 15 PE. One vote towards a higher PE range would be that this pandemic and it's affect on Apple showed that many of Apple's products and markets were rather resilient. From CNN graphs, at the worst point the US jobs were down 15%, and are currently down just more than 6%. But Apple ended up with YOY revenue gains in each of the last 4 quarters, and EPS gains in 3 of them. But AAPL and the market, over the last couple of decades, has taught me that valuations and price adjustments just don't tend to care about being fair or logical. They overcorrect to the downside, and ever so occasionally they even overcorrect to the upside. Patience and not taking huge risks can get you through most things. But it's also important to think about investment horizon, even if it is decades or a century. There's very few companies out there that are 100 years old, and most that are approaching that have lived through a variety of upturns and downturns for the specific company. Apple has had its share of upturns and downturns, as a company and with its stock. Things look at least slightly rosy on the 3 to 5 to 10 year future, and Apple has the people, momentum and aptitude to keep pressing forward. But it is important to make sure that that continues. If Apple falters, or even just gets a little too complacent, I'd want to be notice this before the market as a whole did.
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Post by archibaldtuttle on Mar 12, 2021 8:35:16 GMT -8
The trend towards services was clear in January 2020 too. None of us can say what PE range the market will eventually settle on for Apple. I hope it’s above the historical range but we have no way of knowing. But it feels like AAPL at 32 PE is still a lot riskier than AAPL was at 15 PE. Well it is pretty easy to post doom and gloom about the company every time there is a dip. Or to cling to historical PE numbers that value AAPL at less than half of other leading tech companies. Doesn’t mean there is any value in “I told you so”. It's not "I told you so," I tried to warn people ahead of time to be cautious. And I'm doing the same thing now. It could drop further, and people should be cautious. There's no value in blind faith. You don't get points for being loyal to AAPL. I believe in logical evaluation and investing in the best performing assets. A few months ago I moved some of my AAPL money into DIS and SPY, and I'm happy I did. I don't know what the future holds. I'm hopeful AAPL has found a bottom, because I still have significant AAPL holdings. But I am worried about how the market has been valuing it. We should be able to discuss that here.
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Post by Luckychoices on Mar 12, 2021 9:50:02 GMT -8
Well it is pretty easy to post doom and gloom about the company every time there is a dip. Or to cling to historical PE numbers that value AAPL at less than half of other leading tech companies. Doesn’t mean there is any value in “I told you so”. It's not "I told you so," I tried to warn people ahead of time to be cautious. And I'm doing the same thing now. It could drop further, and people should be cautious.There's no value in blind faith. You don't get points for being loyal to AAPL. I believe in logical evaluation and investing in the best performing assets. A few months ago I moved some of my AAPL money into DIS and SPY, and I'm happy I did. I don't know what the future holds. I'm hopeful AAPL has found a bottom, because I still have significant AAPL holdings. But I am worried about how the market has been valuing it. We should be able to discuss that here.I completely agree with you warning people to be cautious with their investments since caution with one's investments should always be a given, IMO. I would worry more about how the market is valuing AAPL if other tech stocks were doing well during this period, but they are not. Additionally, I don't value the future of AAPL/Apple based on how the short-term market is treating the stock...especially after the ongoing fiasco with GME. 02/24/21: One month:
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Post by Lstream on Mar 12, 2021 10:40:28 GMT -8
Well it is pretty easy to post doom and gloom about the company every time there is a dip. Or to cling to historical PE numbers that value AAPL at less than half of other leading tech companies. Doesn’t mean there is any value in “I told you so”. It's not "I told you so," I tried to warn people ahead of time to be cautious. And I'm doing the same thing now. It could drop further, and people should be cautious. There's no value in blind faith. You don't get points for being loyal to AAPL. I believe in logical evaluation and investing in the best performing assets. A few months ago I moved some of my AAPL money into DIS and SPY, and I'm happy I did. I don't know what the future holds. I'm hopeful AAPL has found a bottom, because I still have significant AAPL holdings. But I am worried about how the market has been valuing it. We should be able to discuss that here. On discussing this, agree. I believe that the historical valuation has been wrong. Apple being priced like it is going out of business or at half the valuation of a Microsoft or Google never made any sense to me. Still doesn't. Yes, it can return to those valuations or something like 25. But is Apple as a business REALLY worth less than the examples above? Disagreeing on this fundamental point is not "blind faith". Further, I think I can make an argument on Apple valuation that is at least as logical as yours. I don't see how those historically low valuations make any sense whatsoever. But hey, that is why there is a market. Different participants have differing points of view when looking at the same thing. I think that your warnings might make some sense to short term traders, but I think they are off-base for long-term holders, who are able to live through the ups and downs. Throughout my history of owning this stock, I have heard all kinds of opinions on why I was wrong in holding instead of selling. I remember one in particular, from someone who had sold Apple at $400. He was salty because I told him I intended to hold, even though it was at $600 at that time. Told me in no uncertain terms I was delusional because the valuation made no sense. We are at the equivalent of about $3360 now. We don't discuss Apple any more. I am not an overly cautious person by nature, so it could explain why we see things different here. Excessive caution is a recipe for mediocrity in my opinion.
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4aapl
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Post by 4aapl on Mar 12, 2021 10:47:24 GMT -8
I thought it was interesting looking at a 1 Y chart of Apple, Amazon, and Google. 1Y Apple Amazon Google(wow, I normally just post the URL and don't worry about making it a nice looking link, but that URL is horrendous) Currently all 3 are up nearly the same, YOY. Amazon and Google are at about 69%, and Apple is currently almost up 76%, but those are pretty close for companies that are different and have done differently, but are lumped together for a bunch of people just looking at FAANG, Nasdaq, or tech in general. AAPL will likely outperform again, especially if it comes out with good earnings. But we're currently still in this timeframe where bigger US and Global financial issues are on the wall of worry, and sector differentiation has often mattered more than individual company differentiation, except at the extremes. This is 10 miles into the olympic marathon, with a few weeded out, but mainly anyone who has a shot at the top spots is still in a tight pack. But soon enough things will start spreading out a bit.
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Post by duckpins on Mar 12, 2021 10:58:54 GMT -8
I found reading the IBD and the harebrained theories very dangerous. When you look at 100 different charts there is always something. Buying at the highs for a big run up works if you know when the high is just a stepping stone not a top. The guy who owns it is nuts. I read his books and donated them. Better sources of technical info are investors intelligence and the McClellan Oscisallator IMHO.
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JDSoCal
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Post by JDSoCal on Mar 12, 2021 10:59:04 GMT -8
There are reasons to be fearful of AAPL (lack of innovation and over-politicization of the company being my main ones), but the PE argument is ludicrous for several reasons. History is never a valid indicator of a stock's future performance. And, as others have said, go ahead and justify the most profitable, highest-margin, and most favorite brand in America that oh BTW is so dominant that it is facing antitrust scrutiny trading at a PE below Square or Peloton or Zoom or Netflix or Nvidia or Visa or Microsoft. "Apple has always had a relatively low PE so it should have a low PE" is just ludicrous and PE's are pretty much irrelevant to 99% of investors. Stocks are driven by narratives and animal spirits. Even if the narratives are questionable like this EV thing. If the surf forecast says 3 feet and choppy, but 8 foot glassy waves come in, you ride the waves.
I just hope Apple announces its car sooner rather than later. Because those 992 Turbo S's aren't getting any cheaper.
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Post by silkstone on Mar 12, 2021 11:27:32 GMT -8
A friend of mine who is in his seventies now, once had a nationally syndicated talk radio show and made several million dollars which he entirely lost in 2008 when everything came crashing down.
I asked him how he could be handling it so well. He told me that the eight million dollars he lost at the age of 66 came to him so easily, he just didn’t realize he could lose it all overnight. He tried to make it back but could not.....but he’s always very positive when I see him.
So, making money is one skill while managing it is entirely different and just because you’re good at one, doesn’t mean you will be good at the other.
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Post by duckpins on Mar 12, 2021 12:43:27 GMT -8
I remember all the mortgage companies with their high dividends before they went to 0. What a con. Too bad your friend wasn't a bank or hedge fund, he could have recovered with the bail out.
Interesting close where Apple is looking to take out the 121 call sellers? That is unusual.
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chinacat
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Post by chinacat on Mar 12, 2021 12:43:27 GMT -8
There are reasons to be fearful of AAPL (lack of innovation... So I take it that you are unimpressed with the dawning of the age of Apple silicon? I believe that the stunning performance of the M1 Macs is merely an appetizer for the broader impact that will be realized not only in performance, but also in the application of the technology to areas that may not be profitable enough to be the foundation of a company, but can be leveraged to increase the utility, versatility and possibly the profitability of future products, some of which may have no current competitors in the industry, like the original iPhone. Nice to see you posting again, JD.
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mark
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Post by mark on Mar 12, 2021 14:19:48 GMT -8
It's not "I told you so," I tried to warn people ahead of time to be cautious. And I'm doing the same thing now. It could drop further, and people should be cautious. There's no value in blind faith. You don't get points for being loyal to AAPL. I believe in logical evaluation and investing in the best performing assets. A few months ago I moved some of my AAPL money into DIS and SPY, and I'm happy I did. I don't know what the future holds. I'm hopeful AAPL has found a bottom, because I still have significant AAPL holdings. But I am worried about how the market has been valuing it. We should be able to discuss that here. On discussing this, agree. I believe that the historical valuation has been wrong. Apple being priced like it is going out of business or at half the valuation of a Microsoft or Google never made any sense to me. Still doesn't. Yes, it can return to those valuations or something like 25. But is Apple as a business REALLY worth less than the examples above? Disagreeing on this fundamental point is not "blind faith". Further, I think I can make an argument on Apple valuation that is at least as logical as yours. I don't see how those historically low valuations make any sense whatsoever. But hey, that is why there is a market. Different participants have differing points of view when looking at the same thing. I think that your warnings might make some sense to short term traders, but I think they are off-base for long-term holders, who are able to live through the ups and downs. Throughout my history of owning this stock, I have heard all kinds of opinions on why I was wrong in holding instead of selling. I remember one in particular, from someone who had sold Apple at $400. He was salty because I told him I intended to hold, even though it was at $600 at that time. Told me in no uncertain terms I was delusional because the valuation made no sense. We are at the equivalent of about $3360 now. We don't discuss Apple any more. I am not an overly cautious person by nature, so it could explain why we see things different here. Excessive caution is a recipe for mediocrity in my opinion. All I can say is that I regret selling every share of Apple that I've sold to date. In the end, without any exceptions, I would have been better off simply holding. That's because even if I have certain intentions, like buying bull call spreads, sometimes life gets in the way and I just don't actually do the new trade. That's where I find myself right now ... I "forgot" to get into my usual 2+ year bull call spread positions when the stock was down early last year, and I haven't seen an opportune time to buy that position since.
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mark
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Post by mark on Mar 12, 2021 14:29:29 GMT -8
There are reasons to be fearful of AAPL (lack of innovation... So I take it that you are unimpressed with the dawning of the age of Apple silicon? I believe that the stunning performance of the M1 Macs is merely an appetizer for the broader impact that will be realized not only in performance, but also in the application of the technology to areas that may not be profitable enough to be the foundation of a company, but can be leveraged to increase the utility, versatility and possibly the profitability of future products, some of which may have no current competitors in the industry, like the original iPhone. Nice to see you posting again, JD. It could also be that a few M1s, or a few M2s or M3s, finally have enough processing power to run a real autonomous automotive system. Tesla themselves claim that their first generation architecture can't do it, and I wouldn't be at all surprised if their current generation *also* can't quite do it yet. When I see this "lack of innovation" claim so many times, I always ask - WHAT do you consider to be innovation? If you claim that Apple hasn't had any new innovation since the iPhone in 2007, then WHAT EXACTLY do you consider to be new innovation since 2007? From any and all businesses out there. Give some examples.
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Post by Lstream on Mar 12, 2021 17:23:06 GMT -8
So I take it that you are unimpressed with the dawning of the age of Apple silicon? I believe that the stunning performance of the M1 Macs is merely an appetizer for the broader impact that will be realized not only in performance, but also in the application of the technology to areas that may not be profitable enough to be the foundation of a company, but can be leveraged to increase the utility, versatility and possibly the profitability of future products, some of which may have no current competitors in the industry, like the original iPhone. Nice to see you posting again, JD. It could also be that a few M1s, or a few M2s or M3s, finally have enough processing power to run a real autonomous automotive system. Tesla themselves claim that their first generation architecture can't do it, and I wouldn't be at all surprised if their current generation *also* can't quite do it yet. When I see this "lack of innovation" claim so many times, I always ask - WHAT do you consider to be innovation? If you claim that Apple hasn't had any new innovation since the iPhone in 2007, then WHAT EXACTLY do you consider to be new innovation since 2007? From any and all businesses out there. Give some examples. I don’t get how building a $20 Billion wearables business in 5 years doesn’t count.
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chinacat
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Post by chinacat on Mar 12, 2021 20:31:20 GMT -8
It could also be that a few M1s, or a few M2s or M3s, finally have enough processing power to run a real autonomous automotive system. Tesla themselves claim that their first generation architecture can't do it, and I wouldn't be at all surprised if their current generation *also* can't quite do it yet. When I see this "lack of innovation" claim so many times, I always ask - WHAT do you consider to be innovation? If you claim that Apple hasn't had any new innovation since the iPhone in 2007, then WHAT EXACTLY do you consider to be new innovation since 2007? From any and all businesses out there. Give some examples. I don’t get how building a $20 Billion wearables business in 5 years doesn’t count. The iPhone set a very high bar, fairly or not.
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JDSoCal
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Post by JDSoCal on Mar 13, 2021 10:22:13 GMT -8
There are reasons to be fearful of AAPL (lack of innovation... So I take it that you are unimpressed with the dawning of the age of Apple silicon? I believe that the stunning performance of the M1 Macs is merely an appetizer for the broader impact that will be realized not only in performance, but also in the application of the technology to areas that may not be profitable enough to be the foundation of a company, but can be leveraged to increase the utility, versatility and possibly the profitability of future products, some of which may have no current competitors in the industry, like the original iPhone. It's definitely a significant iterative (performance and margins) improvement on Macs. But personal computers have devolved into what I'll call a niche product that doesn't really move the revs needle these days. Of course, Apple has been designing the silicon for its main product for several years, so the MX Macs seemed inevitable. When I see this "lack of innovation" claim so many times, I always ask - WHAT do you consider to be innovation? If you claim that Apple hasn't had any new innovation since the iPhone in 2007, then WHAT EXACTLY do you consider to be new innovation since 2007? From any and all businesses out there. Give some examples. I like Guy Kawasaki's definition of innovation: An invention plus a market (to sell it). In Apple's case, something that is transformative and changes the game beyond just iteration of the existing paradigm. Everything that Apple has done since iPhone is an variation of iPhone (iPad) or an adjunct (wearables). Apple silicon, while really cool, isn't transformative enough to really be innovative as I define it. It's a differentiator and margin expander of an existing (arguably dying) paradigm (personal computers). I don’t get how building a $20 Billion wearables business in 5 years doesn’t count. Apple wearables are, by design, essentially iPhone accessories. I have a watch I never use because it doesn't do anything as well as my iPhone. I believe it will take wearables actually replacing phones altogether before we see real innovation. Hopefully, it will be from Apple. I used to think the Walled Garden was impenetrable, but officious politicos all over the country and world are trying to break up or into the Apple Store (what markets couldn't do, meddling lefties will). But if antitrust shakedowns allow competitors to decide what is in the garden, that is a real threat. iPhone (and iOS) was an innovation akin to the meteor and the dinosaurs. What's the next disruptive meteor? If it's a car, I don't see how it would be truly innovative (market disruptive). But if it were obvious, by definition, it isn't an innovation.
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bud777
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Post by bud777 on Mar 13, 2021 12:14:42 GMT -8
I don't know if this would be called innovation, because it puts together some pieces that have been laying around since the 90's, but it certainly would be fun. When ID software came out with the Doom engine, they distributed editors to let anyone construct their own levels. The level was a 3D collection of rooms that the user could wander through. In reality, the "level" was just a file, called a .WAD file. You could teleport to a new level by entering a teleporter and selecting your destination. This was exactly the same thing as what happens when you go to a website: you access a remote computer, transfer a file( ..HTML instead of WAD), and your rendering engine (browser) interprets it. You ( with your VR glasses) travel through a virtual world as rich as the web, created by the same kind of effort that created the billion-plus pages on the web.
With the data speeds of 5G, I imagine this world could be very realistic. I see it as a transformation way to access information. Nothing would prevent having 2D withing the #D world so you could drop back to the current web if needed.
I don't know, it is just the start of an idea, someone more creative than I should pick it up and run with it. Good luck.
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Dave
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Post by Dave on Mar 14, 2021 2:58:42 GMT -8
I for one am always thankful for those that are being watchful and diligent and not just blindly walking through the graveyard hoping for the best. I appreciate the insight and wisdom of others even though I may not always agree with what is being said. None of us can know for sure what tomorrow may hold. Tim Cook could die unexpectedly or he could be caught with his hand in the cookie jar, who knows, the possibility’s are endless both inside the company and outside of it. It happens to companies all of the time. I knew a man that had invested heavily in General Motors and lost it all in 2009. It’s easy to look back and see all of the warning signs saying that the company was in trouble and was just a house of cards waiting for a push. In his generation GM was the foundation of the nation, what could possibly go wrong. I don’t want to be that person. That’s what I believe the purpose of this board is for, discussion. Please continue to share your knowledge as there are others, like me, that need and appreciate the experience and wisdom that is contained within. Now I have to go readjust all of the clocks.
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