chinacat
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AAPL Long since 2006
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Post by chinacat on Jan 15, 2022 5:39:55 GMT -8
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Post by hledgard on Jan 15, 2022 5:48:24 GMT -8
Thanks chinacat for the opening bell on the weekend ! ! We all appreciate it ! !
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chinacat
Moderator
AAPL Long since 2006
Posts: 4,429
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Post by chinacat on Jan 15, 2022 6:13:21 GMT -8
Thanks to cdnphoto for catching my hurried mistake in the thread opening posting.
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Post by macster on Jan 15, 2022 8:20:05 GMT -8
I like what Bart said and it justifies my 100% all in over 16 years. “I don’t see what the problem is. This fellow had 62% of his portfolio in companies that produce the dominant high end smartphones by units and revenue and whose loyal 1 billion users upgrade every few years and a Fortune 9 company ahead of the entirety of the leading search company. And another company building the dominant tablets unit and revenue wise Fortune 99. And another company that has the best high end computers powered by breakthrough silicon chips and has seen industry leading growth Fortune 89, and yet another company with the dominant smart watches and wireless earbuds, Fortune 83 company. And a service company growing such that it doubled revenue in under 4 years and is now a Fortune 46 company? Plus and R&D company poised to disrupt two markets with innovative AR and Automotive EV products and who know what to come. So yeah, this guy is mightily diversified with segment leading companies on every front and continued growth prospects. You have to wonder why the other 38% of his portfolio hasn’t kept up.”
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chinacat
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AAPL Long since 2006
Posts: 4,429
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Post by chinacat on Jan 15, 2022 9:01:47 GMT -8
Agreed. We started IRAs as soon as we could; those are professionally managed, and would be capable of supporting us in our current retirement state (we will soon reach the (revised) point of mandatory withdrawals). We were very fortunate to get a small windfall a few years later and felt comfortable accepting a bit more risk (or so we felt at the time). We received some pressure from the pros during the AAPL dip of a couple of years ago, but by then had come to realize that Tim had the company well on the path to reaching the state you describe above. The pros no longer even talk about Apple with us, as it is now the majority of our holdings.
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4aapl
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Posts: 3,632
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Post by 4aapl on Jan 15, 2022 11:07:22 GMT -8
I like what Bart said and it justifies my 100% all in over 16 years. “I don’t see what the problem is. This fellow had 62% of his portfolio in companies that produce the dominant high end smartphones by units and revenue and whose loyal 1 billion users upgrade every few years and a Fortune 9 company ahead of the entirety of the leading search company. And another company building the dominant tablets unit and revenue wise Fortune 99. And another company that has the best high end computers powered by breakthrough silicon chips and has seen industry leading growth Fortune 89, and yet another company with the dominant smart watches and wireless earbuds, Fortune 83 company. And a service company growing such that it doubled revenue in under 4 years and is now a Fortune 46 company? Plus and R&D company poised to disrupt two markets with innovative AR and Automotive EV products and who know what to come. So yeah, this guy is mightily diversified with segment leading companies on every front and continued growth prospects. You have to wonder why the other 38% of his portfolio hasn’t kept up.” That is a way to look at it, though there still is lots of overlap, between people (Tim or anyone in upper management being hit by a bus), locations (something tragic happens, natural or man made), industries (all pretty related, on a macro level), and lawsuits/regulation. In the caller's portfolio, it all depends on risk/reward, and what he is looking for. The "let it ride" mentality makes a lot of sense, especially if he doesn't need the money in the shorter term and is ok if things weren't always this good. Reversing his numbers, his original portion could have been in the 15-30%, depending on how the other positions have done in the mean time. That's a much different level than the current 62%. One way to look at it is if it was all in cash today, would he put ~60% of it in AAPL. That takes out the worry of taxes on existing gains. Personally, I think we're still more than 100% in AAPL, thanks to the wonders of margin. Given our risk/reward profile, and our monetary needs vs size of our portfolio, if we were suddenly all in cash instead I would still likely make an oversized purchase of AAPL, but it would likely be around 50%. OTOH, for a more normal situation, giving outside advice to someone with a small/moderate/sizeable portfolio, that has a 5+ year timeframe on likely needing any meaningful money from the portfolio, I don't think I would recommend more than 20/25% in AAPL. Or for that manner, any one company. "Do as I say, not as I do." We as a group have done extremely well with a company that has been extremely successful, such that just about any long term investment has outperformed. There are times you could lose money, and even a couple long term times including some of the pre-'98 , but overall it has made for a golden age of investing in Apple. There have been some rough falls for AAPL over the past 25 years, but as long as you could hold on through, they eventually worked themselves out, even if it took many years. But don't let success completely blind you of the risks. Don't become blinded like a tech stock buyer of '98/'99, where risk faded away from the mindset since reward was so great, and everyone was a winner. There are other stocks that have had long term performance at least in the same ballpark as AAPL. How would you feel of someone being 62% invested in AMZN, or GOOG, or TSLA? That's where doing differently than you would suggest comes in, via understanding and acknowledging the why. Reading the comments here and on PED, 4 that came up are "Apple is diversified and multinational", "I bought a small portion, and it grew, so I let the winner ride", "I'm such an Apple addict, it's what I know best" and "My portfolio has grown so much thanks to AAPL, the oversized position is justified since even a large drop wouldn't affect us meaningfully". I think I use all of those to some extent. But at least for myself, it's helpful to understand and acknowledge why I am happy with a portfolio mix that I wouldn't suggest to others. And that the general idea translates to other companies as well, including the likes of AMZN, GOOG, and TSLA. A friend used to be a VP of a medium sized tech company, so most of her balance is with their stock. I'm not familiar with the company, which makes it even more insightful to talk with her about finances, theories, and mindsets. Some of her justifications, like thinking of all the roads and schools you are building when having to make a large tax payment, or worries, like having trouble sending stock into her DAF since she feels it would outperform if left as the stock instead of changing into index funds, help me out when dealing with the same things. But her oversized investment in a medium tech company would worry me, whereas I'm sure she has nearly the exact same justifications in her mind. And the same it true for a friend at a fortune 500 company who has moved up the ranks and is now a VP. A large portion of their portfolio is in the companies stock, though they have also done very well with some AAPL investments made 5-10 years ago. While this is a company that will probably lag the S&P, though have lower volatility, it's not somewhere I would want more than 50% of a portfolio kept, especially since his income is from there too. In this he agrees and has been wanting to sell a meaningful amount, but due to regulations and worries on multiple fronts he hasn't managed to sell much, and he continues to be given more. Each situation is different. Often, it just comes down to risk/reward, and how you quantify and justify your positioning. But sometimes it is worthwhile to reevaluate, since things change. Apple is hitting on all cylinders again, but it hasn't always, and it is unlikely that it will forever.
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Post by artman1033 on Jan 15, 2022 12:32:15 GMT -8
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mark
fire starter
Posts: 1,552
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Post by mark on Jan 15, 2022 19:27:18 GMT -8
One of the guys comments that 62% is a lot in any one position, but then goes on "If you own your own business ...", well, I was thinking, if I owned my own business, I'd be very happy if it looked like, and behaved like Apple. I don't mean the $3T part, I mean the growth of earnings part. So the only way most of us can own a business like Apple is ... to buy $AAPL! By the way, it wasn't that much of a freak [out]!
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4aapl
Moderator
Posts: 3,632
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Post by 4aapl on Jan 15, 2022 23:20:00 GMT -8
Grrrr This market watch article had potential, looking at both rate hike and rate decrease times, and the corresponding index returns. The short is that when hiking rates, the economy is still doing great, so there's a lot of positiveness. And on the other side, when decreasing rates, things currently aren't so good (hence the decreases), but the future is looking brighter, especially with cheaper rates. www.marketwatch.com/story/get-ready-for-the-climb-heres-what-history-says-about-stock-market-returns-during-fed-rate-hike-cycles-11642248640?siteid=yhoof2But then they screwed things up, by not annualizing their comparisons. So one entry is for 9 months, most a 2-4 years, and one is for 10.5 years. If annualized you could easily compare to "average" returns. For instance a 30% return looks nice, until you see it's for 3 years, making it just somewhere below average annualized returns. The theory is right that the party isn't over, at least not instantly. This is like process control, trying to minimize the absolute peaks and valleys of something that might look like a sine wave, and make it more consistent. Raising rates should start slowing things down, but it will take a bit, and at least some borrowing will likely surge as borrowers get incentivized to get in before rates go up more. The concept is right. The story just sorely missed its mark by not giving data in a comparable form.
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chinacat
Moderator
AAPL Long since 2006
Posts: 4,429
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Post by chinacat on Jan 16, 2022 11:02:37 GMT -8
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Post by trainspotter on Jan 16, 2022 15:39:32 GMT -8
Excerpts from Wedgewood Partners Fourth Quarter 2021 Client Letter. . . Apple was a top contributor to performance during the fourth quarter. Revenues grew by almost +30%, with earnings further boosted by margin gains from the insourcing of processor design and production for the Company’s Mac lineup. Despite these sourcing changes, Apple still ran into some shortages of mass market inputs and would have otherwise reported even higher growth. The Company also continues to take smartphone share in China roughly a year after Huawei was forced to abandon the industry. Apple’s iPhone franchise should be a beneficiary of Huawei's colossal failure for some time. We continue to hold Apple shares as a core position. . . . Company Commentaries Apple Apple continues to develop new products and services that capture dominant profit share in some of the largest and most competitive industries around the globe3. Having owned Apple continuously for the past 16 years, we find it surprisingly difficult to know what new products the Company will unveil over a multi-decade timeframe. For example, in 2006, we did not know Apple would sell MacBooks with Apple-developed CPUs starting in the year 2020. In 2006, Apple had just made a huge pivot by launching its first Intel-based computers, moving away from IBM PowerPC4. But we did know that Apple’s vertically integrated (software and hardware) product development strategy was unique and extremely capable of creating products and experiences that customers thought worthwhile enough to spend growing amounts of time and money on. Today, that development strategy culture is still intact and as entrenched as ever thanks to Apple’s methodical long-term investments in key areas such as semiconductors and integrated circuits (IC), which have been complemented by continuous software innovation. In just a few years after Apple’s switch to Intel for its PCs, Apple made a couple of strategic acquisitions that launched its internal semiconductor development platform. These acquisitions, including PA Semi and Intrinsity, saw the Company add several hundred silicon engineers in the process, initially with the stated goal of expanding Apple’s parallel processing capabilities for its line of Mac computers.5 However, Apple’s first internally- designed system on a chip (SoC), the A-4 (launched in 2010), was not a multicore chip, nor was it designed for a PC. Yet by 2011 it was rumored that Apple had “1,000 engineers working on chips.”6 With the introduction of the iPhone and the creation of the Open Handset Alliance in 2007, off-the-shelf solutions for the touchscreen smartphone industry exploded, setting up supplier-customer dynamics reminiscent of the “Wintel” era of the 1990’s. Samsung, Qualcomm, Broadcom, and NVIDIA (to name a few) often provided off-the-shelf inputs for original equipment manufacturers (OEM) like Nokia, Samsung, ZTE, Sony, and Apple. By definition, these inputs were not custom made; therefore, those parts alone would not provide any sort of differentiation. So, the real benefit of recruiting semiconductor design talent was that Apple could create custom inputs to make products that would significantly stand out from the competition. Apple has developed well over a dozen custom processors and other integrated circuits since it launched its first “A-series” processors. The A-series processor family seems to be an annual iteration of Apple’s mobile CPUs, often enabling new iOS-specific functions that sometimes takes competitors years to mimic. For example, in 2017 Apple’s A11 Bionic processor featured a “neural processing unit” that provided the iPhone X with enough processing power specifically dedicated to operating the device’s FaceID 3D mathematical algorithms so users could securely unlock their phones and also make digital payment authorizations. It took years for competitors to copy this feature using similar biometric scanning, but even those have been sparingly embraced by users, meanwhile Apple’s FaceID helps authorize over 600 million payments per year.7 Payments alone are probably not a huge reason to go out and buy an iPhone or iPad, but after more than a dozen years of chip iterations we would argue that regular device feature innovations along with quality improvements have yielded a consistent and differentiated value proposition that regularly convinces consumers to stay and grow in the Company’s lucrative ecosystem. To capture the vast majority of the profit share in mobile, Apple has had to do more than generate revenue by focusing on user experience. The Company has also had to maintain a disciplined value chain to keep expenses under control. One obvious but immensely important aspect of their strategy has been a focused product set. This concentrated purchasing power likely affords raw chip procurement economics that are not far from off- the-shelf solutions.8 In addition, Apple has been able to secure leading-edge fabrication technology at its fabrication partners at huge scale. This rare capacity alone provides a multiyear head start on many processing competitors. So, Apple can reap the benefits of custom chips without paying exorbitant prices, which creates value for most everyone involved. We expect Apple’s strategy of differentiation through silicon will continue for years to come. According to Apple’s website, Apple currently has as many job openings for silicon-related development as they do for software applications and frameworks. More recently, Apple has started to displace Intel CPUs from its PC lineup and replaced it with Apple’s M-Series silicon. Apple also plans to replace Qualcomm modem silicon by including an internally developed modem on upcoming A-Series processors.9 Of course, Apple does not participate in the server CPU market or cater to hyperscale customers, despite iCloud, the App Store, and all of its other cloud-based services. However, we would not be surprised if one day Apple tried to bend the curve in the cloud. None of these moves are mean feats given Intel and Qualcomm have been competing in processor design and production for generations. Apple has effectively created a semiconductor business that rivals and even surpasses some of the most established semiconductor-focused businesses in the industry. Apple continues to differentiate through vertical integration, which has been a hallmark of Apple’s long-term strategy to grow and capture superior profitability. It is difficult to predict what new products will be unveiled; however, we think this strategy should continue to serve shareholders quite well.
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
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Post by Dave on Jan 17, 2022 3:19:35 GMT -8
Thank you Trainspotter for that link.
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Dave
Member
"It's tough to make predictions, especially about the future." Yogi Berra
Posts: 4,103
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Post by Dave on Jan 17, 2022 3:27:19 GMT -8
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chinacat
Moderator
AAPL Long since 2006
Posts: 4,429
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Post by chinacat on Jan 17, 2022 7:49:36 GMT -8
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JDSoCal
Member
Aspiring oligarch
Posts: 4,182
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Post by JDSoCal on Jan 19, 2022 10:59:04 GMT -8
One of the guys comments that 62% is a lot in any one position, but then goes on "If you own your own business ...", well, I was thinking, if I owned my own business, I'd be very happy if it looked like, and behaved like Apple. I don't mean the $3T part, I mean the growth of earnings part. So the only way most of us can own a business like Apple is ... to buy $AAPL! By the way, it wasn't that much of a freak [out]! More bad advice from the Lose Money Fast team. Years ago, I'd considered starting a small business: A small brewery/brewpub. I was quickly taken aback by the enormous capital investment (about a million) to maybe earn $50K/yr at first, or maybe lose everything. Even the regulatory issues were daunting - and I'm a lawyer. One way to save startup costs was to buy equipment from defunct breweries - and I was struck by the fact that there was no shortage of them. So invest a mil to make 5 figures, maybe 6, for how many years to break even on my capital investment, with a >0 risk of losing everything? And that was before covid destroyed retail.
Or, plop that mil into an already profitable company with huge margins, extremely loyal customers, and 9 figures of cash on hand. Is there any risk whatsoever that Apple goes to zero? I guess there is the Blackberry example, but for every BB there is a MSFT that everyone had written off for dead. Hell, even IBM is still doing well based on where I BOT it at. And, of course, Apple does all of my work for me. Most small businessmen I know work 80 hour weeks.
Guy Adumbi thinks the former is a better risk? (the point of this discussion was risk, not reward, so the potential to get rich from a small business is irrelevant). Maybe if your trading business were given regular free PR by regular appearances on CNBC, your perceptions of owning a business might be a bit skewed...
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mark
fire starter
Posts: 1,552
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Post by mark on Jan 22, 2022 23:49:26 GMT -8
One of the guys comments that 62% is a lot in any one position, but then goes on "If you own your own business ...", well, I was thinking, if I owned my own business, I'd be very happy if it looked like, and behaved like Apple. I don't mean the $3T part, I mean the growth of earnings part. So the only way most of us can own a business like Apple is ... to buy $AAPL! By the way, it wasn't that much of a freak [out]! More bad advice from the Lose Money Fast team. Years ago, I'd considered starting a small business: A small brewery/brewpub. I was quickly taken aback by the enormous capital investment (about a million) to maybe earn $50K/yr at first, or maybe lose everything. Even the regulatory issues were daunting - and I'm a lawyer. One way to save startup costs was to buy equipment from defunct breweries - and I was struck by the fact that there was no shortage of them. So invest a mil to make 5 figures, maybe 6, for how many years to break even on my capital investment, with a >0 risk of losing everything? And that was before covid destroyed retail.
Or, plop that mil into an already profitable company with huge margins, extremely loyal customers, and 9 figures of cash on hand. Is there any risk whatsoever that Apple goes to zero? I guess there is the Blackberry example, but for every BB there is a MSFT that everyone had written off for dead. Hell, even IBM is still doing well based on where I BOT it at. And, of course, Apple does all of my work for me. Most small businessmen I know work 80 hour weeks.
Guy Adumbi thinks the former is a better risk? (the point of this discussion was risk, not reward, so the potential to get rich from a small business is irrelevant). Maybe if your trading business were given regular free PR by regular appearances on CNBC, your perceptions of owning a business might be a bit skewed... Funny. I know someone that opened a brewpub in So Cal a few years ago (Long Beach Beer Lab). And, yes, he invested close to $1M, and still 14 months later wasn't open yet. The regulatory issues are not just daunting, they are never ending. He finally opened and did well enough, but the restaurant business sucks (it's the worst small business of all, with the most failures, in the shortest amount of time, with the highest initial capital requirements). I wouldn't even recommend opening a restaurant to my worst enemy. But this guy, a really nice guy, loves brewing, and just felt that he had to do it. I don't know the current status, maybe PPP saved it through covid? I do know that his blueberry beer was terrific, and his chocolate beer was also pretty good.
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