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Old 03-15-12, 09:48 AM   #1
CbadRider
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Apple stock hits $600

Apple hit $600 in pre-market trading.

Some people I work with swore the stock would tank after Steve Jobs died. It's gone up over 200 points since then.

Then they said it would drop after the iPad3 was announced because it didn't have all of the expected updates. It's gone up about 50 points since then.

I'm not planning on selling my shares any time soon. How high do you think it will go?
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Old 03-15-12, 10:15 AM   #2
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Here's what I don't understand about apple. Their P/E ratio has come down to a reasonable level, they are sitting on a ton of cash, why the heck aren't they paying a dividend?
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Old 03-15-12, 10:44 AM   #3
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Here's what I don't understand about apple. Their P/E ratio has come down to a reasonable level, they are sitting on a ton of cash, why the heck aren't they paying a dividend?
actually, the new CEO is talking about doing just that.


What's funny is, samsung, who is being sued by apple, is the sole provider for the ipad3 screens.

oh, and samsung is backlogged on the ipad3 screens.
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Old 03-15-12, 11:06 AM   #4
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Some people I work with swore the stock would tank after Steve Jobs died.
I think that was a common impression. The reality is that while Steve was the public face of the company, there are so many good people working for them that it is far from true. Over the years they really developed a strong sense of identity and direction, with a strong sense of purpose and design, and will continue along their path for a long time.
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Old 03-15-12, 04:38 PM   #5
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What's funny is, samsung, who is being sued by apple, is the sole provider for the ipad3 screens.

oh, and samsung is backlogged on the ipad3 screens.
Companies disagree on issues all the time, it's not like they have to divorce their entire relationship just because of one issue. They both want to make as much money as possible, and the status quo will do that until the cases are decided.
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Old 03-18-12, 04:24 AM   #6
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Here's what I don't understand about apple. Their P/E ratio has come down to a reasonable level, they are sitting on a ton of cash, why the heck aren't they paying a dividend?
That would be lame because it would reduce their cash and put a damper on their stock price's appreciation. Those looking for dividends should put their money elsewhere, utilities, banks or manufacturing. Apple's not an appropriate investment for those who want dividends anyway. The risk-tolerance just doesn't match. That's like putting a grandma who just gotten her 1st motorcycle license on a BMW S1000RR.
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Old 03-18-12, 05:05 AM   #7
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That would be lame because it would reduce their cash and put a damper on their stock price's appreciation. Those looking for dividends should put their money elsewhere, utilities, banks or manufacturing. Apple's not an appropriate investment for those who want dividends anyway. The risk-tolerance just doesn't match. That's like putting a grandma who just gotten her 1st motorcycle license on a BMW S1000RR.
Good grief.

The only reason you INVEST in ANY company is to earn dividends. Pure and simple. Its return on capital and this is the natural order of capitalism.

So why on earth does anyone invest in companies that don't pay dividends?

Because they are gambling.

A stock that never pay's dividends is worth NOTHING in the natural order of things. The fact that perfectly sane people thinks its OK to invest in stocks that don't pay dividends is evidence that you have been suckered into a ponzi scheme.

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Old 03-18-12, 05:20 AM   #8
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There are compelling arguments pro and con on the dividend issue with this company. Ultimately they do have to find a way to deploy $100 billion + in cash. AAPL does remain relatively cheap by most investing metrics, particularly P/E after back out the cash. The projected growth curve for this firm remains so off the hinges that I don't lose sleep over the stock. I bought my first shares for about $80. People have been telling me to sell the stock because it's going to crash for five years. I do my own research.

The two strongest arguments against a dividend are that shareholders have to pay taxes on the income (a stock buyback wouldn't subject them to that) and that companies that start paying a dividend are throwing in the towel on growth. That last argument sounds spurious to me, this company's growth prospects are unrelated to any prospective dividend.

I agree with Anthony that any stock that doesn't pay a dividend is essentially a gamble on growth. Most of my holdings are dividend payers like VZ, MO, CAT, etc. (I'm an investor, not a trader). On the other hand, a significant portion of my strong returns (approximately 15% annualized over 10 years, including one of the worst downturns in stock market history) have come from some speculative stock holdings like this one. So it's an important part of a stock investment portfolio.

I suspect that there will be a dividend regardless. My best case scenario would be a 10 for 1 stock split and a 3% dividend yield, but I doubt both will happen.
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Old 03-18-12, 06:06 AM   #9
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In the end, it's all comes down to purchasing power, whether that's represented by fiat money, or numbers in a ledger somewhere. What matters with investments is how much purchasing power it gains you in a certain amount of time. For many people, they're better off working a job and putting extra money away as it grows their purchasing power faster than any type of investments. I'd much rather get 100% appreciation in my purchasing power than 5% regardless of how that was gained.

The secondary factors that may or may not lead to that appreciation can be growth-rate, dividends, gross/net earnings, return on equity, return on assets, etc. Tertiary factors derived from those may be P/E, RSI, MACD, ROC, stochastic, DMI, etc. All these are still just derivatives used to rationalize of the bottom line: my purchasing power, is it going down, maintain or growing at a certain rate. Even then that's variable depending upon exchange-rates.
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Old 03-18-12, 06:21 AM   #10
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On the other hand, a significant portion of my strong returns (approximately 15% annualized over 10 years, including one of the worst downturns in stock market history) have come from some speculative stock holdings like this one. So it's an important part of a stock investment portfolio.
Over the past decades, it's pretty much impossible to find a stock that has given back to shareholders as much as Apple:


People have said $50/shr was too much and they're getting out. Same at $100 and I bought in as they flee. Hits $150 and people are running for the hills as I gobble up more and add a pile of leaps as well. At $200, only fools would invest. Well, I had to do some fading at that level. But at $300, only idiots would get in, so stupidly I got in. At $400, it was way too expensive! Well, I got cheap with a couple hundred calls there. At $600? Well, I ratio'ed in some puts for insurance. What kind of an idiot would buy a flat or an auto and not insure it right?
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Old 03-18-12, 06:49 AM   #11
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Mother Nature is a capitalist. There are NATURAL laws of Capitalism. You invest capital in order to earn a return (dividend). Yes in a situation of a startup you invest your capital now in order to earn a return later but there are time limits on this. It doesn't last forever otherwise you have lost your capital and the investment was a failure.

Now the natural investment market has been perverted by short term investors who make money on capital growth without being concerned about dividends. Sure someone has been clever enough to exploit a niche but this growth is driven by the PROMISE of returns (dividends) later. If the returns never come then its been a failure. Its gambling.

So many people are so much into the gambling that they have completely lost sight of the foundations of capital investment. Its a ponzi scheme waiting to collapse.

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Old 03-18-12, 10:32 AM   #12
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If the returns never come then its been a failure. Its gambling.
Whatever you say. The returns on stocks like this far outweigh dividend paying stocks while they are growing, the risk is part of the deal. Characterizing investing in such equities as 'gambling' is trite and misleading. I can do research to justify the value of a bet on any particular stock, I can't do that research @ a craps table. If you think AAPL is going to crash anytime soon, you can avoid the stock. The research I've done points to a very different outcome, but there are no guarantees in this kind of investing. But you gotta do the homework.

Do you really think the 3% dividend yield on some stock is going to save your investor ass if the market plunges like it did a few years ago? It helps, but it's no safety net. All equities carry risk. Every single one. It's just a matter of the degree of risk. Some stocks lost 60%++ of their value in the most recent crash (including AAPL). The dividend payers (like Verizon, etc.) loss far less and then covered you on the downside with dividend returns buying the shares each quarter at a depressed price so you got more shares (that's how I take the dividends as quarterly share awards). But at the end of the day, through the ups and downs of the last decade, AAPL has returned far more to investors than VZ or any other more stable dividend payer, and over a fairly long stretch. This company is not a flash in the pan, the business model is innovative and solid and the company has the strongest balance sheet anyone has ever seen.
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Old 03-18-12, 02:30 PM   #13
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If you say that a stock is High Risk and High Growth then fine but is such a situation I would expect a VERY high dividend someday. Maybe some years it never pays a dividend but in the good years it pays a very high dividend. Well, that may be the nature of the investment but if a stock NEVER pays a dividend then its a failure. There is no return on capital. The fact that such a stock is growing in capital value to such an extent is a BUBBLE. Its a gamble in an age of gambling. There is no fundamental support for the share price.

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Old 03-18-12, 04:02 PM   #14
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If you're talking about actual MTM value, then only cash counts. Even book-value is a derivative with implied values. I've liquidated to all-cash numerous times and saved myself a tonne in purchasing-power in the past several decades. Heck, I learned that lesson early on in the '87 crash. Personally I don't feel safe with my money parked in anything but cash. Even then there's a certain amount of risk as well. I move it around depending upon exchange-rates to maintain my cash's purchasing-power.

Cash on your balance-sheet at a brokerage is still a derivative of value and sometimes I convert it into gold-based currency that I can get my hands on and tuck away physically. Especially given the games those in power have played with fiat money and hiding the M3 so they can counterfeit trillions more with no oversight. But that's a different topic of discussion.

Many ways to extract returns on your investment other than just dividends. Fading out a couple contracts a month gives me all I need for each month's living expenses. Heck, just 10 contracts paid all my expenses for an entire year.

"Capital" and "dividends" and "returns" is a debate on semantics as it's vague terms used to describe already-abstract concepts. One has to examine what money really IS, where its energy comes from, in order to understand the bottom line.

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Old 03-18-12, 05:06 PM   #15
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By any investing metric I know (and I've been doing this for years) AAPL is undervalued at today's price, not over valued. If you think it's a bubble, don't buy it.
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Old 03-18-12, 05:46 PM   #16
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The stock will pop or drop depending what the company announces tomorrow.

That might well be the long awaited dividend Anthony is wringing his Aussie hands over. That's what I would prefer. Hey, it has to be a dividend or a substantial stock buy-back. Or maybe they're just going to buy Disney. For cash. And they'd still have $20 billion left over.

I think it's a dividend, one recent driver of the stock price has been mutual funds and pension managers that typically can only buy dividend paying stocks. Those entities have some latitude (those covenants for such funds typically apply to 80% of capital, they have some wiggle room for precisely such maneuvers) and the word on the street is they have been piling into AAPL in anticipation. In other words it appears the smart money thinks a dividend is imminent, so maybe that's the deal. We find out @ 9AM EDT tomorrow.

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Old 03-18-12, 07:12 PM   #17
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Every time I hear of AAPL hitting a new high, I think of that day, somewhere in the Amelio period, when I told my dad to buy in at $7.46. Well, that didn't happen.
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Old 03-18-12, 08:26 PM   #18
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Every time I hear of AAPL hitting a new high, I think of that day, somewhere in the Amelio period, when I told my dad to buy in at $7.46. Well, that didn't happen.
Yeah, but to be fair, the stock didn't really start climbing until a couple of years after Jobs' return, c. 2001 or so. I think you could have bought the stock for ten bucks or so back then. I also think it's quite possible the stock still has considerable upside. Also possible that it could stagnate and become another Intel or Microsoft and not go anywhere for a long time. But given the amazing realistic growth prospects for their core businesses in the next several years that downside scenario seems less likely. Interestingly, the downside scenario for this stock appears to be stagnation @ its current levels, not anything like a bubble bursting and a big plunge in share price. Because all the research does not point to a bubble at all. I'd like to see the numbers behind that odd assertion. That sounds like something that was pulled out of somebody's ass until somebody can show me the numbers that fly in the face of dozens of respected analysts whose very detailed and highly documented research indicates the opposite.

Still, it's stocks. Anything can happen. Nobody understands better than a long experienced investor who has lost tens of thousands of dollars on bad stock choices over the years. But more winners than losers, hence my returns. You don't have to be right all the time to succeed at this, just most of the time.

Here's the #1 thing I've learned investing over the past 10+ years: if you can't wrap your head around the business model of the stock you're buying, don't go there. I got killed on bank stocks. Never again. Not because I don't think they can be a good investment, I realized I don't understand them.

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Old 03-19-12, 12:13 AM   #19
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you have to admit though, at one point in time, apple was about to croak with its various failed endeavors and RISC processors that were being constantly out performed by the 'inferior' AMD athlon64 processors.

Although, the crap RISC processors were the fault of motorola/IBM, if I remember correctly. AMD also had the same problem with their partnership with IBM a few years later.
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Old 03-19-12, 02:09 AM   #20
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and with smart phones and tablets becoming so popular RISC is back, and companies like Intel are odd man out with no products to offer.
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Old 03-19-12, 02:23 AM   #21
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Sure, if Apple is making a lot of money and IS about to pay a dividend then all is well. There are companies out there that don't pay dividends yet the fact that most don't mind is a perversion of the natural market.

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Old 03-19-12, 05:20 AM   #22
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The stock is up $20+ per share in the pre-market on anticipation of a dividend announcement today. If such an announcement is forthcoming I think the stock trades into the $610+ range. If the announcement disappoints the stock could sell off to $550 or less. Interesting day.
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Old 03-19-12, 06:17 AM   #23
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Whatever you say. The returns on stocks like this far outweigh dividend paying stocks while they are growing, the risk is part of the deal. Characterizing investing in such equities as 'gambling' is trite and misleading. I can do research to justify the value of a bet on any particular stock, I can't do that research @ a craps table. If you think AAPL is going to crash anytime soon, you can avoid the stock. The research I've done points to a very different outcome, but there are no guarantees in this kind of investing. But you gotta do the homework.
I don't think so and here's why.

There's only one thing that drives stock price. The ratio of buyers to sellers. Therefore you can do all the research in the world and unless the rest of the market sees and believes what you see you lose.
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Old 03-19-12, 07:24 AM   #24
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I don't think so and here's why.

There's only one thing that drives stock price. The ratio of buyers to sellers. Therefore you can do all the research in the world and unless the rest of the market sees and believes what you see you lose.
Ultimately that's very true, but fundamentals drive stock valuation as well. Stocks trading @ 10x-15x earnings have more room to grow and are far less prone to a huge price correction than stocks trading @ 40x p/e. I don't buy the latter, even though some of those stocks could have made me plenty of dough in the right spots over the past ten years. But I won't go there.

The company announced a stock buyback plan and a $2.65/share/per quarter dividend, which @ current levels equates to a dividend yield of less than 2%. Still, these factors should help the investors and the stock. I love dividend stocks, and my biggest holding just became one, so I'm a happy camper.

I've been doing it this way for a decade, and while I've made some bad calls, my returns speak for themselves, all through a pretty choppy market over the past 4 years. I'll keep doing it this way until it stops working. I think I'm a very conservative investor, but investing is risky, period. Hell, life is risky.
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Old 03-19-12, 07:39 AM   #25
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Ultimately that's very true, but fundamentals drive stock valuation as well. Stocks trading @ 10x-15x earnings have more room to grow and are far less prone to a huge price correction than stocks trading @ 40x p/e. I don't buy the latter, even though some of those stocks could have made me plenty of dough in the right spots over the past ten years. But I won't go there.
Fundamentals only matter if people behave rationally which history has shown time and time again simply doesn't happen. When the down turn comes, it can come so fast that smaller investors have big holdings wiped out. This focus on stock price is one of the reasons we shouldn't pay executives in options because then they have every incentive not to pay dividends and try and drive up the price for short-term gain.
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