

Ask HN: Would you still by Apple stock? - nkh

I know they are the largest company in the the world now, so I don't expect them to double.  While on the other hand, there was a recent hn article that they still only had 8% of the worlds cell phone market.  What are your thoughts, and better yet your quantitative analysis?
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sjayman
Their launches are not beating customer expectations as they once used to -
think iPhone 1, iPod, Nano, Air and compare that to today's launch of the
iPad. Was that launch revolutionary, or modest?

This point alone doesn't mean that they are not a bet worth taking. But that,
taken along with the fact that they're now facing tougher odds growing 20% or
30% per annum on already massive sales figures makes it harder to justify
investing in them in order to make huge returns.
([http://www.nytimes.com/2012/02/25/business/apple-
confronts-t...](http://www.nytimes.com/2012/02/25/business/apple-confronts-
the-law-of-large-numbers-common-sense.html?pagewanted=all))

Lastly, and most importantly, society, especially a free one, always finds a
way to mobilize against those that are deemed too powerful. The simple
argument here is that in order to scale past the law of large numbers and
continue to deliver "predictable" growth to the Street, companies sometimes
have to push against the limits of acceptable business practices. We have seen
that with Walmart, Microsoft, Exxon, BP, AT&T not to mention the robber barons
of old.

Free societies, especially representative democracies check such growth with
regulation (sometimes necessary, sometimes far reaching, but in its ideal -
self-correcting). The same sorts of regulations that prevented AT&T (of old
think Ma Bell) and Microsoft from extending its reach, will soon affect Apple.
One can argue, it already has. What with lax supervision of its subcontractors
in China etc (Foxconn)

That said, I am very impressed with how quickly Apple responded to these
accusations, and tended to being more open than closed. An instinct not easily
attributed to Apple.

In closing. Apple is probably a safe place to park your cash to hedge
inflation. Perhaps even enjoy 4-5% YoY growth averaged aver 10 years. But
blockbuster, maybe not.

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jordanmessina
There's a lot of talk about Apple starting to pay out dividends to stock
holders. This could be huge for two reasons. The obvious being that you start
making money now rather than waiting for capital growth. The second, less
obvious, is that some investors hold the rule that you don't buy stocks that
don't pay dividends. If Apple started to pay dividends it would open doors to
even more investors. I would assume this would help their stock rise at an
even faster rate.

I would still buy Apple stock if I had the cash on hand. I think a possible
split would make the stock even more attractive as well. ~530/share makes it
somewhat hard to make a meaningful investment.

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LukeRB
I've been a shareholder since 2007 and I would seriously consider selling if
they offered a dividend. Offering dividends is not what true growth companies
with good plans for the future do. FWIW, I'm far from risk-averse; I wouldn't
invest in a single company that offers a dividend due to the implied lack of
growth and innovation that is implied by giving away retained earnings that
could be used for R&D, strategic acquisitions and new business initiatives. In
Apple's case, this includes new markets/products, increased retail exposure
and strategic exclusive supply chain deals.

I hope, for Apple's sake and our own, that they don't offer a dividend
anywhere in the near future, if ever.

~~~
lix2333
This is correct. It would be a huge event if Apple started paying dividends
and I'm fairly certain the market would not react kindly to that. The reason
is, the market is pricing the Apple stock high due to what they think is
coming in the future. They see lots of growth and expect the stock to increase
in price. If Apple starts pay a dividend, that means they have decided that
they aren't a high growth company anymore, and more of a stable giant
(CocaCola, GE, etc). So all the analysts who thought they were going to have a
certain amount of sales and growth have to readjust their predictions. Lower
earnings predictions = lower stock price.

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LinaLauneBaer
I wouldn't invest in a single company nor would I try invest in specific
companies. This is because I believe in the so called "Efficient-market
hypothesis"[1].

tl;dr: "one cannot consistently achieve returns in excess of average market
returns on a risk-adjusted basis, given the information available at the time
the investment is made"

There are many studies that have shown this.

Even if you think you are better informed than the average Apple shareholder -
this doesn't matter in the long-run. You may be lucky of course and make a lot
of money - but in the long-term average case investing in specific companies
is not better than investing in something like the Dow Jones.

Also - the stock market is a highly irrational market that can be shown by a
little experiment - I will make it concrete:

As 100 people the following question: Do you think that you know more about
Apple than the average Apple investor? Yes or no?

In a perfect world you should get 50 x "yes" and 50 x "no" as an answer. But
in reality more than 50% answer with "yes".

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kappaknight
I would buy it and I do think it will hit $800 or even up to $1,000 if it
doesn't split. Why? In addition to all the exciting products they're putting
out, they are JUST starting to get into the iPhone 4/4S business in China. The
market over there is at least as big if not slightly bigger than the market
here in the U.S. So is there room for them to double their cell phone market
share? Yes, definitely. Does iPhones lead people to buy other Apple products
like tablets and laptops? Yes.

Whether it's sustainable in the long term or not, there is definitely room for
growth in the short term.

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LukeRB
I've been an investor since 2007 and though I still fully believe in the
company and its continued growth, I feel that the stock price's exponential
growth in recent months is out of line with it's actual performance. Don't get
me wrong, the price should be rising, but not this quickly. Broader market
forces are at play in this and I would expect a market correction to occur in
the coming weeks or months, which will have a significant effect on AAPL
because it has a beta hovering around 2. Of course, the question is: When will
the correction take place?

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coderdude
Give it some time. For all we know they're in dead reckoning[1] mode right
now, where the last fix on their coordinates came from Steve Jobs. They'll
continue to extrapolate along their current path but just wait until the winds
of change arrive. I think they're hoping to cash in on this period of time
between now and when you realize they don't know what the next hotness is.

[1] <http://en.wikipedia.org/wiki/Dead_reckoning>

~~~
nkh
I suppose the question is, assuming they are dead reckoning, is the current
stock price 531 asking too much, or is there still profit to be made?

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DomBlack
I work with stock market data daily (providing charts and technical alerting
to end users) and the kind of growth Apple is having is just not sustainable,
I mean it's gone from $320 last Jan to $532 today!

I am a fan of Apple products, but I just dont see it as a good investment, I
would suspect that it will either level off or have to talk a fall soon.

So my personal preference is do not buy Apple, I wouldn't (even if I could
stomach $525 per share!)

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dhammack
I had the same thoughts. In my experience, exponential growth in stock price
is unsustainable, and usually results in a correction. Since the question is
really how long do we have until a correction, I would say two to four weeks.
TL;DR - Don't buy now.

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luksus
I still would buy but observe the company closely and how they do with iPad3,
iPhone5 and Apple TV... specially at launch and during/after the holiday
season

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justjimmy
Do you like money?

(I'm personally excited for Mountain Lion, how iBook market will shape the
field, next gen iPad, so I'm rather optimistic about Apple)

~~~
nkh
I'm excited with where Siri can go as well. Maybe I'm suffering from the "it
can go an higher" bias.

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baremetal
I would stay the hell away from it. I might start considering shorting it soon
(but buy protective calls to hedge the short)

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connorlee
Yeah, there's still time to buy Apple Stock. I asked myself the same thing
this time last year when it was around $300. Prediction: $800 by 2014.

