Wednesday, August 1, 2018

New Geico Rock Award Nominee -- August 1, 2018 -- Nothing About The Bakken

More on AAPL.

Later, 8:04 p.m. CDT: Apple eating Samsung's lunch. And dinner.

Later, 7:46 p.m. CDT: CNBC says new share price to give Apple a $1 trillion market cap: $207.

Later, 7:46 p.m. CDT: Warren Buffett made more than $2 billion in his Apple investment. The article says BRK has made $2.7 billion if the company's position in AAPL has not changed. CNBC says Apple's success (3Q18 earnings) due to Trump's tax reform bill. Just think what Apple could do if Phase 2 of Trump's tax reform is passed by Congress. LOL.

 Original Post

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

Note: I am posting the AAPL updates for many, many reasons, mostly because the company fascinates me on so many levels. It has nothing to do with AAPL as an investment per se. A new reason: I am getting requests from more readers for Apple updates.

From SeekingAlpha today:
  • Needham maintains a Buy rating after earnings and raises its Apple target by $10 to $220, a 16% upside to yesterday’s close.  
  • firm says the best way to value Apple is as an ecosystem with de facto “subscribers” because research indicates the average iOS consumer stays within that ecosystem for 10 years.
  • Needham estimates the Apple ecosystem has 823K unique members owning 1.4B active devices. 
  • more action: Monness Crespi raises from $235 to $275; Citi raises by $20 to $230; Wells Fargo raises to $210; UBS raises by $5 to $215; Bernstein raises from $100 to $190
  • Apple shares hit a new all-time high this morning, touching $199.26. Shares are now up 4.5% to $198.64 with the market cap sitting at $972.33B.
Bernstein: where the h*** has she/he been? Geico Rock Award nominee. Bernstein actually thought AAPL was going to fall to $100/share? 

On the other hand, look at Monness Crespi -- up to $275. Say what? 

Comment: right now, as things stand, if AAPL goes to $203/share, Apple has a $1 trillion market cap. Sometimes euphoria drives euphoria.

AAPL's P/E is 19. Let's call it 20.

The first quarters are always best for AAPL (October - December). Most recently, 1Q18, Apple posted earnings of $3.89/share.

After yesterday's earnings report, Apple has earnings of $11.03 for the current/recent twelve months.

If Apple posts earnings of $4.00/share in 1Q19 (last three months of this year; think Hanukkah, December 2 - 10, 2018), then earnings will be for the current/recent twelve months:
  • 4.00 -- estimated 1Q19 (compare with $3.89 1Q18)
  • 2.20 -- estimated 4Q18 (compare with $2.07 4Q17)
  • 2.34 -- 3Q18 (actual)
  • 2.73 -- 2Q18 (actual1
  • Total: $11.27. Let's call it $11.
Maintaining the same P/E of 20, that translates to a share price of ... let's see ... 20 x $11 = $220. 

By the way, no one has commented on the fact that Apple's cash horde dropped ... what was it ... $24 billion? How did that happen? Two words: stock buybacks.

My Dad's Reaction To The News ...

... that AAPL hit an all-time high, surged 5%, up over $10, now trading over $200/share.

If AAPL hits $203/share, Apple has a market cap of $1 trillion.  Market cap right now, $986 billion.



[Note: in the video above, with his left hand, he is asking for others in the room to join in. He didn't want to celebrate alone.]

This is pretty funny. Our dad bought a large number of AAPL shares years ago (a decade ago?) when he thought the company was in groceries. His only "due diligence" for investing: the crawler on CNBC and day-old stock prices, dividends, and P/Es in the business section of the Bismarck Tribune. At the time, he borrowed money against credit card companies that offered huge "loans" with zero interest for six months. He took loan after loan paying off loans before they came due with new credit card offers. He paid off all loans before any interest accrued. And accumulated a lot of AAPL shares in the process.

He was old school, having grown up in the depression, thought fresh fruits were a luxury when growing up in northwest South Dakota ... and then was completely amazed decades later, when he was in his 70's I suppose, that credit card companies would offer him huge amounts of money for "free."

He did not believe in re-balancing his portfolio based on age (the stock / bond ratio as one ages); and, I guess, as he got older, he thought it was less risky to go "all in." LOL.

Our dad probably never heard of Bernstein. 

There may be a bit of hyperbole there, but not much.


  1. Great post about your Dad's investment in AAPL. Can I hire him to be my investment advisor?
    If and when you ever run out of ideas for surveys of any sort, why not create a "brag" post, where folk would post the best investment that they still own, and when they acquired it, etc...
    Not as good as your Dad's but.... 1986, Costco, $6.96.

    1. Ha, that would be fun. Sort of like gambling at the casinos - no one ever tells you how much they lost. LOL.

      So, to help set the record straight:

      1) My worst decision ever: not selling Lucent when it was at the top. I must have left a gazillion dollars on the table.

      2) I've lost way more money on oil companies focused on the Bakken than I care to admit; trying to make it back now. LOL. MDU was one of those companies.

      3) MLPs -- why, oh, why did I ever get into MLPs? Nothing but headaches.

      4) Other losses over the years: Sprint; Nokia.

      5) Sold way too soon: WD-40.

      But other than that great stories overall.

      6) One of my best investments: Texaco after it declared bankruptcy. Phillips 66 at $5 or $6, decades ago before it was bought by Conoco.

      Thank you for taking the time to write. By the way, the best thing my dad did (financially) for me was just talking about the stock market. I don't think he understood it very well, and he never, ever taught me anything about the market. But I heard him from my very, very early years talking about "the market."

      I'm not sure you can teach kids under the age of 25 about the market (with some exceptions). All you can do is talk about it in general terms and hope they discover it for themselves.