Ask HN: Would you still by Apple stock? | Hacker News Reader

Ask HN: Would you still by Apple stock?

17 pointsnkh16 comments

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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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...)

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.

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.

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.

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.

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".

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.

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?

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

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?

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!)

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.

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

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)

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

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

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.

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