AAPL - Apple Inc.

[John Hjorth]

Well done! - looks like the buy backs will have more bang for the buck

 

Attached is what I call a rational decryption of the press release with regard to new guidance for the quarter just ended. I hope it appears selfexplanatory, if you refer to the numbers in the top of the press release.

 

Thanks shalab,

 

I'm just trying to create some data driven balance in this discussion. [Which, to me  - honestly - is almost non-existent here right now.]

 

- - - o 0 o - - -

 

This reminds me dearly of the Novo Nordisk A/S situation in the autumn of 2016 : An earnings miss in a wonderful company & world leader, politics involved etc.

 

Among Danes there is a saying, that a dog over the first few years of its life evolves a personality like the owner of the dog. A home-spun philosophy is gradually evolving inside my head ... - Investors [perhaps] invest in companies that are bolted together & wired the same way as the investor?

 

Jeff [DooDiligence] owns both AAPL & NVO. Here is how Jeff recently has described himself:

 

in·dom·i·ta·ble

/inˈdämədəb(ə)l/

adjective

 

impossible to subdue or defeat.

"a person of indomitable spirit"

Synonyms: invincible, unconquerable, unbeatable, unassailable, invulnerable, unshakable, unsinkable.

 

 

Coincidence? - Because this is to me also a description of AAPL. -We actually also have a special term for a person with such a mentality and attitude towards challenges here in Denmark : A bottle cork. [Fits perfect to the quote above.]

 

- - - o 0 o - - -

 

The above is also in the press release, but people don't see or read it.

[Scunny Bunny]

Look let's be frank.  The sheer degree of adulation for AAPL got way out of hand around October.  I'm not a fan of the company culture - don't forget the grubby little things AAPL does to annoy customers - plug changes, removal of output sockets etc which by and large devalue their products, and the lowered production quality (eg model 8 bends) - has the hallmarks of a company out to extract as much from addicts as possible - clearly shown in the chart. The focus on the Buffett thesis and the aggressive capital management and "compounders" mania fogged peoples brains IMHO.

 

Did folks really think >17% product price inflation seen in year to Sep 18 was in some way sustainable (see chart attachment). Or don't they calculate these numbers? R12 average price of US$765/iphone unit = "sticker shock" and clearly alluded to in the release as more folks buy the device, hold for longer and switch carriers in major markets. Too much blind following of Buffett thesis that a $1000 device is underpriced - in a very competitive market?

 

I was short AAPL for a while and totally amazed it got to $230 (13x EV/EBITDA) - covered back at $149. Company can continue being a tontine for a period. This will derate the stock but it's not a unit growth company and in a non-unit growth industry - see Gartner #s.  Reckon it got too obsessed with capital management, as its notional debt costs make any equity retirement accretive. No position at present - my focus on company numbers rather than macro China, though accept the latter tricky as is competitive environment there. 

[Gregmal]

Well done! - looks like the buy backs will have more bang for the buck

 

Attached is what I call a rational decryption of the press release with regard to new guidance for the quarter just ended. I hope it appears selfexplanatory, if you refer to the numbers in the top of the press release.

 

Thanks shalab,

 

I'm just trying to create some data driven balance in this discussion. [Which, to me  - honestly - is almost non-existent here right now.]

- - - o 0 o - - -

 

This reminds me dearly of the Novo Nordisk A/S situation in the autumn of 2016 : An earnings miss in a wonderful company & world leader, politics involved etc.

 

Among Danes there is a saying, that a dog over the first few years of its life evolves a personality like the owner of the dog. A home-spun philosophy is gradually evolving inside my head ... - Investors [perhaps] invest in companies that are bolted together & wired the same way as the investor?

 

Jeff [DooDiligence] owns both AAPL & NVO. Here is how Jeff recently has described himself:

 

in·dom·i·ta·ble

/inˈdämədəb(ə)l/

adjective

 

impossible to subdue or defeat.

"a person of indomitable spirit"

Synonyms: invincible, unconquerable, unbeatable, unassailable, invulnerable, unshakable, unsinkable.

 

 

Coincidence? - Because this is to me also a description of AAPL. -We actually also have a special term for a person with such a mentality and attitude towards challenges here in Denmark : A bottle cork. [Fits perfect to the quote above.]

 

- - - o 0 o - - -

 

The above is also in the press release, but people don't see or read it.

 

I am not trying to be abrasive in my asking of the following question(in reference to the bold), but to my earlier point, do the facts/data really matter with a company like Apple? All the information is out there, everyone's got access to the same things, and with the company probably being the most covered public company in the world, is anyone here(or anywhere else) going to contribute some groundbreaking data set to the table that changes anything? Nope...It isn't as though the market is "missing" anything with Apple.

 

Your only edge is in potentially understanding the bigger picture better than the next guy and trying to connect dots that will help you see the true picture being painted. I have no position here but find the post by Scunny Bunny to be more helpful in getting a feel for this than trying to parse words or decode what IMO is a very misleading release(which by the way, there's already tons on here who are bending over backwards trying to rationalize this awful news and remain positive, aka thesis drift).

 

COBF has some high quality minds but way too many here regularly miss the forest for the trees because of the "numbers/facts" OCD. The numbers and the facts clearly supported buying AAPL at $200+. Common sense interpretation of the big picture however, did not. What's cheap at 12x is still also cheap at 15x, which can also be justified at 20x if it's "high quality".... The facts and numbers can essentially say whatever one wants them to(just like Apple's guidance which by the way, I guarantee you they beat, which goes hand in hand with what some observed in regards to the playing games with metrics last quarter).

 

People often make the mistake of confusing being right with getting it right. Getting it right with an investment is more important than being right.

[gfp]

I haven't read all of the thread here, so apologies if this is rehashing the obvious.  I think the iPhone weakness in greater China is way more related to the high quality and lower cost of the Chinese smartphones (Huawei, OnePlus, Xiaomi, etc..) than it is to any trade-war related patriotism.  iPhones are really really expensive.

 

The rest of the peak iPhone phenomenon is just longer replacement cycles.  My wife doesn't need to replace her iPhone X unless it gets lost, stolen, broken beyond repair..  She doesn't want a bigger phone.  It will be a while before she upgrades.  The XR at $750 just isn't all that compelling compared to top of the line flagship models costing the same or less on android.

 

But I really don't see a huge problem with a company that is reporting another $19.85 Billion dollar net income 3 month period, with record EPS of 4.16 vs their last holiday quarter at 3.89.  Which bought back around $20 Billion in stock during the quarter, paid their cash dividend, and still somehow had a net increase in net cash of another $7 Billion...  This is while they are in the middle of trying to move towards 'net cash' neutral.

 

TTM price to earnings of 12, without backing out the net cash.  Not exactly priced like a grower.  I think Berkshire will be O.K.

[Saluki]

I looked at AAPL a couple of years ago and couldn't get comfortable with it when I read the 10k because (At the time) almost 65% of revenues came from iPhones.  I'm old enough to remember when everyone had a motorola flip phone, then they didn't.  Everyone had a blackberry, then they didn't.  I now think AAPL has a different model because their phone is part of an ecosystem, and while things like TVs and even other cell phones are coming down in price, AAPL raises the prices and still sells them.

 

With todays drop though, it's at a 12 PE and although I generally avoid tech companies (except GOOG which i've owned for a couple of years), when I look at what the rest of the S&P is trading at, it doesn't look like a bad idea. 

[shalab]

Congrats on your success with the short trade. I do agree that Apple was a bit stretched at 180-220 levels.

 

It is obvious that people pay a huge premium for perceived (but not real) growth. One can make money if one can find the point where the perceived growth stops.

 

Look at MSFT - it earns ~30B in net income but is more valuable than Apple at EV/EBITDA of around 25 and higher market cap.  Apple earned 70B last year in net income and can work out ok from current price levels even if it earns 50B.

 

Also apple pays out 20% of earnings in dividends - unlike MSFT which does 40%. So looks like there is more room to grow here for apple.

 

I had no apple products in my house (windows only) - now we have multiple iPads, iPhones and Macs. I may get a watch also. Once one apple device comes in, more follow. So - there is a network effect in play here.

 

 

Look let's be frank.  The sheer degree of adulation for AAPL got way out of hand around October.  I'm not a fan of the company culture - don't forget the grubby little things AAPL does to annoy customers - plug changes, removal of output sockets etc which by and large devalue their products, and the lowered production quality (eg model 8 bends) - has the hallmarks of a company out to extract as much from addicts as possible - clearly shown in the chart. The focus on the Buffett thesis and the aggressive capital management and "compounders" mania fogged peoples brains IMHO.

 

Did folks really think >17% product price inflation seen in year to Sep 18 was in some way sustainable (see chart attachment). Or don't they calculate these numbers? R12 average price of US$765/iphone unit = "sticker shock" and clearly alluded to in the release as more folks buy the device, hold for longer and switch carriers in major markets. Too much blind following of Buffett thesis that a $1000 device is underpriced - in a very competitive market?

 

I was short AAPL for a while and totally amazed it got to $230 (13x EV/EBITDA) - covered back at $149. Company can continue being a tontine for a period. This will derate the stock but it's not a unit growth company and in a non-unit growth industry - see Gartner #s.  Reckon it got too obsessed with capital management, as its notional debt costs make any equity retirement accretive. No position at present - my focus on company numbers rather than macro China, though accept the latter tricky as is competitive environment there.

[John Hjorth]

Well, Greg,

 

Actually, I'm trying to be all ears here.

 

- - - o 0 o - - -

 

Disclosure : I hold AAPL, a tracker position bought late August 2016 at 107.50. [plus my share of what Berkshire owns of it, naturally]. I have never been able to figure out how to value it and the risks related to it with personal confidence, however I have tried.

 

- - - o 0 o - - -

 

Right now I'm not able to comment on the circumstances and events that has lead to this situation for the company, simply because I haven't studied them yet. But I will.

 

- - - o 0 o - - -

 

Suggestion : As a thought experiment, let's try to give this sucker a real tour in the grinder, by:

 

1. Assuming no growth in unit sales from here,

2. Assuming no sales price increases from here,

3. Unchanged R&D level, &

 

ending with tearing off its left arm :

 

4. The company leaves the Chinese market. [A la "We don't want to do business these "illoyal brand traitors"".]

5. Large one-off restructuring provision related to #4.

 

Personally, I feel pretty confident, that the outcome will be a cash machine, still able to pay a dividend and buyback its own stock, thereby able to grow EPS [to provide the investor growth].

 

In short, one has to look at it going forward. While a qualitative judgement of what has happened still matters.

 

Which all brings us back to your own last sentence in your last post [about being right vs getting it right], on which I agree.

 

- - - o 0 o - - -

 

That said, I'm fairly negative on the Press Release about the comments in it about tariffs and China. That does not take the palms for elegance.

[bizaro86]

 

 

I had no apple products in my house (windows only) - now we have multiple iPads, iPhones and Macs. I may get a watch also. Once one apple device comes in, more follow. So - there is a network effect in play here.

 

 

I wonder how pervasive that is. I mostly have Android/Windows products. (Samsung phone/tablet, chrome cast, windows laptop). A few years ago, I won an iPad as a door prize at a conference. We have used it, but it didn't have anything compelling over my similar age samsung tablet that would have cost much less if i had paid for both. I certainly didn't feel compelled to switch. I'm not a tech expert by any stretch, and don't have any particular affinity for Android, but I try to buy the cheapest quality product that meets my needs, which has so far been Android every time.

 

 

[frankhkii]

What is the best resource for market share by country for Apple vs Android/others? From what I've gathered, it seems Apple is growing their share in most markets.

 

I feel the big turning point will be with the 5G refresh which will likely be massive - what is the best data to gather in advance of that (I would think market share trends would be helpful)?

 

I have an iPhone X and have not been compelled to "upgrade" as I still feel my phone is new and top notch however if a 5G version came out and there was 5G available in my area I would feel a need to upgrade when and can't see me moving to another brand for multiple reasons. 

[gfp]

There are many sources online - here is one:

https://deviceatlas.com/blog/android-v-ios-market-share

 

Apple will be a year late with 5G phones it sounds like.  Tying their ship to Intel for modems was a mistake.  Why doesn't someone just buy Qualcomm?  Would Apple be allowed to buy Qualcomm?  Seems so cheap.

 

What is the best resource for market share by country for Apple vs Android/others? From what I've gathered, it seems Apple is growing their share in most markets.

 

I feel the big turning point will be with the 5G refresh which will likely be massive - what is the best data to gather in advance of that (I would think market share trends would be helpful)?

 

I have an iPhone X and have not been compelled to "upgrade" as I still feel my phone is new and top notch however if a 5G version came out and there was 5G available in my area I would feel a need to upgrade when and can't see me moving to another brand for multiple reasons.

[shalab]

If you are a software developer or an application user, I would say it is pretty common. I have seen this happen to many of my friends.

 

 

 

I had no apple products in my house (windows only) - now we have multiple iPads, iPhones and Macs. I may get a watch also. Once one apple device comes in, more follow. So - there is a network effect in play here.

 

 

I wonder how pervasive that is. I mostly have Android/Windows products. (Samsung phone/tablet, chrome cast, windows laptop). A few years ago, I won an iPad as a door prize at a conference. We have used it, but it didn't have anything compelling over my similar age samsung tablet that would have cost much less if i had paid for both. I certainly didn't feel compelled to switch. I'm not a tech expert by any stretch, and don't have any particular affinity for Android, but I try to buy the cheapest quality product that meets my needs, which has so far been Android every time.

[fareastwarriors]

 

 

I had no apple products in my house (windows only) - now we have multiple iPads, iPhones and Macs. I may get a watch also. Once one apple device comes in, more follow. So - there is a network effect in play here.

 

 

I wonder how pervasive that is. I mostly have Android/Windows products. (Samsung phone/tablet, chrome cast, windows laptop). A few years ago, I won an iPad as a door prize at a conference. We have used it, but it didn't have anything compelling over my similar age samsung tablet that would have cost much less if i had paid for both. I certainly didn't feel compelled to switch. I'm not a tech expert by any stretch, and don't have any particular affinity for Android, but I try to buy the cheapest quality product that meets my needs, which has so far been Android every time.

 

Don't even have to be a developer or white-collar type to see this happening.

 

In my family and extended family, nearly all switched to iPhones over the last few years. We are primarily blue collar types like construction, factory, and restaurants. 

[Jurgis]

 

 

I had no apple products in my house (windows only) - now we have multiple iPads, iPhones and Macs. I may get a watch also. Once one apple device comes in, more follow. So - there is a network effect in play here.

 

 

I wonder how pervasive that is. I mostly have Android/Windows products. (Samsung phone/tablet, chrome cast, windows laptop). A few years ago, I won an iPad as a door prize at a conference. We have used it, but it didn't have anything compelling over my similar age samsung tablet that would have cost much less if i had paid for both. I certainly didn't feel compelled to switch. I'm not a tech expert by any stretch, and don't have any particular affinity for Android, but I try to buy the cheapest quality product that meets my needs, which has so far been Android every time.

 

I think it varies.

I think Apple (and no-Apple) has at least 3 somewhat overlapping categories of users:

 

- Geek Apple fans: mostly buy Apple because of features, UI, ecosystem, privacy. Usually well to do. Some upgrade frequently, some do not.

- Influencers/fashionistas: mostly buy Apple because of cachet. Usually well to do (?). Upgrade frequently. Personally, I don't know people in this group, so this is mostly hearsay.

- Regular Jane/Joe Consumer: mostly buy Apple because of ease-of-use, somewhat UI/features, mostly have no clue about ecosystem beyond apps, mostly have no clue about privacy. Not necessarily well to do. Usually do not upgrade frequently. I know a bunch of Lithuanians who are in this category.

 

All these categories can abandon Apple (or even not consider it in the first place) for various/different reasons:

- Geek Apple fans may abandon it for features/cost. Mostly does not happen though.

No-Apple geeks never bought it because of cost or being tied into Android ecosystem.

- Apple fashionistas may abandon it if it's not cool anymore. I don't think this is happening yet, but as I said, I don't know anyone in this category.

No-Apple fashionistas may never bought it because it was too mainstream bling (everyone else has one...).

- Apple consumers may abandon it because of cost mostly.

No-Apple consumers never bought it because of cost mostly.

[rkbabang]

 

 

I had no apple products in my house (windows only) - now we have multiple iPads, iPhones and Macs. I may get a watch also. Once one apple device comes in, more follow. So - there is a network effect in play here.

 

 

I wonder how pervasive that is. I mostly have Android/Windows products. (Samsung phone/tablet, chrome cast, windows laptop). A few years ago, I won an iPad as a door prize at a conference. We have used it, but it didn't have anything compelling over my similar age samsung tablet that would have cost much less if i had paid for both. I certainly didn't feel compelled to switch. I'm not a tech expert by any stretch, and don't have any particular affinity for Android, but I try to buy the cheapest quality product that meets my needs, which has so far been Android every time.

 

Don't even have to be a developer or white-collar type to see this happening.

 

In my family and extended family, nearly all switched to iPhones over the last few years. We are primarily blue collar types like construction, factory, and restaurants. 

 

I've noticed the same thing.  My home had no Apple products except ipods, but once we got iPhones, we went on to get an iMac, iPads, my daughter wants an Apple Watch for her birthday and I could see myself getting one eventually.  I even switched from Ruku to Apple TV recently and it is night and day better.  I've had Roku products since the very first Roku box first came out back over 10 years ago.  I started having audio problems with my 4K Roku Ultra, so I bought the latest Apple TV and I don't think I'll ever go back to Roku, not only is it more reliable, but I like the interface better, the TV Remote Control app on the iphone is great, and the ability to quickly send anything from my phone to the TV (Screen Mirroring) is something I use more than I expected I would. In  short the iphone integration with the Apple TV is seamless and just works. Also it is much faster than the Roku.  I use a NAS unit in my basement as a Plex server to store our home videos/pictures and Plex has a much easier time rendering the video on the Apple TV than it does on the Roku Ultra, the video is smoother and clearer, the interface is faster, etc...

 

As far as the iMac goes, I was always a Linux guy and I find that Apple's OS is just as stable as Linux, it's a Unix based OS like Linux (I can run Emacs, gcc, python, run a Unix command line terminal, etc).  If I had to describe it to a Linux user who has never used a Mac, I'd say that it is almost like running Linux with an Apple created desktop manager and package manager with access to all Mac compatible software.  Far and away better than any version of Windows.

 

[pcm983]

also not to point out the obvious but its declining yoy based on latest guide; eps up due to buybacks

[Viking]

iPhone sales at Apple over the years have been very lumpy. Every 3 or 4 years they launch a must have device and sales spike. In the other years sales grow more slowly. Perhaps the time between must have devices will be a little longer. But when they launch the must have device we will see record units, sales and profits (the benefit of the install base growing every year). The stock price will respond accordningly.

[KCLarkin]

All the information is out there, everyone's got access to the same things, and with the company probably being the most covered public company in the world, is anyone here(or anywhere else) going to contribute some groundbreaking data set to the table that changes anything? Nope...It isn't as though the market is "missing" anything with Apple.

 

This is the great myth of investing -- that you need some informational edge or special insight. Sometimes the market just likes to offer bargains.

 

Ben Graham killed this myth with his Mr. Market metaphor yet it persists.

[Gregmal]

All the information is out there, everyone's got access to the same things, and with the company probably being the most covered public company in the world, is anyone here(or anywhere else) going to contribute some groundbreaking data set to the table that changes anything? Nope...It isn't as though the market is "missing" anything with Apple.

 

This is the great myth of investing -- that you need some informational edge or special insight. Sometimes the market just likes to offer bargains.

 

Ben Graham killed this myth with his Mr. Market metaphor yet it persists.

 

Maybe, but I'd rather own an XPEL or FRP where I know market participants are missing things than just hope and pray AAPL is mispriced for no reason. Like I said, better off just buying an index fund if that's the case. People said AAPL was a bargain at $200. Only two years after Carl Icahn, who is super notorious for pushing silly price targets for his activist companies, said fair value was about $200...

[plato1976]

we have about 1billion iphone install-base

The 1 million question is how long each user will upgrade its iphone, on average....

Currently I believe it's about 2.5 years, and I think it will get longer, but maybe not much longer

 

All the information is out there, everyone's got access to the same things, and with the company probably being the most covered public company in the world, is anyone here(or anywhere else) going to contribute some groundbreaking data set to the table that changes anything? Nope...It isn't as though the market is "missing" anything with Apple.

 

This is the great myth of investing -- that you need some informational edge or special insight. Sometimes the market just likes to offer bargains.

 

Ben Graham killed this myth with his Mr. Market metaphor yet it persists.

[Liberty]

we have about 1billion iphone install-base

The 1 million question is how long each user will upgrade its iphone, on average....

Currently I believe it's about 2.5 years, and I think it will get longer, but maybe not much longer

 

"S" years in the cycle have always tended to be slower, though this time was different, with the XR and XS Max adding new form factors.

[Viking]

Apple metrics:

1.) current share price = $145

2.) market cap = $685 billion

3.) net cash = $130 billion

4.) net earnings CY 2018 est = $59 billion (includes profit warning)

5.) net earnings CY 2019 est = $57 billion (RBC, post profit warning)

 

Company has telegraphed they will continue to be very aggressive with share buy backs; they should be able to reduce shares outstanding by 10% in the next year.

 

The company is spending $15 billion per year on R&D and are famously secretive.

 

Buying Apple at 10 x net earnings (after cash) looks like a pretty good investment to me.

 

The challenge? The news flow and noise around the company and how it is broken (happens every 4 or 5 years) will be intense so longs will need to have thick skin. The stock will likely languish until a catalyst appears and this may take years.

 

The good news? When the catalyst happens the stock will rock.

 

New news? Given the changes with bringing cash back home, Apple may be much more aggressive with buybacks than in past years (when they had to borrow to fund buybacks because cash was trapped offshore). This may be a near term catalyst.

[SHDL]

That sounds about right.  I’ve started buying again after a multi-year hiatus. 

 

Although, I would probably be better off if the stock kept crashing and the company got acquired by Berkshire…

[DooDiligence]

Well done! - looks like the buy backs will have more bang for the buck

 

Attached is what I call a rational decryption of the press release with regard to new guidance for the quarter just ended. I hope it appears selfexplanatory, if you refer to the numbers in the top of the press release.

 

Thanks shalab,

 

I'm just trying to create some data driven balance in this discussion. [Which, to me  - honestly - is almost non-existent here right now.]

 

- - - o 0 o - - -

 

This reminds me dearly of the Novo Nordisk A/S situation in the autumn of 2016 : An earnings miss in a wonderful company & world leader, politics involved etc.

 

Among Danes there is a saying, that a dog over the first few years of its life evolves a personality like the owner of the dog. A home-spun philosophy is gradually evolving inside my head ... - Investors [perhaps] invest in companies that are bolted together & wired the same way as the investor?

 

Jeff [DooDiligence] owns both AAPL & NVO. Here is how Jeff recently has described himself:

 

in·dom·i·ta·ble

/inˈdämədəb(ə)l/

adjective

 

impossible to subdue or defeat.

"a person of indomitable spirit"

Synonyms: invincible, unconquerable, unbeatable, unassailable, invulnerable, unshakable, unsinkable.

 

 

Coincidence? - Because this is to me also a description of AAPL. -We actually also have a special term for a person with such a mentality and attitude towards challenges here in Denmark : A bottle cork. [Fits perfect to the quote above.]

 

- - - o 0 o - - -

 

The above is also in the press release, but people don't see or read it.

 

I have officially changed my name to,

 

Flaske Kork

[KCLarkin]

Maybe, but I'd rather own an XPEL or FRP where I know market participants are missing things than just hope and pray AAPL is mispriced for no reason.

 

Fair enough. Personally, I prefer situations where all the information is well known. With something like XPEL, I assume there are market participants who know much more about the company than I do. If XPEL goes down 50%, I assume there is a good reason. If Apple goes down 50%, I know there is ~0% chance that intrinsic value has dropped 50%.

 

Like I said, better off just buying an index fund if that's the case.

 

This is the exact opposite of what I am saying. If you believe the market prices large caps efficiently, you buy an index or go searching in obscure places for an "edge". If you believe in Graham's Mr. Market analogy, you just wait until the market puts a stock on sale. My unpopular opinion is that a large cap is just as likely to be a bargain as a small cap.

 

P.s. I have no strong opinion on Apple at current price but I think the bulls have a much stronger argument.

[Gregmal]

Maybe, but I'd rather own an XPEL or FRP where I know market participants are missing things than just hope and pray AAPL is mispriced for no reason.

 

Fair enough. Personally, I prefer situations where all the information is well known. With something like XPEL, I assume there are market participants who know much more about the company than I do. If XPEL goes down 50%, I assume there is a good reason. If Apple goes down 50%, I know there is ~0% chance that intrinsic value has dropped 50%.

 

Like I said, better off just buying an index fund if that's the case.

 

This is the exact opposite of what I am saying. If you believe the market prices large caps efficiently, you buy an index or go searching in obscure places for an "edge". If you believe in Graham's Mr. Market analogy, you just wait until the market puts a stock on sale. My unpopular opinion is that a large cap is just as likely to be a bargain as a small cap.

 

P.s. I have no strong opinion on Apple at current price but I think the bulls have a much stronger argument.

 

I think AAPL is a "good value" here, but the same can be said for a lot of things. It's just amazed me how everyone just completely ignored obvious problems that were in plain view until Buffett came along, and then all of a sudden the stock almost doubled for no good reason and there were still folks saying it was "cheap" when nothing changed. Apples advantage IMO continues to erode. There is no real innovation occurring anymore, and I still kind of think the current valuation is predicated on people continuing to be stupid with their money, ie upgrading every 18 months even though they're buying the same phone more or less they just had. It seems folks are wisening up, and if they do, Apple loses a lot of its halo and a lot of its earnings.

 

Right now there are a ton of companies trading at 10x or less, no reason it can't happen to Apple. Mr. Market might put things on sale, but there is also the chance that the perceived "sale price" is also now just the new price. At least until you find a catalyst, which IMO is moreso where owning a widely covered large cap is putting you at a disadvantage.