The day after Apple's (AAPL) earnings, I got an email that had 15 different analyst reports attached to it. Everyone had their comments on Apple's earnings. Everyone had to either apologize or say "I told you" or even better, say, "I told you so" even though they haven't told us. There is a lot of lying that occurs on Wall Street and only the people who are left selling donuts and coffee on the corner of Wall Street and Broadway can tell you the real truth about what is going on and it isn't pretty.
I didn't read any of the analyst reports. Nor did I actually read or listen or pay attention to Apple's earnings reports. I have no idea what they reported. I see that the stock went down, which is great news for me because I get to buy more and make more money. I like making money. I'm just being honest so when I give my opinion you can take it for what it's worth.
The people wringing their hands and brows over one earnings report are the ones who lose the most money on Wall Street. I see this every day and I have no reason to think that rule of the universe is going to change anytime soon.
I've been very bullish on Apple. I even went on TV when Apple was around 300 and said, "Apple will be the first trillion dollar company", which would put Apple's price around 1000. Has Apple hit 1000? No. It's hit 700 but now it's in the 400s. If you followed my advice you would be making money but not as much money as you thought. And if you didn't follow my advice you could feel free to make fun of me, "Altucher said it would 1000 and now it's in the 400s! Hahaha!"
A lot of people go on TV and have a fun time like that. Making fun of people. Often when I go on TV there's someone on the ear-thing in my ear that is always saying, "Ok, jump in now and argue with him." That's what TV is. Fun and more fun.
When you look at a stock, you have to look at two things: The company itself, and the fundamentals of the stock. These are two completely separate things, but joined at the hip. They are like Siamese twins. They might have completely different personalities but if one is having sex, the other has to tag along for the ride and watch. It makes you wonder but stay focused for a second more.
Apple the company is having problems but this is not new. People forget there was a long time between the release of the iPod and the iPhone (about five years). People forget that Apple, under Steve Jobs, had extreme volatility in the stock. Even going down 50% in one year. People forget and forget and then yell the same comments year after year. And then anonymous Internet trolls who pretend to be billionaires come out of the woods and say, "See! We were right all along". Ok, that's fine. Enjoy the parade.
You can't look at a stock day by day. This is where "the company" comes in. When you buy a stock, you're an owner of a company. If you buy a stock as a quick trade then you might as well use your money as hand out hundred dollar bills to all the hungry people on Wall Street because they will make better use of your money than you will.
As an aside, I did an experiment a few months ago and videotaped it (coming shortly). I went to every person in a suit and said I had gone broke trading and could they lend me five dollars. Not a single person gave me money except...I went to one homeless guy. He gave me the five dollars. And a guy selling hot dogs gave me a hot dog for free. So generosity and goodwill still exist on Wall Street.
What's going on with Apple the company? The bad news is this: For the first time, every other company has caught up with it on hardware. Feature for feature - the latest Amazon (AMZN) Kindle Fire is better than the latest iPad. It's got better wireless (two antennas), better speakers, better screens, better lighting (less glare), better content display, just as good Internet browsing, and so on.
Well, what about the iPad mini? What about the iPhone 5?
In late October I was on line to buy an iPhone 5. I had it all picked out. I had the box in my hand. But the line was big. I was at an Apple store on Prince Street in NYC. And I was googling phones and I saw a review of the Samsung Galaxy Note II. I got out of the line, I called a Verizon store and a Sprint store and the Sprint store had the Note II, which had just come out. I left the Apple store.
I bought the Note II. It runs the Google (GOOG) Android operating system, its a bit smaller than the iPad mini but twice as big as the iPhone 5. At 5.5" diagonally across it's a very big phone. But it's also big enough to read kindle books, do web browsing, watch movies, read email, etc. And I actually thought the Google Voice that comes with it was a little better than Siri although it's hard to say. So now when I travel I leave the iPad, iPad mini, iPhone, and even my Mac Air at home. And I bring the Note II in my shirt pocket. It's the only device I need. Life is so much better now!
I was on a podcast with Jason Calacanis and he suggested, "Won't people think you look like a fool with that big phone?" He makes a good point. And it's bad enough that I look like a fool most of the time anyway. You should see me when I look at the mirror in the morning. It's pretty scary.
A) I've never really cared what people think I look like.
B) It's not really that big. I use headphones anyway and keep the phone in my pocket. And most of my usage is reading. Who really likes talking on the phone anyway? When you go back and think of the ten best moments of your life, were any of them while you were on the phone?
I'm actually hoping Sony (SNE) releases the 6" Yuga in the US because I'd probably use that to replace my Note and it would still fit in my pocket.
So, again, for the first time ever, Apple actually has cheaper hardware competition from Google, Sony, Samsung, and Amazon. They've never had that before. And once the Google Glasses come out, it's game over.
That said, my 13 year old daughter refuses to switch from her iPhone 5 to the superior Samsung Galaxy S3 (4.8" diagonally) which I also view as a better phone. Her friends think she is cool with the iPhone 5. So just like some people get their dialup from AOL (AOL) still, the inertial of the cool factor of Apple products will keep people going to the Apple store. And Apple will eventually hit the one corner of the universe they haven't yet totally redefined, which is the TV. They will reinvent the TV and everyone will buy that product.
Which brings me to Apple the stock.
The company trades for 6 times cash flows and still has 20% growth. It should be trading, like almost all tech companies, for 20x cash flows. Which, by the way, puts it around a trillion dollar value, or $1000 a share. Meanwhile the company has about $140 billion cash in the bank, which eventually they will dividend out or start making smart acquisitions up and down their supply chain or horizontally across different product offerings (just like Google and Amazon are).
I own Apple since my initial $1000 call and anyone who did is well in the money. Meanwhile, I also own Google and Amazon. These companies are going to keep innovating past each other and by the time they are through one of them is going to make a time machine, the other is going to put a phone into our neurons, and the third is going to let us spend the rest of our lives in drugged out virtual realities while we fly around in pilotless spaceships. So I'm staying long.
People say "Tim Cook is less innovative". Please shut up if you are saying that. The guy just started at the job and 20% revenue growth is nothing to sneeze at in a flat economy. The stock is dirt cheap and as Warren Buffett says, "if a company is going to be here 20 years from now, it's a good buy now".
Apple is a good buy now. Good-bye.
Additional disclosure: I'm probably going to buy more AAPL and stay long. My planned holding period on these stocks is five years, give or take.