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Geoffrey Rocca

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  • Apple Trading At 2.56x 2016 Cash Flow [View article]
    Well, interest rates aren't 15%, are they?

    Fine, you pick a number for your required return on equity, compound it for five years, and tell me if the result is significant or not. I'm all ears.
    Dec 11 02:43 PM | 0 Likes Like |Link to Comment
  • Apple Trading At 2.56x 2016 Cash Flow [View article]
    Did you ever consider why interest rates are so low? The economy is fragile, which calls for a bigger risk premium. If anything, 10% is low.
    Dec 11 02:23 PM | 0 Likes Like |Link to Comment
  • Apple Trading At 2.56x 2016 Cash Flow [View article]
    So pick a discount rate and do the math. If you use a historical 10%, then over five years the difference is 61.05%. Are you telling me that 61% is not material?
    Dec 11 01:30 PM | 1 Like Like |Link to Comment
  • Apple Trading At 2.56x 2016 Cash Flow [View article]
    If one were considering lending money to Apple, maybe, but the equity risk premium doesn't just go away when interest rates are low.
    Dec 11 01:57 AM | 0 Likes Like |Link to Comment
  • Apple Trading At 2.56x 2016 Cash Flow [View article]
    So you discount equity cash flows based on Treasury rates?

    I don't know which is worse; not discounting at all or thinking that Apple's cash flows are as good as the United States'.

    Maybe I'm getting into Finance 102 territory now.
    Dec 11 01:04 AM | 2 Likes Like |Link to Comment
  • Apple Trading At 2.56x 2016 Cash Flow [View article]
    Cute story, but $335 billion on the balance sheet in 2016 isn't worth $335 billion today, nor is $60 billion in cash flow to be received at the end of 2016 worth $60 billion today.

    Discounting to present value is Finance 101.
    Dec 10 09:05 PM | 2 Likes Like |Link to Comment
More on AAPL by Geoffrey Rocca
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