David Trainer's $240 Apple Price Target Analysis Just Doesn't Add Up [View article]
No actionable insight in that interview that pertains to Apple's valuation. Basically saying that all good things go away, e.g., Nokia, Sony, etc. Of course that is always true in the strictest sense. But the same can be said for all companies, countries, and humans for that matter. But what is the timeframe and what transpires between now and then? What matters is the next 3-5 years from an investor standpoint and there is no sign that Apple's business is "going away" in the nearer term.
Vanguard Wellesley Income Fund (VWINX), A Fund For Everyone [View instapost]
I personally have a 3:1 ratio of stocks to bonds in my IRA. This is by design because I think that asset prices (e.g., stocks) may keep appreciating during the days of QE and I follow the Benjamin Graham 75/25 rule which means I don't let one asset class exceed 75%. I am watching the situation unfold and may change allocations if things change.
The Wellsley fund is factored into that overall ratio along with shorter duration bond funds.
Vanguard Wellesley Income Fund (VWINX), A Fund For Everyone [View instapost]
As an update regarding interest rates - there was an April 10 article which had this to say regarding Vanguard Wellsley bonds:
"Keogh said his challenge would be to cut the fund’s sensitivity to interest rates when they begin to climb. He would do so mainly by adjusting the duration, a measure of how much a change in rates will impact prices, of the bonds that he holds, Keogh said. Based on its current holdings, the fund would fall 0.6 percent were rates to rise 25 basis points, according to an analysis of portfolio data compiled by Bloomberg."
Interestingly, when rates do rise, Bill Gross seemed to think they would rise about 25 basis points in the first year or so (see below). Of course no one knows for certain.
David Trainer's $240 Apple Price Target Analysis Just Doesn't Add Up [View article]
The issue I have with Trainer's article is the heavy emphasis on ROIC without any real insight as to why the ROIC changed. The issue - the change in ROIC was the new thinner line of products at the end of 2012 that suffered from high startup costs and low yields. Despite record demand for products and solid ASP's, Apple had essentially flat earnings due to the manufacturing cost side. It was a short term hit to ROIC.
I am confident that Apple has learned from that sequence of events and have little doubt that future product upgrades will have different outcomes. Consider the 4S which had none of those issues because it leveraged a prior chassis. But making big strides in product design always has short term supply chain risks.
Regarding ROIC, it also tends to also be a function of other factors such as how vertically integrated a company is. Sometimes a company can lock in long term profits by acquiring key assets that tend to lower the ROIC. A classic example are bottler acquisitions by KO and PEP. Most analysts felt that this improved long term prospects for shareholders.
Regarding Apple, I am not unduly concerned. $240/share is ridiculous based on current information on financial metrics. $600 is more reasonable according to Morningstar - with a high degree of uncertainty nevertheless.
The yield payout tends to track the EPS unlike a bond which has a fixed income. The stocks I invest in are very solid companies and tend to have long track records of dividend increases. I am currently 3:1 stocks to bonds and have been slowly dialing down the duration on the bonds.
What I am trying to say - it is possible to construct a portfolio that provides reasonable return prospects in today's market but there is no strategy that can provide 100% safety.
Apple: The iPad Faces Unprecedented Competition [View article]
Hmm, I recall about 2006 as the timeframe.
It was VERY heavy relative to tablets today but the same weight as a laptop. Compared to other laptops it had a much more solid/quality feel to it. The swivel was a smooth metal design solidly integrated into a very strong metal and plastic chassis. It probably cost as much as Apple's top-of-the-line laptop.
I only used it as a tablet for a short while due to the novelty. However-a marketing guy I worked with also had one, and he did use use the tablet function a lot.
It would be nice to see HP start building the best of everything again, but they decided to "out-Dell Dell."
This Supermajor Is Down But Not Out [View article]
I invest in XOM, COP, and OXY. I like all three. XOM puts relatively more into share repurchases so that EPS and dividends will tend to rise faster in the future. It may be preferable for a taxable account whereas COP may be better for current retirement income.
Apple: The iPad Faces Unprecedented Competition [View article]
Ashraf, a number of years ago HP won an award for a converged design!
I actually had one (company bought it for me). I could swivel around the screen and fold it onto the keyboard and I had a tablet! There was a detachable stylus. Also it was a very solid-feeling laptop. So why didn't it succeed? The reason is that most users rarely used it as a tablet. Certainly it was too heavy to read comfortably as a portable book. Even the 4th generation iPAD is considered by many to be on the heavy side.
Anyway, I am a fan of designs that are optimized for one purpose. I have separate laptop and tablet and am perfectly happy with that. That said, if a much better combo design becomes available I will consider it!
This reads like the headline for Apple when it was at 700.
Google now has a market cap of $300 billion. To justify that price it needs to have a road to earning $30 billion/year in less than 5 years. It might, but that is far from assured. For Google to rise to 1000 it has to have a path to generating about $40 billion/year. That seems even less likely. I would call it a hold at the current price but momentum "investors" may push the price up higher in the short term.
Google Glass: When Will It Impact Google's Share Price? [View article]
Alex, my understanding is that Apple and Microsoft are furiously working on HMD (head mounted displays). Most likely Samsung, Sony, Epson, and many others are also working on this. There is certainly no assurance that Google will dominate the product category long term. But that may not matter...I think Google's main interest is to develop the back end server side of this so that regardless of who wins, they have the back end infrastructure to take advantage of all the mapping, advertising, and other opportunities. That is where I think they will succeed.
Regarding the product-I would bet that Apple will make a big splash and that Jony Ive will have something to do with that. But as stated before, the real money will be in the the software/services.
Regarding ROIC comparisons with the companies on your list - the trouble is, they all have very different business models than Apple. The only way to do a fair comparison is to take two companies with the same business model. For example, Baidu and Google would make sense - provided you factor out Motorola.
Regarding ROIC changes: A drop is not always a bad sign. One reason ROIC can drop is that a company becomes more vertically integrated. Like Pepsi or Coke buying its bottler for example.
In Apple's case, the recent round of product introductions were very costly in terms of inventory and capital. Perhaps Apple needs to improve DFM (design for manufacturability). Apple also is becoming more vertically integrated. The latter is good for the long term but does have short term consequences.
iTunes, Apple's Golden Goose... Really? [View article]
I did a 12 month moving sum (quarter to quarter) on iOS device sales excluding iPOD. It provides some insight into a quarterly trend while averaging out seasonality and timing of product introductions. Keep in mind that these are a full 12 months of sales totaled to end on the listed quarter. Thus, for example, the 12 month period ending in 2013 Q2 saw 211.5 million iOS devices (iPADS + iPHONES only) which is still a considerable increase over the prior quarter. The year and quarter are according to Apple's fiscal year, not the calendar.
Apple: The iPad Faces Unprecedented Competition [View article]
"Apple is the world's best consumer electronics company from a "build quality" standpoint, and I hate to see them resist this fairly obvious market trend."
I would call this more of a technology vector-it is not really a market trend at all. As a user of the 4th generation iPad, lack of processor speed does not seem like much of an issue. I see no market advantage in going to Atom at all.
I think it makes more sense for Apple to keep investing in its A-series chips rather than to hitch onto the Atom star. That allows them to optimize the system electronics and allows them to have less expensive processors in the long run (Intel processors are very high margin). If anything, Apple should eventually advance the A-series to displace the older X86 (or whatever they are called now) chips in the MacBook Air.
Moving products to Atom just cedes the intellectual property to Intel and makes Apple products closer to being a commodity. Its like switching to Windows - I don't see that as being an long term technical advantage.
BTW, regarding Windows as being a rich ecosystem - they are certainly rich in the sense of being virus-prone & complex & unwieldy & requiring constant painful updates. I use Windows, OSX, and iOS and have never found Windows to have any significant functional advantage - although some archaic systems require the use of the old IE browser because their coders are lazy.
David Trainer's $240 Apple Price Target Analysis Just Doesn't Add Up [View article]
Vanguard Wellesley Income Fund (VWINX), A Fund For Everyone [View instapost]
The Wellsley fund is factored into that overall ratio along with shorter duration bond funds.
Vanguard Wellesley Income Fund (VWINX), A Fund For Everyone [View instapost]
"Keogh said his challenge would be to cut the fund’s sensitivity to interest rates when they begin to climb. He would do so mainly by adjusting the duration, a measure of how much a change in rates will impact prices, of the bonds that he holds, Keogh said. Based on its current holdings, the fund would fall 0.6 percent were rates to rise 25 basis points, according to an analysis of portfolio data compiled by Bloomberg."
http://goo.gl/HyDOq
Interestingly, when rates do rise, Bill Gross seemed to think they would rise about 25 basis points in the first year or so (see below). Of course no one knows for certain.
http://goo.gl/o2U05
David Trainer's $240 Apple Price Target Analysis Just Doesn't Add Up [View article]
I am confident that Apple has learned from that sequence of events and have little doubt that future product upgrades will have different outcomes. Consider the 4S which had none of those issues because it leveraged a prior chassis. But making big strides in product design always has short term supply chain risks.
Regarding ROIC, it also tends to also be a function of other factors such as how vertically integrated a company is. Sometimes a company can lock in long term profits by acquiring key assets that tend to lower the ROIC. A classic example are bottler acquisitions by KO and PEP. Most analysts felt that this improved long term prospects for shareholders.
Regarding Apple, I am not unduly concerned. $240/share is ridiculous based on current information on financial metrics. $600 is more reasonable according to Morningstar - with a high degree of uncertainty nevertheless.
Stocks Are Not Cheap: New York Fed Study Misinterpreted [View article]
Forward P/E: 11.8
Projected EPS Growth: 8.4
Average Yield : ~2.7%
The yield payout tends to track the EPS unlike a bond which has a fixed income. The stocks I invest in are very solid companies and tend to have long track records of dividend increases. I am currently 3:1 stocks to bonds and have been slowly dialing down the duration on the bonds.
What I am trying to say - it is possible to construct a portfolio that provides reasonable return prospects in today's market but there is no strategy that can provide 100% safety.
Apple: The iPad Faces Unprecedented Competition [View article]
It was VERY heavy relative to tablets today but the same weight as a laptop. Compared to other laptops it had a much more solid/quality feel to it. The swivel was a smooth metal design solidly integrated into a very strong metal and plastic chassis. It probably cost as much as Apple's top-of-the-line laptop.
I only used it as a tablet for a short while due to the novelty. However-a marketing guy I worked with also had one, and he did use use the tablet function a lot.
It would be nice to see HP start building the best of everything again, but they decided to "out-Dell Dell."
Your iPad, iPhone Are Owned By Google Now [View article]
One "minor" issue with your statement - Google has about a third of the shares outstanding of Apple.
"Apple is going to 240 according to the best analyst that ever lived."
Their buyback and dividend program will therefore yield 15% a year!
This Supermajor Is Down But Not Out [View article]
Apple: The iPad Faces Unprecedented Competition [View article]
I actually had one (company bought it for me). I could swivel around the screen and fold it onto the keyboard and I had a tablet! There was a detachable stylus. Also it was a very solid-feeling laptop. So why didn't it succeed? The reason is that most users rarely used it as a tablet. Certainly it was too heavy to read comfortably as a portable book. Even the 4th generation iPAD is considered by many to be on the heavy side.
Anyway, I am a fan of designs that are optimized for one purpose. I have separate laptop and tablet and am perfectly happy with that. That said, if a much better combo design becomes available I will consider it!
4 Reasons To Buy Google Right Now [View article]
Google now has a market cap of $300 billion. To justify that price it needs to have a road to earning $30 billion/year in less than 5 years. It might, but that is far from assured. For Google to rise to 1000 it has to have a path to generating about $40 billion/year. That seems even less likely. I would call it a hold at the current price but momentum "investors" may push the price up higher in the short term.
Google Glass: When Will It Impact Google's Share Price? [View article]
Regarding the product-I would bet that Apple will make a big splash and that Jony Ive will have something to do with that. But as stated before, the real money will be in the the software/services.
Danger Zone For This Week: Apple [View article]
Regarding ROIC changes: A drop is not always a bad sign. One reason ROIC can drop is that a company becomes more vertically integrated. Like Pepsi or Coke buying its bottler for example.
In Apple's case, the recent round of product introductions were very costly in terms of inventory and capital. Perhaps Apple needs to improve DFM (design for manufacturability). Apple also is becoming more vertically integrated. The latter is good for the long term but does have short term consequences.
Apple: The iPad Faces Unprecedented Competition [View article]
iTunes, Apple's Golden Goose... Really? [View article]
Year iOS QTY (M)
2010 Q4 47.4
2011 Q1 62.3
2011 Q2 81.2
2011 Q3 99.1
2011 Q4 109.0
2012 Q1 137.9
2012 Q2 157.1
2012 Q3 170.5
2012 Q4 183.2
2013 Q1 201.5
2013 Q2 211.5
Unfortunately the 12 month trend for earnings went down slightly - probably due to unusually high startup production costs.
Apple: The iPad Faces Unprecedented Competition [View article]
I would call this more of a technology vector-it is not really a market trend at all. As a user of the 4th generation iPad, lack of processor speed does not seem like much of an issue. I see no market advantage in going to Atom at all.
I think it makes more sense for Apple to keep investing in its A-series chips rather than to hitch onto the Atom star. That allows them to optimize the system electronics and allows them to have less expensive processors in the long run (Intel processors are very high margin). If anything, Apple should eventually advance the A-series to displace the older X86 (or whatever they are called now) chips in the MacBook Air.
Moving products to Atom just cedes the intellectual property to Intel and makes Apple products closer to being a commodity. Its like switching to Windows - I don't see that as being an long term technical advantage.
BTW, regarding Windows as being a rich ecosystem - they are certainly rich in the sense of being virus-prone & complex & unwieldy & requiring constant painful updates. I use Windows, OSX, and iOS and have never found Windows to have any significant functional advantage - although some archaic systems require the use of the old IE browser because their coders are lazy.