3 ms·

The risk is that Apple becomes Microsoft. Microsoft has traded in the same $20 - $30 range for more than 5 years. Microsoft is still a cash cow. But there are n

The risk is that Apple becomes Microsoft. Microsoft has traded in the same $20 - $30 range for more than 5 years. Microsoft is still a cash cow. But there are not enough new hits to propel the stock. Apple's not leaving any time soon but until we see a new hit its staying flat to falling backward. While I don't buy into the "Maps would have never happened with Steve!!" the one thing that was undeniable was the man oversaw the iPod, the iPhone and the iPad. Unbelievable. Cook et al shows no signs of opening an entire new market. The iPhone is 47% of revenues today and now has several peers where even 2 years ago it had none. A lot of fund managers parked cash in Apple because it was assured of a better return than interest rates. Now that's gone away etc. So all of these things will add up and the stock will trade flat to down over the next few years (unless they change the TV or computing device market again etc)

deleted 14y ago
[deleted]
adventured 14y ago
It's worse than a risk, it's almost a guarantee. MSFT was $26.x 14 years ago (even though this is all ignoring the ups & downs between, it's still dramatic). Megacap stocks are horrible investments on average if you're seeking good returns, specifically because the law of big numbers cripples the ability for any truly massive company to keep a high growth rate. Not to mention that large companies typically begin paying their large profits out in dividends (rather than using it toward growth), and Apple will do the same. Microsoft has paid out the equivalent of half its current market cap in dividends over the past ten years. It'll be little surprise if Apple is $550 ten years from now, and that's a good scenario given the history of big companies tumbling from the top of the mountain. Unlike Microsoft, Apple has no 'monopoly' in anything, and they have a vicious annual upgrade cycle. If Apple screws up one version of the iPhone, their stock would crash spectacularly, probably losing at least 1/2 of its value. Microsoft botched a few versions of Windows, and took their time on releases, but their desktop monopoly shielded them from the fallout. Whether we're talking McDonalds, Boeing, Coca Cola, Walmart, Berkshire Hathaway, Exxon, Intel, Microsoft, Cisco, HP, Dell, Chevron, etc. - eventually the growth boom ends, and stock returns race toward sub 10% annually. Walmart hasn't moved much in 12 years; McDonalds is now 'growing' at zero and their stock will follow; Coke hasn't moved in 15 years; HP and Dell are disasters, ditto Cisco's stock; Berkshire has returned about 3.x% annually over the last 14 years (with no dividend), radically below Buffett's historical record; Boeing has returned around 2.x% annually over the last 16 years. It's a very long list. It's real simple in premise: you want Apple at $7, or $35, or $90, but not at $500 or $700 when the future returns are likely to be mediocre. Specifically, you want the next Apple, not the last one.

deleted 14y ago

[deleted]

adventured 14y ago

It's worse than a risk, it's almost a guarantee. MSFT was $26.x 14 years ago (even though this is all ignoring the ups & downs between, it's still dramatic). Megacap stocks are horrible investments on average if you're seeking good returns, specifically because the law of big numbers cripples the ability for any truly massive company to keep a high growth rate. Not to mention that large companies typically begin paying their large profits out in dividends (rather than using it toward growth), and Apple will do the same. Microsoft has paid out the equivalent of half its current market cap in dividends over the past ten years. It'll be little surprise if Apple is $550 ten years from now, and that's a good scenario given the history of big companies tumbling from the top of the mountain. Unlike Microsoft, Apple has no 'monopoly' in anything, and they have a vicious annual upgrade cycle. If Apple screws up one version of the iPhone, their stock would crash spectacularly, probably losing at least 1/2 of its value. Microsoft botched a few versions of Windows, and took their time on releases, but their desktop monopoly shielded them from the fallout. Whether we're talking McDonalds, Boeing, Coca Cola, Walmart, Berkshire Hathaway, Exxon, Intel, Microsoft, Cisco, HP, Dell, Chevron, etc. - eventually the growth boom ends, and stock returns race toward sub 10% annually. Walmart hasn't moved much in 12 years; McDonalds is now 'growing' at zero and their stock will follow; Coke hasn't moved in 15 years; HP and Dell are disasters, ditto Cisco's stock; Berkshire has returned about 3.x% annually over the last 14 years (with no dividend), radically below Buffett's historical record; Boeing has returned around 2.x% annually over the last 16 years. It's a very long list. It's real simple in premise: you want Apple at $7, or $35, or $90, but not at $500 or $700 when the future returns are likely to be mediocre. Specifically, you want the next Apple, not the last one.