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So does this mean that it is likely to be profitable to buy Apple stock now?

by roschdal 14y ago

ars 14y ago
No, it means it WAS likely to be profitable to buy Apple stock. Now is too late.
- CamperBob2 14y ago
  Their P/E is still ridiculously low, of course.
mhb 14y ago
Why would it be? It's no secret how much cash is represented by each share of stock.
fghh45sdfhr3 14y ago
Too late.
analyst74 14y ago
In a 100% rational market, all this excessive cash is accounted for in current stock price, and price of stock will drop as dividend is issued -- they most definitely will.
benatkin 14y ago
No. The dividends are less than 1% of the share price. For it to be considered to be profitable on dividends alone I think it would need to pay 10% or more. I don't expect it to increase by 1000%. http://investor.apple.com/faq.cfm http://investor.apple.com/faq.cfm Edit: looks like I was wrong about the price. That seems to be the quarterly dividend. So it's 2% and it could go up. http://www.thestreet.com/dividends/leaders/index.html http://www.thestreet.com/dividends/leaders/index.html Edit 2: Here's a graph of Apple's dividend yield: http://ycharts.com/companies/AAPL/dividend_yield http://ycharts.com/companies/AAPL/dividend_yield
mullingitover 14y ago
Close... it means it's time to sell their stock now.
- nkohari 14y ago
  This, along with the parent comment, is why the stock market is irrational.
  - mullingitover 14y ago
    How so? Apple's stock is already priced to account for their war chest. If the war chest is drawn down, the stock would (presumably) reflect this and drop in proportion to the amount of cash that's released.
    - nkohari 14y ago
      I'm saying that on the same news, one person interpreted it as a buy signal and one person interpreted it as a sell signal.
      - klapinat0r 14y ago
        That is true, however it is not why the/a stock market is irrational. Well, first off, one person asked, the other told, but in your sentiment: What you refer to is more likely a skew of information, a mix of information traders and (e.g.) value traders, or (generalizing term) noise traders. There may not be a facit as to "Is this good or bad for the value of AAPL to have dividends paid out in this amount?". There may be different interpretations. Some might feel it's a sign of a new path in dividends payout from Apple even in the future. Some might think it's a short term "stunt" to keep the investors happy. Some might think it makes them less valuable as they have less money, some might think a strategy of catering to profit and investors will outweigh the "loss" in dividend payout. Just looking at this thread of comments shows there are many interpretations. If you think this is remotely interesting, I'd suggest reading up on reactions to news, e.g.: http://web.usm.my/journal/aamjaf/vol%207-2-2011/7-2-4.pdf http://web.usm.my/journal/aamjaf/vol%207-2-2011/7-2-4.pdf (we overstimate the effects of bad news, and underestimate good news) or an easy-to-read intro to financial markets: http://www.amazon.com/Trading-Exchanges-Market-Microstructure-Practitioners/dp/0195144708 http://www.amazon.com/Trading-Exchanges-Market-Microstructur... (it's a big book, but easy to read selectively, and has a few good chapters on market participants that might help explain how the market works).
danielweber 14y ago
In classical stock markets, if Apple is worth $450 a share and they issue a $10 dividend after trading closes, the next morning the stock will trade at $440. If you grew up reading the stock listings in things called "newspapers" sometimes you would see a letter (I think "x" for "ex-dividend" but it's literally been decades) in the listings next to stocks that were doing this, so you knew that a price drop was about to/had just happened. So even if no one were engaging in arbitrage opportunities, it would make no difference when you purchase the stock.
- wiredfool 14y ago
  Alternately, we have this market. Apple went ex-dividend today, which would (ordinarily) result in their opening price being adjusted to 2.65 below yesterday's closing (457.26). In this (real) market, it opened up somewhere between $2 and $5 (459-463). (google's data isn't very fine grained here).

So does this mean that it is likely to be profitable to buy Apple stock now?

ars 14y ago

No, it means it WAS likely to be profitable to buy Apple stock. Now is too late.

CamperBob2 14y ago
Their P/E is still ridiculously low, of course.

mhb 14y ago

Why would it be? It's no secret how much cash is represented by each share of stock.

fghh45sdfhr3 14y ago

Too late.

analyst74 14y ago

In a 100% rational market, all this excessive cash is accounted for in current stock price, and price of stock will drop as dividend is issued -- they most definitely will.

benatkin 14y ago

No. The dividends are less than 1% of the share price. For it to be considered to be profitable on dividends alone I think it would need to pay 10% or more. I don't expect it to increase by 1000%. http://investor.apple.com/faq.cfm http://investor.apple.com/faq.cfm Edit: looks like I was wrong about the price. That seems to be the quarterly dividend. So it's 2% and it could go up. http://www.thestreet.com/dividends/leaders/index.html http://www.thestreet.com/dividends/leaders/index.html Edit 2: Here's a graph of Apple's dividend yield: http://ycharts.com/companies/AAPL/dividend_yield http://ycharts.com/companies/AAPL/dividend_yield

mullingitover 14y ago

Close... it means it's time to sell their stock now.

nkohari 14y ago
This, along with the parent comment, is why the stock market is irrational.
- mullingitover 14y ago
  How so? Apple's stock is already priced to account for their war chest. If the war chest is drawn down, the stock would (presumably) reflect this and drop in proportion to the amount of cash that's released.
  - nkohari 14y ago
    I'm saying that on the same news, one person interpreted it as a buy signal and one person interpreted it as a sell signal.
    - klapinat0r 14y ago
      That is true, however it is not why the/a stock market is irrational. Well, first off, one person asked, the other told, but in your sentiment: What you refer to is more likely a skew of information, a mix of information traders and (e.g.) value traders, or (generalizing term) noise traders. There may not be a facit as to "Is this good or bad for the value of AAPL to have dividends paid out in this amount?". There may be different interpretations. Some might feel it's a sign of a new path in dividends payout from Apple even in the future. Some might think it's a short term "stunt" to keep the investors happy. Some might think it makes them less valuable as they have less money, some might think a strategy of catering to profit and investors will outweigh the "loss" in dividend payout. Just looking at this thread of comments shows there are many interpretations. If you think this is remotely interesting, I'd suggest reading up on reactions to news, e.g.: http://web.usm.my/journal/aamjaf/vol%207-2-2011/7-2-4.pdf http://web.usm.my/journal/aamjaf/vol%207-2-2011/7-2-4.pdf (we overstimate the effects of bad news, and underestimate good news) or an easy-to-read intro to financial markets: http://www.amazon.com/Trading-Exchanges-Market-Microstructure-Practitioners/dp/0195144708 http://www.amazon.com/Trading-Exchanges-Market-Microstructur... (it's a big book, but easy to read selectively, and has a few good chapters on market participants that might help explain how the market works).

danielweber 14y ago

In classical stock markets, if Apple is worth $450 a share and they issue a $10 dividend after trading closes, the next morning the stock will trade at $440. If you grew up reading the stock listings in things called "newspapers" sometimes you would see a letter (I think "x" for "ex-dividend" but it's literally been decades) in the listings next to stocks that were doing this, so you knew that a price drop was about to/had just happened. So even if no one were engaging in arbitrage opportunities, it would make no difference when you purchase the stock.

wiredfool 14y ago
Alternately, we have this market. Apple went ex-dividend today, which would (ordinarily) result in their opening price being adjusted to 2.65 below yesterday's closing (457.26). In this (real) market, it opened up somewhere between $2 and $5 (459-463). (google's data isn't very fine grained here).