Let's do something just for fun:
You've decided to buy some Apple shares as your 2009 New Year's resolution. After heavy partying you wake up with a hangover on January 1 2009, market's are closed, you wake up again on January 2 2009, your head is clear, your thinking is clear, ok semi-clear and you decided to buy some shares. For 3 months.
So from Jan 2 2009 to April 1 2009 - you had 63 trading days.
During these 63 days volume of AAPL shares trade was around 1.7 billion shares, of course Apple has only 933 million shares, therefore some shares were trade more the once in these 63 days. That's quite normal.
Let's assume you have unlimited amount of money or that you are very well connected with some sovereign wealth funds from the Gulf, which is like the same thing as having unlimited cash available.
A professional buyer, fund, investor with the best brokerage houses would be able to buy around 30% of the daily volume. Let's not forget these were fearful days, beginning of 2009, nobody would think about stocks during this period, but you are bold enough to execute your purchases and you start buying on Jan 2 2009. Since 30% is really an amazing result, let's you buy every day half of that, or 15% of the daily volume, your are a semi-professional, or you just play golf too much and you are lazy to buy every trading day. Your average is 15% of the daily volume.
1.7 billion shares were traded in these 63 days. Just to be safe let's say that you managed to work with a volume of only half of that or 850 million shares. For whatever reason you could "only" buy 15% of 850 million shares. Or you bought 127.5 million AAPL shares.
OK, sounds good. How much did you pay for them.
Let see the average price in these 63 days:
Highest trading day price on average was $94
Lowest trading day price on average was $92
Let's say you were only buying everyday when the prices peaked within that particular trading day. There for you paid $94 per shares.
$94 x 127.5 million = $12 billion with all the costs.
You decided to keep the shares until Valentine's day on 14 February 2012 and you wanted to sell it all in couple of weeks.
The closing price today was $509.46 - you started selling at $500. And for the next 3 weeks the share price doesn't really change much, so your average selling price was let's assume $500.
127.5 million x 500 = $63.75 billion
Your profit 63.75 - 12 = $51.75 billion in just 3 years.
If anybody would do this they would be labelled as the greatest investor of all the time. For sure. $51 billion in 3 years, just by investing is impossible.
Why nobody did it? Well, probably because it was difficult for people to foresee that Apple stock would be worth over $500. However, there is another story on the other side of that coin. People were fearful. People were thinking that the world would come to an end. Yes, they did, I remember watching interviews with analysts from CNBCN, CNN saying this was almost worse than 1929. Anyways, people were fearful and nobody would buy anything. Few did, but nothing to such a scale like described above.
Here is the trick (there are no tricks, but this is really a trick, in a way):
90% of people would rather buy AAPL share today at $509.46 than 3 years ago at $94. I am 100% sure of that. People operate by greed and by fear. Again, we are coming back to the same point. 2009 was fear, 2012 is greed. This is so cyclical already my head is spinning.
Learn how to say no to AAPL share at $500 and learn how to say YES when a good company like that is trading below $100.
Happy investing.
Damian
Tuesday, February 14, 2012
Apple $509 / $475B market cap
Apple, Inc. has a market cap of $475 billion.
On January 19 2012 their market cap was $400 billion. The value of the company grew by $75 billion.
Why?
Let's try to analyze.
Apple's revenue for 2011 was $109 billion. Let's say in 2012 it will be 10% higher, so $120 billion. Let's be really optimistic and let's say they will have a phenomenal year with total revenue at $140 billion.
There are 366 days in 2012. So we have to divide $140 billion by 366 days = $383 million daily revenue. Wow. Just realized how much that is. OK. Their profit margin in 2011 was 24%, let's again say they will really learn how to cut costs in 2012, and they will improve their profit margin by 25% (this is almost impossible, but, let's just give the best possible scenarios.) Their profit margin will be 31.25% - let's round that to 32%.
So what do we have here. We have $383 million daily sales and profit margin of 32% so that comes to $122.50 million daily profit for Apple, Inc.
OK - now from January 19 2012 to February 14 2012 have had 26 days.
26 x $122.50 million = $3.2 billion
OK, so the company now has $3.2 billion more cash than on January 19th. Using the best possible scenario for Apple, Inc. the company has made $3.2 billion, but the total value of the company has increased by $75 billion, well the market says so.
What I really think, and it is not a secret right now. Somebody is crazy to buy Apple stock at $420 and keeps buying it until it is $510 - whoever these people are, they are not thinking clearly and I doubt they know what they are doing. If it continue like this Apple needs a week to have a market cap of over $500 billion or half a trillion US dollars. Now that is insane and it has no justification whatsoever for such inflated price.
Today, my son celebrated his 2nd birthday, we had balloons, but none of them was so big. For the next birthday party, I will just buy some stocks.
Learn how to say NO. Happy investing.
Damian
On January 19 2012 their market cap was $400 billion. The value of the company grew by $75 billion.
Why?
Let's try to analyze.
Apple's revenue for 2011 was $109 billion. Let's say in 2012 it will be 10% higher, so $120 billion. Let's be really optimistic and let's say they will have a phenomenal year with total revenue at $140 billion.
There are 366 days in 2012. So we have to divide $140 billion by 366 days = $383 million daily revenue. Wow. Just realized how much that is. OK. Their profit margin in 2011 was 24%, let's again say they will really learn how to cut costs in 2012, and they will improve their profit margin by 25% (this is almost impossible, but, let's just give the best possible scenarios.) Their profit margin will be 31.25% - let's round that to 32%.
So what do we have here. We have $383 million daily sales and profit margin of 32% so that comes to $122.50 million daily profit for Apple, Inc.
OK - now from January 19 2012 to February 14 2012 have had 26 days.
26 x $122.50 million = $3.2 billion
OK, so the company now has $3.2 billion more cash than on January 19th. Using the best possible scenario for Apple, Inc. the company has made $3.2 billion, but the total value of the company has increased by $75 billion, well the market says so.
What I really think, and it is not a secret right now. Somebody is crazy to buy Apple stock at $420 and keeps buying it until it is $510 - whoever these people are, they are not thinking clearly and I doubt they know what they are doing. If it continue like this Apple needs a week to have a market cap of over $500 billion or half a trillion US dollars. Now that is insane and it has no justification whatsoever for such inflated price.
Today, my son celebrated his 2nd birthday, we had balloons, but none of them was so big. For the next birthday party, I will just buy some stocks.
Learn how to say NO. Happy investing.
Damian
Thursday, February 9, 2012
Facebook / Apple
With Facebook's upcoming IPO it could value the company at $100 billion and Apple's market cap at $444 billion we are now entering "dot.com/tech bubble version 2.0"
Apple is a great company and does amazing products and Facebook is an equally amazing company that provides great service for their users. That said, they are not worth over half trillion dollars. We have just entered into second phase of craziness and this will correct itself at one point. Seeing Apple's share at almost $480 is a scary sight - It was $78 in January 2009.
Happy investing....
Damian Kosutic
Apple is a great company and does amazing products and Facebook is an equally amazing company that provides great service for their users. That said, they are not worth over half trillion dollars. We have just entered into second phase of craziness and this will correct itself at one point. Seeing Apple's share at almost $480 is a scary sight - It was $78 in January 2009.
Happy investing....
Damian Kosutic
Thursday, January 19, 2012
Google, Inc & Microsoft Corp. - tech stocks
Google, Inc. (GOOG)
Revenues - $30 billion
Net Income - $8.5 billion
Market cap - $205 billion
Employees - 31,353
Microsoft Corporation (MSFT)
Revenue - $67 billion
Net Income - $23.15 billion
Market Cap - $237 billion
Employees - 92,000
Google and Microsoft are very similar companies. They are both unoriginal. They both seem to be blind. They completely ignore the hardware side of the business and they 100% focus on software. Between them they share annual turnover of over $100 billion, they share profits of $30 billion and they have more than 100,000 people working for them on different projects/tasks every day. Yet, they are so unoriginal.
I have a problem with such tech stocks and I try to stay away from them. Because today you probably have 200 people in Google working on some project and 200 engineers in Microsoft working on another project, yet their future may depend on two college students in garage somewhere.
Google and Microsoft in my opinion are not smart enough to realize that if they want to protect themselves from garage-working college students, they need to produce hardware and software and they need to market their products and stand behind them. Ultimately, they will be better companies, and customers would benefit from their products, because they would simply be better products. Software needs a hardware to adapt to, you cannot think that one software can work perfectly on different hardwares, just like one type of engine cannot run on all cars.
Thinking works.
Damian Kosutich
Revenues - $30 billion
Net Income - $8.5 billion
Market cap - $205 billion
Employees - 31,353
Microsoft Corporation (MSFT)
Revenue - $67 billion
Net Income - $23.15 billion
Market Cap - $237 billion
Employees - 92,000
Google and Microsoft are very similar companies. They are both unoriginal. They both seem to be blind. They completely ignore the hardware side of the business and they 100% focus on software. Between them they share annual turnover of over $100 billion, they share profits of $30 billion and they have more than 100,000 people working for them on different projects/tasks every day. Yet, they are so unoriginal.
I have a problem with such tech stocks and I try to stay away from them. Because today you probably have 200 people in Google working on some project and 200 engineers in Microsoft working on another project, yet their future may depend on two college students in garage somewhere.
Google and Microsoft in my opinion are not smart enough to realize that if they want to protect themselves from garage-working college students, they need to produce hardware and software and they need to market their products and stand behind them. Ultimately, they will be better companies, and customers would benefit from their products, because they would simply be better products. Software needs a hardware to adapt to, you cannot think that one software can work perfectly on different hardwares, just like one type of engine cannot run on all cars.
Thinking works.
Damian Kosutich
Apple, Inc - $400 billion mark
Yesterday, Apple stock traded at an intra-day high of $429.47 surpassing market cap mark of $400 billion.
$400 billion. August 1997 - 90 days from bankruptcy. January 2012 - $400 billion market cap. 15 years.
That is a fifth of human's life expectancy in developed world. So if you are 30 years old right now, by the time you are 45 you can also change the world, just like Mr. Jobs, if of course these are your ambitions.
This $400 billion mark is meaningless, it doesn't mean much to any of the Apple employees, it is not the reason why they will continue to make great products, it is just a reminder than in life anything is possible.
"Here is to the crazy ones" (Apple ad from 1997)
Is it worth $400 billion? Well, if somebody is willing to pay $400 billion for the whole business than yes. Yesterday many people bought Apple stock trading at $429. So if you bought one share you are also willing to pay $400 billion for the whole business provided you have the money, probably not. So how come almost 10 million shares were traded yesterday? Well, here we go again, if you notice craziness on the market, just follow it, because this is one place where money can be made after sanity kicks in again. I am not suggesting anything, but in my opinion, Apple has shown that in life everything is possible. From inevitable bankruptcy to the largest company in the world (August 2011) to $400 billion market cap (January 2012). Also, where great things happen, crazy people follow. So, - here is to the crazy ones.
Enjoy.
Damian Kosutich
$400 billion. August 1997 - 90 days from bankruptcy. January 2012 - $400 billion market cap. 15 years.
That is a fifth of human's life expectancy in developed world. So if you are 30 years old right now, by the time you are 45 you can also change the world, just like Mr. Jobs, if of course these are your ambitions.
This $400 billion mark is meaningless, it doesn't mean much to any of the Apple employees, it is not the reason why they will continue to make great products, it is just a reminder than in life anything is possible.
"Here is to the crazy ones" (Apple ad from 1997)
Is it worth $400 billion? Well, if somebody is willing to pay $400 billion for the whole business than yes. Yesterday many people bought Apple stock trading at $429. So if you bought one share you are also willing to pay $400 billion for the whole business provided you have the money, probably not. So how come almost 10 million shares were traded yesterday? Well, here we go again, if you notice craziness on the market, just follow it, because this is one place where money can be made after sanity kicks in again. I am not suggesting anything, but in my opinion, Apple has shown that in life everything is possible. From inevitable bankruptcy to the largest company in the world (August 2011) to $400 billion market cap (January 2012). Also, where great things happen, crazy people follow. So, - here is to the crazy ones.
Enjoy.
Damian Kosutich
Wednesday, January 18, 2012
Apple, Inc.
Today, Apple's market capitalization is $395 billion.
Apple is $157 billion worth more than Microsoft.
On August 6 1997 Microsoft invested $150 million into Apple to save the company from bankruptcy. This was only 15 years ago. In 15 years Apple went from a market cap of $6 billion to $395 billion. That is a 6500% increase in 15 years. In investing this is almost a dream. Well, not quite. It seems somebody has been following the trends.
Kingdom Holding, owned by Prince Alwaleed bin Talal of Saudi Arabia invested $115 million into Apple Computer, Inc. They acquired 5% of the company by April 1997. Price Alwaleed later said the main reason why he invested into Apple is because Steve Jobs' return to Apple.
Apple is not an example of value investing, it is not even a growth investing, since the company used to be big and than almost bankrupt. This is person investing, the reason why the Prince (not the singer) invested is because he believed Steve Jobs will do an amazing job. He did surprise us all.
Find a company that makes great products, even if they are not on the market, just learn about them, follow the trends, read about their individuals, because it is all about the people.
Be original.
Apple is $157 billion worth more than Microsoft.
On August 6 1997 Microsoft invested $150 million into Apple to save the company from bankruptcy. This was only 15 years ago. In 15 years Apple went from a market cap of $6 billion to $395 billion. That is a 6500% increase in 15 years. In investing this is almost a dream. Well, not quite. It seems somebody has been following the trends.
Kingdom Holding, owned by Prince Alwaleed bin Talal of Saudi Arabia invested $115 million into Apple Computer, Inc. They acquired 5% of the company by April 1997. Price Alwaleed later said the main reason why he invested into Apple is because Steve Jobs' return to Apple.
Apple is not an example of value investing, it is not even a growth investing, since the company used to be big and than almost bankrupt. This is person investing, the reason why the Prince (not the singer) invested is because he believed Steve Jobs will do an amazing job. He did surprise us all.
Find a company that makes great products, even if they are not on the market, just learn about them, follow the trends, read about their individuals, because it is all about the people.
Be original.
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