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Author Topic: What's Wrong With Apple (stock)?  (Read 53477 times)

NWarsh

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Re: What's Wrong With Apple (stock)?
« Reply #375 on: August 03, 2018, 11:23:43 AM »
One of the purposes, not the purpose.  If a company feels their stock is valued low, they should have every right to buy it back and take shares off the market.  Employees are part of corporations and they benefit, too.  Most people get a tax break, that means most will get more money out of the deal in the short term.  Wages are up (highest since 2009) and with unemployment so low they will go up higher as labor markets are tight and employers have to pay more for talent, economy is roaring right now, but everything is cyclical and will come down again.  The question is whether a bust comes on the heels of all of this.

The other purpose was to move money offshore to the US.  Get it out of Ireland and other low tax situations.  Apple is moving vast sums of money ($285 Billion) from foreign countries to the US, as an Apple shareholder I applaud this.  https://www.cnbc.com/2018/04/30/apples-plan-to-repatriate-285-billion-could-be-a-boost-for-investors.html  Good move. Rather have the money here, working for the citizenry here.  https://www.theverge.com/2018/1/17/16901936/apple-tax-bill-foreign-money-united-states

Theoretically you are right, with low unemployment rates wage growth should be going up.  And yes, wages have been increasing, but so has inflation.  Despite the unemployment levels, YoY real wage growth (measuring your actual purchasing power) has been in decline since June of last year.  The preliminary numbers for June '18 actually show YoY real wage growth at 0.0% despite unemployment rates going from 4.3% to 4.0% and "true" unemployment numbers dropping from 8.5% to 7.8% in that time frame.  With this pay data, we know companies are not using the extra bump in cash to pay their employees any more than what inflation dictates (at least not yet, we will see where we end up).  Data comes from the BLS website just to show average real wage growth by year with the annual unemployment rates next to them.


                      Ave YoY Real Wage Growth   Annual Unemployment   
2008 (last 1/2)                 -0.76%                       7.20%(December)
2009                                  2.08%                       9.30%   
2010                                  1.16%                       9.60%   
2011                              -0.88%                       8.90%   
2012                               -0.33%                       8.10%   
2013                                  0.61%                       7.40%   
2014                                  0.88%                       6.20%   
2015                                  2.48%                       5.30%   
2016                                  1.20%                       4.90%   
2017                                  0.36%                       4.40%   
2018 (first half)                  0.37%                       4.00% (June)

In terms of the 2nd purpose to bring more money back onshore to the U.S., that will take some time to determine how much of an effect it will have, but early returns are that, yes indeed some of the larger companies are doing that.  Apple for example has already brought their cash balance down $18B, mainly through buybacks.  Given the amount of buybacks we are seeing, I can only assume that a lot of companies are using that as a strategy.  And it has been discussed here who the buybacks ultimately have the biggest impact for.

Overall, I think the tax plan is doing exactly what it was designed to do.

jesmu84

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jesmu84

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Re: What's Wrong With Apple (stock)?
« Reply #377 on: August 03, 2018, 11:55:59 AM »
Overall, I think the tax plan is doing exactly what it was designed to do.

Give the wealthy and powerful more wealth and power?

jesmu84

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Re: What's Wrong With Apple (stock)?
« Reply #378 on: August 03, 2018, 11:56:58 AM »
One of the purposes, not the purpose.  If a company feels their stock is valued low, they should have every right to buy it back and take shares off the market.  Employees are part of corporations and they benefit, too.  Most people get a tax break, that means most will get more money out of the deal in the short term.  Wages are up (highest since 2009) and with unemployment so low they will go up higher as labor markets are tight and employers have to pay more for talent, economy is roaring right now, but everything is cyclical and will come down again.  The question is whether a bust comes on the heels of all of this.

The other purpose was to move money offshore to the US.  Get it out of Ireland and other low tax situations.  Apple is moving vast sums of money ($285 Billion) from foreign countries to the US, as an Apple shareholder I applaud this.  https://www.cnbc.com/2018/04/30/apples-plan-to-repatriate-285-billion-could-be-a-boost-for-investors.html  Good move. Rather have the money here, working for the citizenry here.  https://www.theverge.com/2018/1/17/16901936/apple-tax-bill-foreign-money-united-states

Yea. Joe six-pack is seeing a significant boost to his personal financial situation as a result of the tax plan/buybacks

NWarsh

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Re: What's Wrong With Apple (stock)?
« Reply #379 on: August 03, 2018, 11:59:26 AM »
Give the wealthy and powerful more wealth and power?

Like I said, it is doing what it was intended to do  :(

Babybluejeans

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Re: What's Wrong With Apple (stock)?
« Reply #380 on: August 03, 2018, 12:03:36 PM »
Few have any illusions about the purpose and actual impact of the tax bill--its approval rating is somehow lower than the President's. Sad!


4th and State

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Re: What's Wrong With Apple (stock)?
« Reply #382 on: August 03, 2018, 03:00:28 PM »
Both are mechanisms for putting cash in investor pockets but dividends have a shorter term impact because A) you have to own the stock at a given point to receive the dividend(so you can't buy a stock to get the dividend) B) dividends do nothing to change the scarcity of a stock so supply and demand doesn't factor in like buybacks do. Dividends can drive up a stock price long term if a company is paying them out on the regular whereas buybacks pump the price up because there are fewer stocks and/or people want to cash out of a certain investment at a premium. Regular dividends would indicate continuing strength in a company but that's also why companies have come to rely more on buybacks than dividends...if you cut a dividend just once for some reason it can tank the stock long term whereas not doing a buy back isn't signaled as anything.

Buybacks also increase the EPS (earnings per share) for a unit of stock, as there are less stocks outstanding in the market for the same amount of company earnings.  So you are essentially comparing between receiving a larger dividend or owning a larger share of future earnings (stock buyback)....there is not a large difference between the two and the negative connotation on buybacks has never made much sense to me.

Jay Bee

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Re: What's Wrong With Apple (stock)?
« Reply #383 on: August 03, 2018, 09:22:38 PM »
Buybacks also increase the EPS (earnings per share) for a unit of stock, as there are less stocks outstanding in the market for the same amount of company earnings.  So you are essentially comparing between receiving a larger dividend or owning a larger share of future earnings (stock buyback)....there is not a large difference between the two and the negative connotation on buybacks has never made much sense to me.

Socialism makes no sense.

TSmith34

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Re: What's Wrong With Apple (stock)?
« Reply #384 on: August 04, 2018, 11:23:17 AM »
Socialism makes no sense.
Apropos of nothing.

Do you need to use your own #bandisguy hashtag?
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Benny B

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Re: What's Wrong With Apple (stock)?
« Reply #385 on: August 04, 2018, 03:57:16 PM »
Give the wealthy and powerful more wealth and power?

And yet, no support here for compulsory voting?!?  Hypocrites.
Wow, I'm very concerned for Benny.  Being able to mimic Myron Medcalf's writing so closely implies an oncoming case of dementia.

MU82

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Re: What's Wrong With Apple (stock)?
« Reply #386 on: August 04, 2018, 04:01:45 PM »
And yet, no support here for compulsory voting?!?

Don't worry, Benny, I support compulsory voting ... as long as folks promise to vote for the correct candidates!
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TSmith34

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Re: What's Wrong With Apple (stock)?
« Reply #387 on: August 04, 2018, 06:24:36 PM »
And yet, no support here for compulsory voting?!?  Hypocrites.
I reiterate my support
"Bigly mentally unstable, believe me.  Sad, unbelievably sad."

WarriorDad

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Re: What's Wrong With Apple (stock)?
« Reply #388 on: August 05, 2018, 11:05:35 AM »
And yet, no support here for compulsory voting?!?  Hypocrites.

When voting is mandatory, it is no longer an act of freedom.

“No one is more hated than he who speaks the truth.”
— Plato

MU Fan in Connecticut

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Re: What's Wrong With Apple (stock)?
« Reply #389 on: August 05, 2018, 02:27:05 PM »
Don't worry, Benny, I support compulsory voting ... as long as folks promise to vote for the correct candidates!

Ditto.
None of the Above meets the criteria for not voting.

jesmu84

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4th and State

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Re: What's Wrong With Apple (stock)?
« Reply #392 on: August 07, 2018, 10:25:30 AM »
Thank you for linking this.  There have been a few of these articles on this topic going back the last few years, but with different viewpoints on where it is good or bad.

https://www.cnbc.com/2018/05/07/the-stock-market-is-shrinking-and-thats-a-good-thing-private-equity-honchos-say.html


https://www.marketwatch.com/story/this-incredible-shrinking-stock-market-is-bad-news-for-this-type-of-investor-2017-06-09


https://money.cnn.com/2015/07/09/investing/stock-market-shrinking/index.html


https://www.wsj.com/articles/fewer-listed-companies-is-that-good-or-bad-for-stock-markets-1515100040

What often is not mentioned is that amount of international companies available to invest in has doubled.  While the US stock market has shrunk, it ends up being a wash with the combined US and ex-US stocks available.  Micro Cap US stocks have undoubtedly shrunk, however.

MUBurrow

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Re: What's Wrong With Apple (stock)?
« Reply #393 on: August 07, 2018, 10:37:59 AM »
Buybacks also increase the EPS (earnings per share) for a unit of stock, as there are less stocks outstanding in the market for the same amount of company earnings.  So you are essentially comparing between receiving a larger dividend or owning a larger share of future earnings (stock buyback)....there is not a large difference between the two and the negative connotation on buybacks has never made much sense to me.

I would guess that buybacks have a more negative connotation because they are seen as more sporadic events that dramatically reduce cash balances - and therefore are seen as a zero sum game with reinvestment - as opposed to dividends which are seen as more gradual reductions of cash balances and indicative of long term success/allowing for simultaneous reinvestment?

mu03eng

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Re: What's Wrong With Apple (stock)?
« Reply #394 on: August 07, 2018, 10:53:51 AM »
What often is not mentioned is that amount of international companies available to invest in has doubled.  While the US stock market has shrunk, it ends up being a wash with the combined US and ex-US stocks available.  Micro Cap US stocks have undoubtedly shrunk, however.

Yes the US market is getting smaller and primarily for two reasons, one you mention that overseas markets are becoming as prominent but also because how companies are capitalizing is changing as well. Start-ups and small/medium companies don't have to issue an IPO to properly capitalize their businesses anymore. The number of mechanism by which these types of companies can access capital has exploded over the last 20 years, from VCs, to Angel Investors, to large corporations investing not to buy the company but to simply have access to their capability/technology.

I know of one start-up that is capitalized by every major competitor in the market space so they all have access to the technology. This start-up doesn't have to worry about IPOs/shareholders/business media/etc. They can focus on development and growing, everyone is wildly compensated and maybe when they get big enough they cash out by having one of their investors buy them.

One side note, I've always struggled with the idea that the stock market isn't "democratic" enough that the common person doesn't have access to it. Even if you raised a minimum wage to $20/hr are folks at that wage level going to invest in the market? Is that a good thing to aspire to? I'm not saying this from an elite "stay out of my country club" standpoint, but pragmatically speaking isn't there a certain income level where market investment makes sense because the risk/reward tolerances are different? The focus on the market as the source of income inequality is really focusing on the symptom more than the cause (IMO it's monetary/tax policy at fault not the markets).
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mu03eng

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Re: What's Wrong With Apple (stock)?
« Reply #395 on: August 07, 2018, 11:10:43 AM »
Circling back to the wage discussion that was going on previously, I think there are three factors that are driving the stagnation in wage growth, two major and one minor. Obviously the concentration of wealth in the market via buybacks, generational wealth transfer, hedge funds, etc is a major driver in wage inequality...simply because corporations are taking cash on hand and pushing it back into the market or into technology(more on that in a minute) that reduces the cash in pocket which then doesn't go into employee pockets.

However, one major driver that people forget is productivity in the form of technology, and I think the reason they forget it is the way technology is making us more productive is different than in years past. In previous years technology/productivity has been about getting more out of a worker in their job for their company (email let me talk to more people more quickly, order management systems let me process/take more orders, etc) but now it is transforming how companies do business and making the "X as a Service" completely viable. Companies are giving up jobs and functions that aren't core competencies to 3rd party vendors who do only that thing for a whole bunch of customers. Traditionally, you think of this as something like janitorial services....in the 60/70s companies had their own janitor service, then in the 80/90s they went to 3rd party companies that all they did was janitorial services. Technology has advanced to the point that you can now do that with all job functions (IT, OT, manufacturing, customer service, engineering design, logistics, sourcing, etc) and that specialization has allowed those vendors to be more efficient and get more utilization out of the resources they have. A small/medium company might have previously needed a staff of 20 IT personnel in-house but now they get the same capabilities with a staff of 4 in-house and 16 FTE from a vendor and the vendor doesn't have 16 people dedicated to that customer....they are rotating those resources amongst multiple customers, which means the salaries stay largely the same because there isn't more work we've just got better at doing the work with fewer people thanks to technology.

Bottom line, IMHO, the XaaS revolution will be holding salaries down for at least the next 5 years as creative destruction transformers how we do business. Once XaaS becomes a commodity/ante to the market, the providers will have to start competing for human capital again because quality will again become a competitive factor as opposed to just pricing.
"A Plan? Oh man, I hate plans. That means were gonna have to do stuff. Can't we just have a strategy......or a mission statement."

MU82

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Re: What's Wrong With Apple (stock)?
« Reply #396 on: August 07, 2018, 11:36:07 AM »
Apple - along with Facebook, YouTube and Spotify - finally kicked the d-bag conspiracy theorist Alex Jones off their sites.

For those who might not know, Jones is now being sued for repeatedly claiming that Sandy Hook didn't really happen, the government is running a conspiracy to make us think it happened, and 20 little kids actually faked their deaths.

Jones is claiming this is a First Amendment issue. Of course it isn't. Apple can take any podcast it wants off iTunes, and Jones still can spew his demented world view any time he wants.

If there are 10 bigger d-bags in the world than Alex Jones, I can't name 'em.
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Jockey

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Re: What's Wrong With Apple (stock)?
« Reply #397 on: August 07, 2018, 11:59:34 AM »
Apple - along with Facebook, YouTube and Spotify - finally kicked the d-bag conspiracy theorist Alex Jones off their sites.

For those who might not know, Jones is now being sued for repeatedly claiming that Sandy Hook didn't really happen, the government is running a conspiracy to make us think it happened, and 20 little kids actually faked their deaths.

Jones is claiming this is a First Amendment issue. Of course it isn't. Apple can take any podcast it wants off iTunes, and Jones still can spew his demented world view any time he wants.

If there are 10 bigger d-bags in the world than Alex Jones, I can't name 'em.

I can only think of one.

MUBurrow

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Re: What's Wrong With Apple (stock)?
« Reply #398 on: August 07, 2018, 12:14:15 PM »
One side note, I've always struggled with the idea that the stock market isn't "democratic" enough that the common person doesn't have access to it. Even if you raised a minimum wage to $20/hr are folks at that wage level going to invest in the market? Is that a good thing to aspire to? I'm not saying this from an elite "stay out of my country club" standpoint, but pragmatically speaking isn't there a certain income level where market investment makes sense because the risk/reward tolerances are different? The focus on the market as the source of income inequality is really focusing on the symptom more than the cause (IMO it's monetary/tax policy at fault not the markets).

I agree entirely with this. My nit to pick is more with the way the markets are portrayed as indicative of economic health/growth for the entire country. The folks with money in the markets are a desired advertising audience and consume economics-oriented media, leading to a positive feedback loop tracking the daily movement of the markets. But this has resulted in a sort of media creep whereby its now "common knowledge" that the market is an accurate depiction of US economic health as a whole (because people with money in the markets care a lot about their daily movements). This has lead to a lot of those bad monetary/tax policies - "if the markets go up, it must be good for the US economy" type stuff. But that's just not accurate - a lot of policy can be N2O in the market's tank, but have a neutral or even negative economic impact on the majority of US workers. Its kind of an insidious side effect of "checking the markets" on the local 5 and 6 o clock news everyday.

mu03eng

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Re: What's Wrong With Apple (stock)?
« Reply #399 on: August 07, 2018, 12:22:33 PM »
I agree entirely with this. My nit to pick is more with the way the markets are portrayed as indicative of economic health/growth for the entire country. The folks with money in the markets are a desired advertising audience and consume economics-oriented media, leading to a positive feedback loop tracking the daily movement of the markets. But this has resulted in a sort of media creep whereby its now "common knowledge" that the market is an accurate depiction of US economic health as a whole (because people with money in the markets care a lot about their daily movements). This has lead to a lot of those bad monetary/tax policies - "if the markets go up, it must be good for the US economy" type stuff. But that's just not accurate - a lot of policy can be N2O in the market's tank, but have a neutral or even negative economic impact on the majority of US workers. Its kind of an insidious side effect of "checking the markets" on the local 5 and 6 o clock news everyday.

I completely agree. I also think this is an artifact of a lack of fundamental economic understanding within the population who generally speaking isn't conversant in economic understanding with the exception of politically driven economic ideology.
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