AAPL

Apple Inc.

141.66
USD
2.45%
141.66
USD
2.45%
129.04 182.94
52 weeks
52 weeks

Mkt Cap 2.32T

Shares Out 16.41B

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Sean Peche’s Post

Why is called a bear market? Because Bears fight by swiping their claws downwards unlike Bulls who thrust their horns upwards And why do bear markets start 20% below the highs? Not sure, perhaps that’s the point at which people start to feel “mauled” So what should I do, because my portfolio is being mauled? Well, you can look at all the various stats doing the rounds about: - how many bear markets there've been - how long they have lasted & - how deep the drawdowns were But get it wrong, and those claws could tear your portfolio apart Remember each bear market is different At the start of the bear market beginning Jan 2009, -unemployment was 8% & rising, -inflation was flat and falling & -the S&P was trading on less than 14x earnings Today: - Unemployment is 3.6% - inflation is 8.3% and rising - the S&P is on 20x earnings & - we have a war in Europe Back in 2009, there was $1TRN invested in “driverless cars” (Passives) Today there is $10TRN And if those driverless cars start veering off the road with $10TRN of passengers, who knows how bad this could get Hey, I want to sleep tonight and you aren’t helping Ok, well do you invest with a margin of safety? Well I’m invested in high-quality (HQ) companies That’s not what I asked you I’ve rolled this out before, but Microsoft has always been an HQ company but if you paid too much for it in 2000, you had to wait 14 years to break even Have you got 14 years? No Blackberry and Nokia were HQ companies but then along came another HQ company, Apple who reduced them to dust Well, that’s ok, I’m invested in Apple (directly and indirectly via my Passives) I think you’re missing my point Apple is a $2TRN luxury goods company and didn't you see another luxury goods company, Richemont, fall 13% on Friday I did, but that was because of China But isn’t China 19% of Apple’s revenue? But Apple has an “ecosystem” Inflation is a problem and right now people are struggling to feed themselves so maybe we should be careful of "eco-systems" unless we can eat them or burn them to stay warm Are you saying you don’t like Apple products? No, I own and love a few of their products, but it doesn’t mean I need to own it at 22x earnings that doesn’t seem too expensive it is if those earnings are at record levels Ok so give me something with a margin of safety Well, we own Mitsubishi UFJ? The Japanese bank, are you kidding? No, they’re growing earnings, management is making sensible decisions and they’re buying back 5% of its shares at 0.5 x tangible book value Could MUFJ fall 50%? Anything can happen but 0.25x tangible book value for a profitable bank is very extreme Whereas if Apple fell 50%, it would be on 11x earnings – only 10% below the average from 2010 – 2020 I don’t think Bears care too much for HQ companies, But they do eat Apples #valueinvesting #investing

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