Apple's Share Price Hits $100 for the First Time Since June Stock Split

[MacSince1990]

How could you possibly know, either way?

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Do you offer money-back guarantees?

Obviously no one's ever introduced you to the magic 8-ball.

What I meant was this was when I wanted to sell it, but I didn't know if it would reach 100 or if it would go down, so I just sold it where it was. Not that I thought either 100 or 98 were important price points or that I was trying to play the stock in increments of $1 just to buy it back.

I couldn't know what it'd do, so I decided to get off where it was.

 

[IJ Reilly]

Fair point.

Let's just say I've seen it happen more than a few times.

And also not happen, more than a few times. I'm not trying to be hard on you in particular, because I hear this a lot. My point is, the markets do not behave so predictably that a person can pick the best moments to buy or sell.

 

[macduke]

Glad I bought some stock back when it split. My only regret is not buying more.

 

[IJ Reilly]

Obviously no one's ever introduced you to the magic 8-ball.

What I meant was this was when I wanted to sell it, but I didn't know if it would reach 100 or if it would go down, so I just sold it where it was. Not that I thought either 100 or 98 were important price points or that I was trying to play the stock in increments of $1 just to buy it back.

I couldn't know what it'd do, so I decided to get off where it was.

The Magic 8-Ball is my favorite stock market forecaster. How did you know?

I can't argue with any investment logic that is based on what you think is best for you at any particular moment in your life. In the end, that is as it should be. What I argue against is investing (trading, really) based on guessing entry or exit points, especially for individual stocks. That's a fool's errand.

 

[GuitarDTO]

Bought a bunch at pre-split $450 per share, and am happy : ) It's still undervalued, and I will use any dips to scoop up additional shares. The iPhone announcement will likely cause a drop (the ol' buy on rumor sell on news), especially if availability of a larger model is delayed. With that said, if they roll out a payment system with the new iPhone, that could trigger another 10-15% bump easily. Great time to own this stock.

 

[omenatarhuri]

And also not happen, more than a few times. I'm not trying to be hard on you in particular, because I hear this a lot. My point is, the markets do not behave so predictably that a person can pick the best moments to buy or sell.

Of course, but to get rich you just a need a good time to buy or sell on average, not the best. Many people do get rich in such a way, just have to be smarter or luckier than most other ones.

 

[69650]

No. There has been lots of news. When Apple was trading at $450 last year that was a price based on an assumption that LESS iPhones were going to be sold going forward. Instead there keep being record iPhones. We get great quarterly news about sales. Also Android continues to not be able to capture the high end smartphone market. At the same time Macs and iPads continue to sell at a very nice rate.

The key is not the number of product lines that Apple sells but the number of items in each product line. Apple keeps beating the nay sayers who thought that low end Android phones and tablets were going to decrease Apple sales. But that hasn't been happening.

The buyback program has an influence, but I suspect not that much. Apple is using the buyback program to, basically, insider trade on behalf of its shareholders. It strongly believes that its stock is undervalued (sitting in a position with tons of inside information) and so it is buying it back. That makes my shares more valuable. But the key thing is the continued huge sales numbers of iPhones. That is the most important part of Apple's finances.

So what's different between now and when the stock crashed so dramatically a couple of years ago? Lots of promises about new products but still nothing on the table. I disagree that Android sales are not eating into iPhone sales. iPhone sales have risen as they've started selling on more carriers in more countries. You can't keep doing that indefinitely. The iPhone sales growth has slowed dramatically over the past few quarters.

 

[IJ Reilly]

Of course, but to get rich you just a need a good time to buy or sell on average, not the best. Many people do get rich in such a way, just have to be smarter or luckier than most other ones.

Mostly luckier, but you don't need to get lucky if you take a balanced investment approach, start when you are young, and stick by it. Unfortunately most people think they have to be luckier or smarter and either try to outsmart the market (which is a mistake), or do nothing, and end up poor.

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So what's different between now and when the stock crashed so dramatically a couple of years ago? Lots of promises about new products but still nothing on the table. I disagree that Android sales are not eating into iPhone sales. iPhone sales have risen as they've started selling on more carriers in more countries. You can't keep doing that indefinitely. The iPhone sales growth has slowed dramatically over the past few quarters.

Plenty, including four consecutive quarters of declining to flat growth, and no new products on the horizon to tell a different story over the short or medium term. Investors hate that, and for good reason. The iPhone refresh is anticipated to be very positive for earnings. Add to that the buyback, and the stock is now returning to levels achieved two years ago.

 

[PocketSand11]

Apple's stock price closed at an all-time high of $100.53, breaking its previous closing high of $100.30 ($702.10 pre-split) set on September 19, 2012.

Wow. It almost makes me wish I was trading AAPL like I did before from 2008 to 2013, but I remember all the horror of the dump to $390 after I had bought at $560. I didn't really know whether Apple would recover. I did hold until it went up past my purchase price, but I still prefer now to stay with SPY instead. It's been doing well too, not as well as AAPL but with such lower risk that it was so worth it.

Income from SPY dividends with dividend reinvestment will give me 100% growth within fewer than 40 years if the dividend yield doesn't change. AAPL has the same dividend yield for now, but unlike AAPL, I can hold SPY forever and not worry about it. It maintains itself. I'm also worried about Apple's lack of forward movement recently. They're slowly losing their edge without Jobs and are failing to buy up companies to maintain their grip on the markets like MS and Google, two of my least favorite companies, have done so well. The buyback helped the stock but not the company.

 

[imageWIS]

Apple bought back billions of dollars worth of stock since Sep 12. Hence, the all-time high is closer to $110 with the shrinking outstanding share number, not $100. I don't know why the financial media (and Macrumors) disregard such a trivial and obvious fact.

Because they now nothing about finance? I think the stock split was shortsighted and foolish. There is a reason why Google never split their stock, or why Berkshire has both A and B shares and A are hovering around $200,000...!

 

[TallManNY]

So what's different between now and when the stock crashed so dramatically a couple of years ago? Lots of promises about new products but still nothing on the table. I disagree that Android sales are not eating into iPhone sales. iPhone sales have risen as they've started selling on more carriers in more countries. You can't keep doing that indefinitely. The iPhone sales growth has slowed dramatically over the past few quarters.

I'm not saying that Android isn't competition. But Apple was priced at a level that predicted DECREASED iPhone sales. Not decreased market share of the smartphone market which is obviously increasing and going to continue to increase until all cell phones are smartphones. But actually, in absolute numbers, less iPhones sold. The stock price predicted that if 2013 was 200 million iPhones sold, then 2014 was going to be 180 million. (I don't know if these numbers are right or even in the ballpark, but the point is if Apple kept selling about the same number of iPhones at about the same margin for just a handful more years, then the stock price was too low.)

At one point last year, Apple had a market cap of $400 billion or so, yet was making nearly $40 billion in profit. And its best product was in the smartphone space which was growing and is projected to grow more. The best explanation for that valuation was that folks were concerned that Apple would not be able to sell expensive and highly profitable iPhones in similar numbers going forward.

What has happened is that HTC, Samsung, and Google (and others) have come out with just about as good as anyone can imagine Android phones, and the iPhone sold like a champ right through those launches. Android will vacate the market for the next two quarters while they see what Apple can do. So Apple will be the "IT" phone for the remainder of the year. And it is just a great phone. Folks are figuring it out.

That said, I don't discount the possibility of significant retrenchment in the stock price. It happened before, and yes, until a new market category launches and is proven successful, the market could move against Apple again. If I were a short term trader, I would probably even bet on it (if I had to make a three month bet today).

But I think it comes down to smartphones and tablets. Everyone NEEDS a smartphone (you are less powerful without one, you need it). Everyone will WANT a tablet (it is about the same side as paper, which is a form factor that is relatively unchanged over centuries, but much more useful). I think there is plenty of room to run in these markets. Apple's market share might even increase, but is unlike to decrease faster than the market themselves are growing. So units sold will increase over time. (Note I maybe be wrong about iPads though because cheap tablets might be good enough and want may not be strong enough to drive massive sales at Apple's prices.) As long as iPhone sales continue to increase and margins stay about as strong, then a higher stock price will be justified.

 

[MacSince1990]

The Magic 8-Ball is my favorite stock market forecaster. How did you know?

I knew, because I know you're a pretty smart guy, and want a better chance at predicting day-to-day market prices than you'd get by following your average analyst. 8-Ball's the only way =P

I can't argue with any investment logic that is based on what you think is best for you at any particular moment in your life. In the end, that is as it should be. What I argue against is investing (trading, really) based on guessing entry or exit points, especially for individual stocks. That's a fool's errand.

It is a fool's errand for the most part, true. On the other hand I"m not trying to gauge the exact moment it'll be at its absolute low or high, and if I did, I'd fail miserably well over 90% of the time. I don't have to though. I just have to sell higher than I bought it at, and buy it back a bit cheaper. This usually works all right.

 

[psac]

I'm glad the 100.49s (post split price) I bought two years ago are finally in the money, woo hoo! Bought right near the high and held for two years of looking at a loss. Finally came back.

I also bought before that at lower price points, but that one was the killer.

 

[IJ Reilly]

I knew, because I know you're a pretty smart guy, and want a better chance at predicting day-to-day market prices than you'd get by following your average analyst. 8-Ball's the only way =P

"Outlook Hazy. Ask Again."

Damn.

It is a fool's errand for the most part, true. On the other hand I"m not trying to gauge the exact moment it'll be at its absolute low or high, and if I did, I'd fail miserably well over 90% of the time. I don't have to though. I just have to sell higher than I bought it at, and buy it back a bit cheaper. This usually works all right.

The math on trading in and out is not in your favor. You only have to miss highs and lows by a little to have been better off holding, let alone if you have to buy back in at a higher price than you sold. It is so difficult for a small investor to play the trading game successfully. The good news is, you don't have to play it.

 

[Dave00]

Of course, but to get rich you just a need a good time to buy or sell on average, not the best. Many people do get rich in such a way, just have to be smarter or luckier than most other ones.

They really don't. People that are the most successful don't time the market at all. See Warren Buffet, who said it's better to get a good company at a fair price than a fair company at a good price. You are rarely, if ever, going to be able to buy at the bottom and sell at the top. You can, however, buy in the vicinity of good value and sell in the vicinity of bad value. I bought in at pre-split prices of $50, $80, $200, $400, and $600 on the way up. I bought again at $600, $550, $450, and $390 on the way back down. I think now it's fairly or perhaps a little over-valued, but selling would incur large capital gains from those $50 shares (~$7 post-split pricing) and I'm collecting dividends so there's really not much point. If the P:E got up around 20, I might change my mind. However, the point is that patience is rewarded. Wasn't happy about my $600 shares sitting at $390, but I felt undervalued, so I waited. Now every price point is in the black.

 

[Tumbleweed666]

Because they now nothing about finance? I think the stock split was shortsighted and foolish. There is a reason why Google never split their stock

Google stock split 2:1 this year

 

[Dave00]

Because they now nothing about finance? I think the stock split was shortsighted and foolish. There is a reason why Google never split their stock, or why Berkshire has both A and B shares and A are hovering around $200,000...!

What's the reason again that Google never split their stock (which they did, several months ago)?
Splits make it easier for investors to invest smaller amounts. Tiny share numbers are harder for brokerages to fill, leading to pricing inefficiencies. If you're a student who wanted to invest $500 in AAPL, there was no way to do so pre-split. Now you can buy 5 shares. The lower share price also makes it more likely they'll be listed in the Dow, which indirectly can push up share price as there are index funds which invest in the Dow.

 

[MacSince1990]

The math on trading in and out is not in your favor. You only have to miss highs and lows by a little to have been better off holding, let alone if you have to buy back in at a higher price than you sold. It is so difficult for a small investor to play the trading game successfully. The good news is, you don't have to play it.

You aren't wrong. But personally I've had a net success over the last few years doing this. Some stocks I absolutely would have been better of holding, but doing the math I end up better off doing what I'm doing. I do hold for months at a time, I don't day trade, for what it's worth.

Shame we can't all make millions of trades per second and cash in on variations of thousandths of a cent.

Why is that even legal again?

 

[IJ Reilly]

What's the reason again that Google never split their stock (which they did, several months ago)?
Splits make it easier for investors to invest smaller amounts. Tiny share numbers are harder for brokerages to fill, leading to pricing inefficiencies. If you're a student who wanted to invest $500 in AAPL, there was no way to do so pre-split. Now you can buy 5 shares. The lower share price also makes it more likely they'll be listed in the Dow, which indirectly can push up share price as there are index funds which invest in the Dow.

Since the advent of electronic trading, small odd lots are no more difficult to buy or sell than large or round lots. The only rationale for a split for AAPL is the possibility of being listed in the DJI, the importance and significance of which eludes me, it being the most antique and meaningless of all the market metrics.

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You aren't wrong. But personally I've had a net success over the last few years doing this. Some stocks I absolutely would have been better of holding, but doing the math I end up better off doing what I'm doing. I do hold for months at a time, I don't day trade, for what it's worth.

Shame we can't all make millions of trades per second and cash in on variations of thousandths of a cent.

Why is that even legal again?

Net success does not mean that you wouldn't have been better off without the trading in and out, as I think you recognize. As an individual investor, you really have to take a different approach or you will become road kill.

 

[CartoonCat]

This old saw never fails to amuse. So, under this scenario, what is the rumor, and what is the news?

Obviously the rumor is... Apple will release some kind of magical, must have gadget in September. The News will be... they didn't.

 

[IJ Reilly]

Obviously the rumor is... Apple will release some kind of magical, must have gadget in September. The News will be... they didn't.

"No Second Coming. Apple Shares Decline Sharply"

 

[oplix]

it went up $56 pre-split. woohoo...

 

[Dave00]

Since the advent of electronic trading, small odd lots are no more difficult to buy or sell than large or round lots. The only rationale for a split for AAPL is the possibility of being listed in the DJI, the importance and significance of which eludes me, it being the most antique and meaningless of all the market metrics.

I'm not sure on this. It probably depends on the volume of the security and the brokerage filling the order. When I've traded odd lots, I've often found the order broken into different trades unless I used a limit order (and even then occasionally different prices). Hard to prove one way or the other, especially since odd lots have only recently even been counted in trade volume. Regardless, large share price makes it harder for those with less equity to trade, and probably lowers the amount that those smaller investors are able to buy. For instance, were AAPL at $700, an investor with $1000 would only be able to buy one share, and an investor with $500 wouldn't be able to buy at all, unless they found someone willing to sell a fractional share, which is near impossible outside of dividend reinvestment. As for the index, you'll get no argument here that the Dow is a rather arcane measure with the oddity of share price having an effect on the security's representation. But, there are ETF's and Index Funds that invest in the Dow, so any listing in a new index means an automatic purchase of AAPL if they are listed, which they really should be with the Dow's supposing to represent the largest US companies in different industries.

Net success does not mean that you wouldn't have been better off without the trading in and out, as I think you recognize. As an individual investor, you really have to take a different approach or you will become road kill.

Agreed again. I know people who have had success gambling as well, making enormous sums of money. That doesn't mean it's a good investment, and over time they'll return to the mean, as will short-term traders.

 

[IJ Reilly]

I'm not sure on this. It probably depends on the volume of the security and the brokerage filling the order. When I've traded odd lots, I've often found the order broken into different trades unless I used a limit order (and even then occasionally different prices). Hard to prove one way or the other, especially since odd lots have only recently even been counted in trade volume. Regardless, large share price makes it harder for those with less equity to trade, and probably lowers the amount that those smaller investors are able to buy. For instance, were AAPL at $700, an investor with $1000 would only be able to buy one share, and an investor with $500 wouldn't be able to buy at all, unless they found someone willing to sell a fractional share, which is near impossible outside of dividend reinvestment. As for the index, you'll get no argument here that the Dow is a rather arcane measure with the oddity of share price having an effect on the security's representation. But, there are ETF's and Index Funds that invest in the Dow, so any listing in a new index means an automatic purchase of AAPL if they are listed, which they really should be with the Dow's supposing to represent the largest US companies in different industries.

Agreed again. I know people who have had success gambling as well, making enormous sums of money. That doesn't mean it's a good investment, and over time they'll return to the mean, as will short-term traders.

I haven't done much small or odd-lot trading but my impression is they get bundled into larger trades. Possibly with a thinly-traded stock the market orders won't execute as quickly as a high volume stock, but I am sure you as the seller won't get charged an outsized commission for trying to move it, which was the case before electronic trading. All that being said, my honest bias is against investors who can only buy a few shares of company making that sort of investment. Those investors should be into ETFs or some other vehicle (such as QQQ) that allows them to make small, steady buys. I can't imagine that Apple's board was thinking of tiny investors when they spit the shares (even though this is what they implied).

Yes, a person can buy a DJI ETF, though I can't imagine why anyone would. The entire point of buying ETFs is to diversify and mitigate risk, and you don't get that at all with the DJI. I am also having a hard time understanding why Apple would split the stock just so they could become a DJI component some day. By the time Dow Jones gets around to mucking around with it again, AAPL shares might be too high again.

As an investor I made one really good bet, and that was on AAPL in 1997. I hung in through some really tough times. I wouldn't claim to anyone that I wasn't damned lucky or recommend this as an investment strategy. All of my investments from here, including my proceeds from AAPL, will be into ETFs.

 

[Dave00]

All that being said, my honest bias is against investors who can only buy a few shares of company making that sort of investment. Those investors should be into ETFs or some other vehicle (such as QQQ) that allows them to make small, steady buys. I can't imagine that Apple's board was thinking of tiny investors when they spit the shares (even though this is what they implied).

Yes, a person can buy a DJI ETF, though I can't imagine why anyone would. The entire point of buying ETFs is to diversify and mitigate risk, and you don't get that at all with the DJI. I am also having a hard time understanding why Apple would split the stock just so they could become a DJI component some day. By the time Dow Jones gets around to mucking around with it again, AAPL shares might be too high again.

Agreed it's better in ETF's/Index funds, but it's a good learning experience for the very small investor to be able to put money in a stock, learn about its fundamentals, watch as the "experts" show just how poorly they're able to predict results, and test one's own expectations. This hopefully mitigates tendencies in the future, when it counts a whole lot more.

I can't pretend to know the thought process behind AAPL's board (assuming there is any thought process at all, which with corporate boards is often a tenuous assumption.) However, prior to the split an estimated 35-40% of AAPL trades were in lots smaller than 100 shares, which suggests that the small investor might play a significant role.

I agree that investing in the Dow is not a terribly wonderful strategy, but it is employed by a significant number of investors. There are multiple index funds that invest in Dow, and the exchange-traded fund DIA has $11.5 billion. Thus, it's likely that a listing in Dow would result in immediate infusion of a billion or two. In a $500B company, that may not seem like a lot percentage-wise but it's still a billion-dollar buy order, which certainly wouldn't hurt the stock.