Does Apple's upcoming $3T Market Cap encourage or scare You?

The definition of a 3 trillion dollar company is a company with a 3 trillion dollar market cap. Market cap is shares outstanding times the last price shares were traded at.

The right question is “Are shares of Apple overvalued, fair-valued, or undervalued?” Apple currently has a total annual yield of 3.5% which is 2.9% from share buybacks and 0.6% from dividends. It’s P/E is 32 and it’s revenue growth rate last year was allegedly 28%. It used to have a P/E of between 10-15 but the Nasdaq 100 index has a P/E of 30. This leads me to believe Apple is fairly valued relative to it’s peers but it’s more shareholder friendly that it’s peers because of share buybacks, dividends and voting rights.

I believe the 3 Trillion dollar market cap is justified and that neither scares me nor encourages me. Most people are better-off because of Apple’s contributions to the world —- shareholders, consumers, and employees.

Warren Buffett says it’s far better to be invested in U.S. companies that have exposure to China rather than any Chinese companies directly. He also likes companies with a large cash position. Apple is both of those two things. In a flight to safety, Apple shares may actually go up instead of down.

My biggest concern for Apple is the recent, repeated IOS Zero-day software exploits.

To a first approximation I'm indifferent.

On one hand Apple sells a high volume of quality products. If you attempt to use one of these

https://www.samsung.com/us/tablets/tab-a7/

you can understand why Apple has a "monopoly" for good tablets and phones.

On the other hand it's also true that the stock market has gone up and up and up with no visible means of support. Even though the stock market has been largely unloved since the 2000 bubble pop and the 2008 rout, it was hovering between the high end of normal and the low end of "crazy bubble" before the Coronavirus came, GameStop and all that.

Yeah, a bit because I'd argue at least 3 of largest stocks in the major indexes are now extremely overvalued -- AAPL, NVDA and TSLA.

Historically AAPL was valued with a PE around to 10-15, but today it's trading with a PE over 30. This alone may not be a huge problem if it wasn't also for the fact AAPL's best growth years are likely behind them and they'll may struggle to continue to justify their valuation.

Over the last few years many stocks have seen significant multiple expansions without similar expansions in the fundamentals. On one hand it could be argued the multiple expansion seen in recent years has been justified given where interest rates are and the pandemic stimulus measures, but regardless of whether what we're seeing is the reflection of economic policy or a market bubble, it's clearly not sustainable.

The risk of course is that inflation starts to run away and the FED need to remove liquidity and raise rates much faster than the market is anticipating. In this scenario we'll see the opposite of what happened in 2020/2021 and stock multiples will drop like a rock. If you're a regular person though without significant amounts invested in the market then the risk to you is that inflation remains hot slowly eroding into your savings, wages and purchasing power. Either way, it's probably not great news and there's probably a reason why CEO's and insiders are selling their stock holdings at record rates.

I have nothing against Apple. I take this as a larger sign that so much "funny money" has been injected into the economy over the past few years that large dollar amounts have started to become almost meaningless. Valuations are disconnected from objective reality. This is unlikely to end well.

Perhaps missing:

"Apple reported total annual sales for 2021 of $365.8 billion, up a significant 33% from the $274.5 billion it reported in 2020. Gross margins for the 2021 year were up 45.6% from the year ago."

"Amazon revenue for the twelve months ending September 30, 2021 was $457.965B, a 31.62% increase year-over-year."

Go ahead and short the Standard Oils of today. If/when they are broken up, the sum of parts will be worth even more.

The world as a whole nonetheless grows more prosperous, 5% last year. There are going to be bad outcomes for a whole bunch of people, and some of the doom is real - I wouldn't invest in Florida beachfront property, for example. But "the system" is remarkably resilient as a whole. And it concentrates wealth upwards. It's like the demolition of an Amazon warehouse by tornadoes: it killed six people, but none of them were Jeff Bezos, who still gets to go to space.

To be fair, NASDAQ 100 also almost tripled in value in the same period, so it's not like Apple is a big outlier. It shows more about the socio-economic policies and environment we're going through than Apple itself.

Recall that had the pandemic stimulus been sent directly to Americans it would have put over $10k into every living American’s bank account.

Instead, most of it went to propping up the system that benefits everyone a little bit, but benefits the very wealthy a lottttttt.

The solution is clearly to increase direct payment amounts to get better micro-voting about where value lies in the economy, and to siphon the net amount accumulating to the very wealthy with progressive taxes and a fully funded IRS that can utilize high tech to track law-skirting financial moves.

But of course this won’t happen, the democrats are already fighting to lower taxes for the rich who live on the coasts.

Oh well. These valuations driven by a small percentage of Americans who own all the stocks are mostly a sign that the wealthy who got a lot of money don’t know what to spend it on (that’s why it’s better to pay Americans directly… on average).

Apple owns a platform. They can screw devs over and expect to be paid for the service.

They’re willing to go international.

And just think of all the things they could be doing but aren’t. Servers. PCs. Software. Social networking.

Anything they want.

FAANG flourish because 1. lockdowns boost tech use 2. runaway money printing to fund the pandemic devalues money and forces people to invest. Both are at the direct expense of ordinary people whose businesses and savings are being destroyed. FAANG + pharma + gov now comprise a powerful coalition that controls information streams and regulation and which is incentivized to proceed with 'new normal' measures forever, regardless of their medical merit, and I wish it were possible to discuss this more openly and critically without devolving into a polarized left wing-right wing polemic.

"Scare" maybe isn't quite the right term here but the general concentration of wealth we're seeing in society right now definitely does not fill me with hope. I don't think the end result is going to be a good one.