Stock market is a "fully-fledged epic bubble" and will burst
Discussion
nunpuncher said:
bmwmike said:
vulture1 said:
bmwmike said:
Where do you guys see Apple on the oscilloscope of trash people don't need to trash people don't need but have to buy?
I see apple as a kodak.One day the go to for everyone (well 50% ish of the market) the next day the a slow decline to nothing.
Yes they have brand power for now but its not a consumer staple it will have its peak at some point and then down forever.
Frankly im surprised at the ammount people are willing to pay for Apple products. Especially those who can ill afford it.
Dunno. Truly. Not convinced either way but probably more bullish for them. They are doing a lot right and they have a lot of run way and a lot of brand.. plus expanding into services and cars and...
Edited by bmwmike on Friday 28th October 00:38
The Kodak comparison is perfect. iPhones generate 3x the profit of their next most profitable area, services. Which is fully reliant on people sticking with iPhones so they are tied in to the apple ecosystem.
If harder times mean people don't renew their phones as often or decide to go for a vastly cheaper android and realise they also "just work" then it won't be long before it's on the bones of its arse again.
The Kodak comparison is non existent. Apple expanded their user base exponentially through innovation and technological prowess-Kodak didn't do anything at all.
Iphones do not generate 3X more profit than the next most profitable business category. Not even 1.5X
It is android phone market share that is being lost to Apple (since early 2021) iPhone global share was 14%, now > 20%
lizardbrain said:
Loads of innovation possible, just like at what the Chinese have done with WeChat and TikTok.
Western social media is looking a bit behind the curve right now
Tiktok is a lot like Vine was, just with a harder pump behind it and a lot more data collection. Just a better attempt at an existing idea. Western social media is looking a bit behind the curve right now
DonkeyApple said:
However, we need to note that Apple aren't alone in renting £1k phones. Companies like Samsung are in that space also now and in comparative terms, one might assume that their Western customers are more exposed to the current market?
Very true. However, Samsung aren't almost wholly reliant on folk renting £1k phones. They have a much wider product range and within each vertical there is a product for almost every budget from a £200 TV up to a £6k TV.Apple's problem is that they reincarnated the business on the back of a very expensive phone. iPhone sales accounts for 50% of their revenue. Services such as the app store, cloud etc is the next biggest proportion and it's only about 15%. They could have been a much bigger player in this area if they hadn't hobbled their services to their own devices for so long.
It's not a company I see vanishing but I could see it falling from grace as they just don't seem to have the same level of innovation that got them to where they are now.
AdamIM said:
The iPod started the super-normal growth for Apple and Bill Gates was instrumental in saving Apple (before that) from potential failure
The Kodak comparison is non existent. Apple expanded their user base exponentially through innovation and technological prowess-Kodak didn't do anything at all.
Iphones do not generate 3X more profit than the next most profitable business category. Not even 1.5X
It is android phone market share that is being lost to Apple (since early 2021) iPhone global share was 14%, now > 20%
https://www.statista.com/statistics/253649/iphone-revenue-as-share-of-apples-total-revenue/The Kodak comparison is non existent. Apple expanded their user base exponentially through innovation and technological prowess-Kodak didn't do anything at all.
Iphones do not generate 3X more profit than the next most profitable business category. Not even 1.5X
It is android phone market share that is being lost to Apple (since early 2021) iPhone global share was 14%, now > 20%
nunpuncher said:
AdamIM said:
The iPod started the super-normal growth for Apple and Bill Gates was instrumental in saving Apple (before that) from potential failure
The Kodak comparison is non existent. Apple expanded their user base exponentially through innovation and technological prowess-Kodak didn't do anything at all.
Iphones do not generate 3X more profit than the next most profitable business category. Not even 1.5X
It is android phone market share that is being lost to Apple (since early 2021) iPhone global share was 14%, now > 20%
https://www.statista.com/statistics/253649/iphone-revenue-as-share-of-apples-total-revenue/The Kodak comparison is non existent. Apple expanded their user base exponentially through innovation and technological prowess-Kodak didn't do anything at all.
Iphones do not generate 3X more profit than the next most profitable business category. Not even 1.5X
It is android phone market share that is being lost to Apple (since early 2021) iPhone global share was 14%, now > 20%
Margins on Iphone are circa 35% give or take. Margins on Services is > 70%. Gross profit from iPhone is circa $15B and $13.5B from Service. Ergo, Apple does not 'make 3X more 'profit' than its next most profitable category.
Benedict Evans wrote some interesting piece about Apple's app store revenues last year.
https://www.ben-evans.com/benedictevans/2021/7/8/a...
https://www.ben-evans.com/benedictevans/2021/7/8/a...
AdamIM said:
nunpuncher said:
AdamIM said:
The iPod started the super-normal growth for Apple and Bill Gates was instrumental in saving Apple (before that) from potential failure
The Kodak comparison is non existent. Apple expanded their user base exponentially through innovation and technological prowess-Kodak didn't do anything at all.
Iphones do not generate 3X more profit than the next most profitable business category. Not even 1.5X
It is android phone market share that is being lost to Apple (since early 2021) iPhone global share was 14%, now > 20%
https://www.statista.com/statistics/253649/iphone-revenue-as-share-of-apples-total-revenue/The Kodak comparison is non existent. Apple expanded their user base exponentially through innovation and technological prowess-Kodak didn't do anything at all.
Iphones do not generate 3X more profit than the next most profitable business category. Not even 1.5X
It is android phone market share that is being lost to Apple (since early 2021) iPhone global share was 14%, now > 20%
Margins on Iphone are circa 35% give or take. Margins on Services is > 70%. Gross profit from iPhone is circa $15B and $13.5B from Service. Ergo, Apple does not 'make 3X more 'profit' than its next most profitable category.
nunpuncher said:
AdamIM said:
nunpuncher said:
AdamIM said:
The iPod started the super-normal growth for Apple and Bill Gates was instrumental in saving Apple (before that) from potential failure
The Kodak comparison is non existent. Apple expanded their user base exponentially through innovation and technological prowess-Kodak didn't do anything at all.
Iphones do not generate 3X more profit than the next most profitable business category. Not even 1.5X
It is android phone market share that is being lost to Apple (since early 2021) iPhone global share was 14%, now > 20%
https://www.statista.com/statistics/253649/iphone-revenue-as-share-of-apples-total-revenue/The Kodak comparison is non existent. Apple expanded their user base exponentially through innovation and technological prowess-Kodak didn't do anything at all.
Iphones do not generate 3X more profit than the next most profitable business category. Not even 1.5X
It is android phone market share that is being lost to Apple (since early 2021) iPhone global share was 14%, now > 20%
Margins on Iphone are circa 35% give or take. Margins on Services is > 70%. Gross profit from iPhone is circa $15B and $13.5B from Service. Ergo, Apple does not 'make 3X more 'profit' than its next most profitable category.
This thread started on 7th January 2021
Dow then 30829 now 32925
Sp500 then 3748 now 3901
Nasdaq then 12740 now 11102
We have the headwinds of increasing interest rates, rampant inflation and war in Ukraine
Interest rates probably near a peak as is inflation.
We've been a lot higher and a bit lower, the bull is still in play, time to rotate into more tech maybe....
LONG LIVE THE BULL!!
Dow then 30829 now 32925
Sp500 then 3748 now 3901
Nasdaq then 12740 now 11102
We have the headwinds of increasing interest rates, rampant inflation and war in Ukraine
Interest rates probably near a peak as is inflation.
We've been a lot higher and a bit lower, the bull is still in play, time to rotate into more tech maybe....
LONG LIVE THE BULL!!
dingg said:
We've been a lot higher and a bit lower, the bull is still in play, time to rotate into more tech maybe....
It’s an interesting time. I just keep carrying on as usual buying global trackers but I did read something recently that made me think about adding a tilt. Small-caps. The article I read said small-caps are ‘cheap’. Something like the S&P600 I think was mentioned.. need to see if I can find the link again The issue with small caps is that we are in a phase of market readjustment where companies that can't feed themselves are being selected out of the heard and shot.
The small cap sector is much more exposed to the issue of cash burn being greater than cash revenue so my thinking would be that while small caps may look cheap by some metrics, there has to be more culling yet to be done?
I'd be happier sticking with despised, dull futureless companies that persist in selling goods and services that are needed and keeping the powder dry for the more glamorous stuff until we've seen more of the market shift?
The small cap sector is much more exposed to the issue of cash burn being greater than cash revenue so my thinking would be that while small caps may look cheap by some metrics, there has to be more culling yet to be done?
I'd be happier sticking with despised, dull futureless companies that persist in selling goods and services that are needed and keeping the powder dry for the more glamorous stuff until we've seen more of the market shift?
DonkeyApple said:
The issue with small caps is that we are in a phase of market readjustment where companies that can't feed themselves are being selected out of the heard and shot.
The small cap sector is much more exposed to the issue of cash burn being greater than cash revenue so my thinking would be that while small caps may look cheap by some metrics, there has to be more culling yet to be done?
I'd be happier sticking with despised, dull futureless companies that persist in selling goods and services that are needed and keeping the powder dry for the more glamorous stuff until we've seen more of the market shift?
Fair point DA. Companies that are cash weak will struggle to rearrange commercial loans with higher rates / terms. The small cap sector is much more exposed to the issue of cash burn being greater than cash revenue so my thinking would be that while small caps may look cheap by some metrics, there has to be more culling yet to be done?
I'd be happier sticking with despised, dull futureless companies that persist in selling goods and services that are needed and keeping the powder dry for the more glamorous stuff until we've seen more of the market shift?
Vanguard do a small-cap fund with approx 4000 stocks which would IMO be more exposed to the zombie companies. If I was picking a small cap fund I’d just go for the S&P600 (which by market cap would be (hopefully) stronger companies).
eta - I think you’re right though that there’s probably more pain to come for small caps. Especially if the US goes into recession
Cheers
Edited by Phooey on Saturday 29th October 11:36
The trouble with smallcaps (and I say this as someone with most of my net worth in them, albeit UK only) is that most are rubbish, and due to size/liquidity/mkt structure, don't receive the degree of institutional scrutiny that would see them quickly found out. So I don't think that just buying the market works for them in the same way. The US may be a bit better although sizewise their "smallcap" is more equivalent to our "midcap", and so on.
But if you're willing to do a bit of work - avoid the dreamer lottery ticket sectors, and spend some time filtering out the clear dross with weak balance sheets, poor cash generation, inept or grifting mgmt, secularly declining businesses etc - then it's not that hard to outperform, despite the popular tendency to write off the entire space.
What you do have to be willing to put up with, in the UK at least, is the bouts of irrational volatility. It's not unusual to see wonky closing auction prints, or things moving 10, 15, 20% in a day on no news whatsoever before reverting the next day. These are usually consequences of the aforementioned factors which ultimately play to your advantage, but frequently lead investors astray.
But if you're willing to do a bit of work - avoid the dreamer lottery ticket sectors, and spend some time filtering out the clear dross with weak balance sheets, poor cash generation, inept or grifting mgmt, secularly declining businesses etc - then it's not that hard to outperform, despite the popular tendency to write off the entire space.
What you do have to be willing to put up with, in the UK at least, is the bouts of irrational volatility. It's not unusual to see wonky closing auction prints, or things moving 10, 15, 20% in a day on no news whatsoever before reverting the next day. These are usually consequences of the aforementioned factors which ultimately play to your advantage, but frequently lead investors astray.
Not true about every small cap. because a few amongst them will be tomorrows big winners.
Good luck picking those though.
Not many would have chosen Amazon, at the time when they were making losses, selling a small quantity of books, to the few who had heard of the internet. Looking back it seems an obvious winner, but not at the time.
Small caps in general can be attractive to investors (particularly get-rich-quick novice investors) because they apparently have the opportunity to grow rapidly from small beginnings.
One risky aspect is their modest size. In the event of difficulties, they don't have the financial and management buffer, to cope with disasters. BP encountered an horrific disaster. They pulled through, but a smaller business would have gone bust immediately.
I guess you can take a professional approach to small caps, analyse their balance sheet (I mean, proper colonoscopy, and see if their fixed assets not liability at all! 
), and also even monitoring management and offer guidance, but that approach is also not cheap (investing time and money at least).
), and also even monitoring management and offer guidance, but that approach is also not cheap (investing time and money at least).Jon39 said:
Not true about every small cap. because a few amongst them will be tomorrows big winners.
Good luck picking those though.
Not many would have chosen Amazon, at the time when they were making losses, selling a small quantity of books, to the few who had heard of the internet. Looking back it seems an obvious winner, but not at the time.
Small caps in general can be attractive to investors (particularly get-rich-quick novice investors) because they apparently have the opportunity to grow rapidly from small beginnings.
One risky aspect is their modest size. In the event of difficulties, they don't have the financial and management buffer, to cope with disasters. BP encountered an horrific disaster. They pulled through, but a smaller business would have gone bust immediately.
DonkeyApple said:
The issue with small caps is that we are in a phase of market readjustment where companies that can't feed themselves are being selected out of the heard and shot.
The small cap sector is much more exposed to the issue of cash burn being greater than cash revenue so my thinking would be that while small caps may look cheap by some metrics, there has to be more culling yet to be done?
I'd be happier sticking with despised, dull futureless companies that persist in selling goods and services that are needed and keeping the powder dry for the more glamorous stuff until we've seen more of the market shift?
Small cap value has tended to do slightly better during rubbish times according to recent research by Avantis.The small cap sector is much more exposed to the issue of cash burn being greater than cash revenue so my thinking would be that while small caps may look cheap by some metrics, there has to be more culling yet to be done?
I'd be happier sticking with despised, dull futureless companies that persist in selling goods and services that are needed and keeping the powder dry for the more glamorous stuff until we've seen more of the market shift?
https://www.evidenceinvestor.com/how-do-small-stoc...
"As you can see in the table below, covering the period 1973-2021 and showing average monthly returns, while small value stocks did earn negative returns during the first half of recessions, their losses were actually slightly less than those of the overall market."
As NowWatchThisDrive points out, the key is in screening out the poor quality and lottery style stocks.
Developed markets small cap (arguably mid cap) value is positive YTD (in GBP), and there are systematic, low cost funds that can capture this return.
Speaking of "cheap", interesting to hear Rob Arnott's views on relative valuations - US vs rest of the world.
https://blog.validea.com/show-us-your-portfolio-ro...
Edited by Derek Chevalier on Monday 31st October 18:40
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