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- May 20, 2006
^What "HAS" worked is not necessarily and indicator of what will work going forward.
I think the point is what has worked in the past may be wearing out its welcome if you know
what I mean.
Smart phones and MP3 players are mature markets which means little to no growth and heavy
price competition. Additionally, in the tablet space companies are going at apple on price as well
and I really don't think they have a response . Developing countries don't have the income to
significantly affect revenues either imo, not to mention the lack of handset subsidies in foreign
countries.
According to various sources, with Apple's revenues being 1.5% of GDP, and average GDP
per household of $50k, every man woman and child in the country need's to spend 200-300
yearly on apple products in order to maintain revenue, not to mention any additional growth.
With aapl being 6% of the Russel Index, mutual funds are prohibited by law from buying
appl going forward. 5% is the cutoff. I think appl is about 4% of the S&P right now.
Lastly, from watching financial markets for 10+ years I can tell you that if you see a chart like
appl, its not going to just level off or plateau, and it certainly can't continue through the roof. Every
bubble in the history of bubbles looks just like appl's chart right now.
I know it feels good to see your investments perform well and to feel lke you've made a good call
and whatnot. But I would be extremely cautious, at some point we are going to see a pretty steep correction
and appl will feel it hard. I was joking with a friend the other day, telling him appl's new product line includes
bags for people to hold.
I think the point is what has worked in the past may be wearing out its welcome if you know
what I mean.
Smart phones and MP3 players are mature markets which means little to no growth and heavy
price competition. Additionally, in the tablet space companies are going at apple on price as well
and I really don't think they have a response . Developing countries don't have the income to
significantly affect revenues either imo, not to mention the lack of handset subsidies in foreign
countries.
According to various sources, with Apple's revenues being 1.5% of GDP, and average GDP
per household of $50k, every man woman and child in the country need's to spend 200-300
yearly on apple products in order to maintain revenue, not to mention any additional growth.
With aapl being 6% of the Russel Index, mutual funds are prohibited by law from buying
appl going forward. 5% is the cutoff. I think appl is about 4% of the S&P right now.
Lastly, from watching financial markets for 10+ years I can tell you that if you see a chart like
appl, its not going to just level off or plateau, and it certainly can't continue through the roof. Every
bubble in the history of bubbles looks just like appl's chart right now.
I know it feels good to see your investments perform well and to feel lke you've made a good call
and whatnot. But I would be extremely cautious, at some point we are going to see a pretty steep correction
and appl will feel it hard. I was joking with a friend the other day, telling him appl's new product line includes
bags for people to hold.