Covered calls on AAPL?

Here's what I wrote in another thread yesterday on AAPL....I think bailing right now is just a bad idea and you shouldnt care what the next 12 months are, unless you're a chartist and trying to trade the name. Selling calls here at 52 week lows is silly IMO but profit is profit.

"Apple is fine, they have tons of cash, cash is king. Buybacks are stupid I dont know why everyone wants a buyback just to artificially boost share price, google isnt buying stock. Yes apple is cheap but its a tech company for god sake. They might make sense for a company with nothing to innovate like Procter Gamble but for companies that have major opportunities, buybacks are idiotic. Apple should use their cash to go in and dominate other industries whether it be finance, automobiles,virtual reality,robots, whatever.They have the cash. They have the organizational structure, Tim cook is a supply chain guy. They have the technical chops. But mostly their ecosystem gives them an incredibly powerful base to grow from.

Apple's strength is their cash, their cash flow, their modern corporate structure, their lack of pension overhang, unions and such. Buying back stock and giving out dividends weakens the company. We're entering a phase in society where literally facebook,apple,google will dominate our lives till the end of time, if anyone emerges they will be acquired. I would want to hoard all the cash in the world and prepare to just dominate every field if I was running apple. Of course old people retiring today want dividends. They're in a great position to be in. "

FWIW I stlil think apple is worth $5 trillion or more in 20-30 years yes still 10x or more from here as ridiculous as it sounds. This thing is nowhere near topping out, whatever they want to dominate they can and will. Their cash pile is unstoppable. When will they get into other things, who knows, but they will, just relax, its the best name youll ever own, your ancestors a few generations away will thank you for holding on.

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they have tons of cash, cash is king.

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having all that cash with nothing to do with it is a horrible sign, dumbass

Are you serious? Just because Apple hasn't done anything doesn't mean they wont. You guys keep selling your apple, I certainly have a ton and have added more here recently in the low 90s, my whole basis is $47 so I really dont care, but the reality is, they're boosting the dividend every year, their cash is growing and apple is going to be a monster for the rest of our lives bc their ecosystem has people locked in for the most part. Apple could buy tesla, but why? Its not like Tesla has technology apple cant duplicate. Apple will probably sit around, let tesla do all the innovating, and when tesla perfects the car battery apple will jump in and build 5x as many gigafactories with all their cash and just get to work launching cars then.

Apple has cash that amazon,tesla,netflix,etc all dream of having, cash opens doors to everything. Just bc Icahn bailed on Apple doesnt mean its a dog. Lets not forget Icahn went long CHK at $15 recently, he went long Hertz before it crumbled, and many other atrocious investments. Apple was one of his few good buys and he bought that at $475 when it lingered in the 300s and low 400s for a long long time. Icahn may be one of the best ever, but lets not pretend like he's steve cohen.

Everyone is dying for apple to make a purchase and berates them for not doing it. Why on earth would they overpay for these companies at ridiculous valuations today, they're being prudent and realize they dont have to buy anything today at these awful multiples and when the markets come back to reality, if they ever do then apple will have a mountain of cash to begin picking up assets with. Ask the oil companies how wise it was for them to do all those mergers at $100 oil.

You can hate on me all you want but Im not a total moron at analyzing individual names. Actually those who went long the few names i laid out in 2013 like PM,MO, and V seem to have done alright.

not xom. My portfolio doesnt have many names mostly PM,MO,V,FB,GOOG,AAPL. MO Im very close to letting go, I have a monster capital gain and I dont even reinvest the dividends anymore since it crossed $50. I havent yet, but Im very close to letting MO go.

Just drip V and youll be fine, but the problem with V is I really do feel at some point in the future apple or google will do something and knock the credit card processors out. They could easily do the processing for way less than the fees currently charged by amex or visa. Its not like V has some technological prowess that enables them to act as pimps at every small business. I dont know how anyone can bet against apple or google moving forward, make those a big part of your portfolio and youll be fine forever IMO.

I could say a lot here, but I'll just respond to the last bit...

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FWIW I stlil think apple is worth $5 trillion or more in 20-30 years yes still 10x or more from here as ridiculous as it sounds. This thing is nowhere near topping out, whatever they want to dominate they can and will.

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Over the decades, how many people said the same thing (minus market cap) about how many other companies, and where are these companies now? How about US Steel (X)? Kodak (EKDKQ for the old stock, which isn't traded anymore)? Cisco (CSCO)?

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Their cash pile is unstoppable

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Tell that to the US Repatriation Tax rate.

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just relax, its the best name youll ever own, your ancestors a few generations away will thank you for holding on.

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See above, and think of all the big company/stock names over the years that you've heard the same exact thing but didn't pan out.

AAPL isn't going to continue growing at the same rate as in the past due to the law of large numbers if nothing else. To reinforce this point, consider that for AAPL to become a $5 trillion company in 30 years (to be conservative based on the timespan you suggested in the first quote) requires an annual growth rate of around 7.25%, which is faster than annual US GDP growth for any year in more than a decade. If we instead assume it takes 20 years to acquire a $5 trillion market cap, then the stock annual growth rate would be 11%. They're big, and it's hard to keep growing when you're that large - just ask Warren Buffett.

Not trying to be mean or say that AAPL can't be a good investment. It's just that your post sounds like something you'd hear from a Cisco investor in the 90's.

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Ok but Cisco,Kodak all that stuff you mentioned was nowhere near the level of apple.

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Quantitatively, how do you come to this conclusion? Both of these companies were the cat's pajamas back in the day. Not that I would know from experience because I didn't even know that Cisco existed at its stock price peak and wasn't even a twinkle in my daddy's eye when Kodak peaked in 1987.

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Apple is engrained in our lives beyond belief. Their ecosystem ropes you in and you're entrenched forever.

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Maybe your life, but not the lives of everyone. I've only had one Apple product in my life (an iPod), and it was given to me (I also lost it and never bothered to replace it). I've never even entertained the idea of getting an AAPL product ever since - I just don't care for them, and I'm certainly not alone.

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Their computers are the best in the world hands down and whats the retention rate on that???

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I could build a custom PC that's better than any Apple computer for the same amount of money or less than the Apple product. This is nonsense, and it's not even their main source of revenue.

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Whats apples market penetration on a global scale? Is their room to grow??? Apple hasn't even sniffed the surface of global penetration of phones or computers yet its the second biggest company on earth

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I could make a lot of sexual jokes about how deep they are in China, but I won't. Where do you expect them to go from there?

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and they have a mountain of cash that neither kodak nor cisco ever dreamed of having.

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You mean $21.5 billion in cash and cash equivalents, or 7% of total assets? I guess I can give you the $33.7 billion in short term marketable securities. But what I can't give you? The $177.6 billion in long term marketable securities which are 58% of their assets. And here's an accounting lesson: that $177.6 billion is labelled long term marketable securities because they are planning to sit on it for at least a year accruing interest - which, in this interest rate environment, doesn't produce much. And lest we forget, anything outside the US is subject to US repatriation taxes to bring into this country, which is why the company has been borrowing money to pay dividends, etc. LINK to AAPL's latest 10Q since you want to tell me further down to "go back and do some homework."

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I had a samsung note 3 for literally 3-4 days and I returned it and got an iphone a few years ago, that was the last time I cheat on apple with samsung.

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Yay, anecdotes! Those mean a whole lot with smart investing decisions!

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To compare those titans from the past to the fortress that is apple, and yes fortress bc that balance sheet doesn't lie is just silly. We're entering a technological golden age with robots, cars, etc and apple has all the cash on earth to dominate in whatever way they seem fit. No offense but LOL at kodak references, cmon man thats such a cliche answer.

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Why is it silly? You don't say why, you just try to brush it away with points repeated ad nauseam. But here's why they should be compared: back in their prime, people considered them to be a huge part of the future and to keep growing at unsustainable rates, just like you are doing with Apple.

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If you dont believe me just go back and do some homework, Cisco had a whopping $19B in cash in 2000

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I love the first part because you're trying to call me dumb or ignorant, and yet the second part is inaccurate because CSCO's fiscal year 2000 annual report shows cash of $4.2 billion. Which, coincidentally, is 12.88% of CSCO's total assets at the time, larger than AAPL's current 7% of assets. Furthermore, CSCO in 2000 had a current ratio of 2.138 versus AAPL's 1.283 in the present. Sure, AAPL's is larger in absolute terms, but percentages, ratios, and margins are almost always more important in finance and investments.

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this is old, but here's a link from 2012

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Yay! A 4-year old article that's almost useless to the current situation. And what's even better? Your quoted part focuses on the absolute numbers, not what matters - percentages, ratios, and margins. And to top it all off, your link is to a site that pays random people to post articles. The author of the linked article works for a litigation and utility regulation company, so we know he's an expert in the field of investments.

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Are you serious? Just because Apple hasn't done anything doesn't mean they wont. You guys keep selling your apple, I certainly have a ton and have added more here recently in the low 90s, my whole basis is $47 so I really dont care, but the reality is, they're boosting the dividend every year, their cash is growing and apple is going to be a monster for the rest of our lives bc their ecosystem has people locked in for the most part. Apple could buy tesla, but why? Its not like Tesla has technology apple cant duplicate. Apple will probably sit around, let tesla do all the innovating, and when tesla perfects the car battery apple will jump in and build 5x as many gigafactories with all their cash and just get to work launching cars then.

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First off, nobody is advocating to sell it all, but you certainly seem to be advocating to buy at any expense.

I don't even want to address the fact that you think Apple will start manufacturing cars without making any acquisitions because that is just pure insanity.

I'm not trying to "hate" or call you a bad investor, but I think you need to take off the fanboy glasses for a second. Apple has not innovated in over 5 years. The rode the gravy train of the iPhone and it appears that is fading. For now at least. These are facts.

Bottom line, Apple will continue to be a solid investment, but there is certainly no reason to rush out and buy any right now.

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omada the fact you said you could build a computer is where I end this discussion.

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What I meant is that you or anyone else can go on websites and order custom built PC's based on whatever hardware you want. I have no clue how to put an actual PC together, but I do know that a custom built PC can outperform an AAPL product for the same price or less. The Gaming and Tech Boards will say similar things. Here's a video comparing a $3000 Mac versus a $3000 custom built PC. It's just an example, but it proves the point.

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lets just agree to disagree for now.

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It doesn't affect me in the slightest what you do with your money; I'm just trying to warn you that you're being a bit stubborn and too set in your thinking. The really great investors aren't set in stone in their opinion of a company, and I'm just hoping I can get you to open your mind up. Some new company will rise up to be the next AAPL while AAPL grows old as a dividend-paying blue chip. That's just how the tech sector and stock market work. Just take a step back and think about what we're saying, please.

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You act like just because they havent rushed out to make an acquisition during this bull market that they're ignorant. You have companies trading at some of the most ridiculous multiples we've ever seen in the tech world yet you want apple to go out there and overpay???

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I couldn't agree more with the valuation argument. Trust me. I've been a big bear the past few months.

That said, they will pay a premium regardless. So I don't think what the company is trading for currently has much to do with anything. There are folks much smarter than you and I that will evaluate what a potential acquisition is worth. But furthermore, I just don't see Apple doing this. What has management telegraphed to you that nobody else has seen? Sure, Tim said "we're acquisitive" or whatever bologna he muttered when he was pressed the other day, but I really think Tim is content to march on and provide a good working environment for thousands of employees and focus on being a socially responsible steward of the business world.

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If you haven't noticed Apple & Gilead are both the leaders in their fields tech & medicine and neither one has made a horribly overpriced acquisition in the recent bull markets....coincidence? I think not. Prudent management doesnt simply go out and buy things just bc they have piles of cash, I mean my god.

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It's funny you mention GILD. They are currently facing the a similar problem. One trick pony with increasing competition.

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The fact they have a mountain of cash just means they can weather a storm better than others. It really makes no sense to me when people talk about apples numbers and numbers dropping, the numbers are so ridiculous that it doesnt even matter. Look at apples market cap vs something like amazon with nominal profits and tell me if you think apple isnt a steal. Apple may not have something up its sleeve today, but it will, and when it does, it will have the cash to execute a plan without secondarying all over shareholders.

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Weather the storm huh? I think I'd rather grow my dollars with someone like Amazon than have them sit around while Apple "figures it out".

We've discussed my views on Amazon already isn't that other thread, so I won't repeat myself, but your objectivity is clearly lacking. People pay for growth, not past success. You have a very distorted view of market cap, PE, growth, etc and can't seem to distinguish the different stages of a company.

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Apple is brilliant on so many levels, if they wanted to launch streaming, netflix and hulu would be in trouble. If they wanted to build a tv, every other tv maker would be in trouble

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Ok, now you're just trolling. WTF does that even mean? "If they wanted to"? They don't want to? I thought they had all the cash in the world to do anything... I guess it's not worth their time.

I'm out. Peace.