As Apple Goes, So Goes the Global Economy

Although I am on a busman’s holiday and will not resume publishing The Morning Line until Sep 17, here’s a timely note concerning AAPL. We’ve been using a 151.38 downside target that remains viable, but I expect the stock to go much lower in the months and years ahead — well beneath $100, that is. When the company announced a week ago that iPhone sales were holding up pretty well, it was a clarion call to short the bejeezus out of the stock.

Apple was alway going to be more vulnerable than most retailers to an economic downturn, and that downturn has finally arrived. A key market for the company’s pricey, over-camera’d cell phones is Europe, which is headed into deep recession. The one-decision chimps of the portfolio world who have ensured AAPL’s steady rise over the years are not going to go quietly into the night, however. They’ll have their hands full distributing the biggest-cap stock ever to the rubes in a process that will take years.

AAPL remains the key bellwether for the stock market as a whole, and it is the only stock one need get right to get the market right. The bear market will still be tricky to play, though, since everyone knows by now that we are in one. Wall Street’s shameless shills, particularly the clueless, lazy hacks in the news media, will be talking up the resumption of the bull market each and every day until the Dow falls below 10,000. But if you can contrive to tune out their blather, you’ll have a better chance of getting through the nation’s slide into darkness without losing eveything,  Here’s a link to my interview on Friday with Jim Goddard of Howe Street. (Also interviewed  for This Week in Money were Doug Casey and Ross Clark.) I was quite bearish in my chat with Jim, but we never touched on Apple — hence this note.

  • RICHARD CHARLES September 4, 2022, 8:30 pm

    Trust you and all yours are enjoying Vacay Rick.

    In 1953 it was,
    ‘What’s Good For GM is good for America.’
    That was before Japan Inc and Korea took over with better product at lower prices.

    In 1953 the GM CEO President was nominated to serve Ike as DefSec with $2.5 M in GM stock.
    During confirmation hearings he uttered his famous phrase about a conflict of interest:

    “I cannot conceive of one because for years I thought what was good for our country was good for General Motors, and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country. Our contribution to the Nation is quite considerable.”

    Similar may have been said of T, GE, IBM, GOOGL, MSFT, AMZN, AAPL and TSLA as each took its turn in the sun at high noon before creative destruction.

    Today trillion dollar plus monopolies, what used to be called Blue Chips, are known for quality, reliability, and the ability to operate profitably in good and bad times.

    There is one trillion dollar plus company whose earnings were + 90 % in Q2, the largest of any public company in the world.

    Aramco is available on the Saudi Tadawul exchange with more than $5 B AUM, buying less than 5 %.

    KSA ETF is another way to own Aramco, with a Target of + 102 % from 44.95 to 89, an expense ratio of 74 basis points covered by 1.84 % dividend before foreign taxes.

    After its IPO Aramco was worth twice AAPL.

    After long saying he did not understand technology stocks, Mr Buffett began accumulating AAPL in 2016 with BRK/A investing deputies Todd Combs and Ted Weschler. He bought $600 M AAPL on a three day decline in March 2022 . He bought more in June. Berkshire is now AAPL’s largest active shareholder. AAPL is 41 % of the BRK/A portfolio.

    AAPL will spend $90 B repurchasing AAPL shares to leverage ROE, despite the new tax, the most of any public company. The AAPL CEO attended BRK/A’s Burning Man for Capitalists in Omaha at this past 30 April 2022 Annual Meeting.

    Since at least April 2016 at 21.61, it has been AAPL’s turn for over a 40 % CAGR for BRK/A, more than an 8 bagger as Fidelity Magellan Fund’s Peter Lynch used to say.

    This has not been without uncertain rick and volatility.
    AAPL has more than twice as much Debt as Equity, 206 %.
    AAPL hit 182.94 in Jan 2022 and 129.04 in June 2022, a – 30 % swing to Buy the Flipping Dip.

    Friday AAPL closed near the lows of the day.
    Now there is buzz about the iPhone 14 intro on W 7 September 2022 after Labor Day.
    We could go from Fear to Greed with impeccable speed.

    Our AAPL Target is + 65 % from 154.695 to 256.36 + 0.59 % Dividend.

    We caution we were investing in Silicon Valley in Sep 1985 after Jobs recruited PEP CEO John Sculley.
    Jobs, a perfectionist, left AAPL after a Board fight over Lisa and Mac, but landed on his feet with NeXT and Pixar.

    AAPL stock traded at a dividend and split-adjusted nickel a share in Sep 1985 when no one wanted it.

    Jobs leveraged his way back into AAPL after selling NeXT to AAPL in 1997 for $429 M and 1.5 M shares of AAPL after AAPL flops with Newton and the PowerPC processor.

    Jobs sold PIXR to DIS for $7.4 B in 2006 to become the largest DIS shareholder.

    Although the new AAPL M and M1 Ultra processors are kicking AMD, INTC and NVDA around the globe,
    a false start with the self-driving Apple Car or cumulative annoyance at AAPL AI could change things.

    Having noted that, our current AAPL Target is + 65 % from 154.695 to 256.36 + 0.59 % Dividend.

    Happy Labors Day All RA.