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Old 05-24-2016, 06:35 PM   #121
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It's a very real and large risk, and when it strikes it comes fast.

Nokia was cash-rich and quite profitable in 2007, with a return on invested capital above 30%, growing in sales and net income at a 20% clip with a net income of 7 billion (EUR). It pretty much had the market cornered in volume and value.

A mere three years later that was all gone, and by 2011 they were loss making and a marginal player. Stock value went down 85% in that period helped along by the 2009 crash.

Not saying that will happen to Apple, I don't know. That fast-collapse risk is probably why the stock is priced as low as it is.
It happened so fast because the Apple iPhone, introduced in 2007, drove Nokia out of business (among other things, I suppose). I guess you'd have to wait for the Apple killer company to appear. Then bail.
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Old 05-24-2016, 08:45 PM   #122
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It happened so fast because the Apple iPhone, introduced in 2007, drove Nokia out of business (among other things, I suppose). I guess you'd have to wait for the Apple killer company to appear. Then bail.

But Apple isn't reliant on a single product or even a single segment like Nokia. They have iPhone, iPad leading two sectors of the same ilk, Macs sell well, and they have services lines up now as well. They have also successfully created households run on Apple products (ask me how I know) and are leveraging that advantage to get into home controls ala Nest.

The chances they're driven out like Nokia are slim, but they could certainly lose market share in phones or pads.
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Old 05-25-2016, 08:31 AM   #123
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The thing I like is their profit share. Even with marginally declining iPhone demand, their profit outstrips everyone. Comparing them to Nokia is one thing but they stack up well against Google, MS, Samsung, HP and a host of other competitors.
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Old 05-25-2016, 08:57 PM   #124
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Up almost 10% from the Buffett buy. Darn it! I was so close to my buy order kicking in. Oh well, at least it's good to know I'm valuing something at just about the same level they are. But I doubt if I had bought first it would have driven the stock up 10%.
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Old 05-25-2016, 09:14 PM   #125
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I read a book by Gerald Loeb, a founder of E.F. Hutton & Co., where he said that when you think it is time to buy or sell, just do it at market price and do not use limit order. I have found that, quite often, haggling over a dollar may cause me to lose the opportunity.

On 5/18, when I sold June put on Apple, it closed at $94.56. Today, it closed at $99.62. If I bought it outright, I would have made $5/share. Instead, my put premium for the strike price of $92 only got me $2.36/share. Apple may continue to climb, but my gain is capped at that $2.36.

Oh well, less risk, less reward. Still, the annualized gain on the put works out to around 30%/yr, so I should be grateful and not too greedy.
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Old 05-26-2016, 01:11 AM   #126
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I rather generate 7% consistently. I'm my own hedge fund manager.
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Old 05-26-2016, 08:27 AM   #127
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Oh well, less risk, less reward. Still, the annualized gain on the put works out to around 30%/yr, so I should be grateful and not too greedy.
You should be grateful because you got lucky. Never be too proud to accept the benefits of luck! And congratulations. Skill, risk and luck often combine to produce above average returns.
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Old 05-26-2016, 09:32 AM   #128
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But Apple isn't reliant on a single product or even a single segment like Nokia. They have iPhone, iPad leading two sectors of the same ilk, Macs sell well, and they have services lines up now as well. They have also successfully created households run on Apple products (ask me how I know) and are leveraging that advantage to get into home controls ala Nest.

The chances they're driven out like Nokia are slim, but they could certainly lose market share in phones or pads.
Two things here: 1) Nokia was never single segment. They sold telco equipment and services to carriers for example, and even home devices. throughout the years they've gone as wide as DSL modems, digital and analog set-top boxes, PC equipment and cards, and even televisions. 2) IPhone sales are 65% of their revenue. Depending on who you ask it's more than 65% of their profit too.

The chances that Nokia would be driven out were slim too. No telling how slim they are for Apple.
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Old 05-26-2016, 11:26 AM   #129
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You should be grateful because you got lucky. Never be too proud to accept the benefits of luck! And congratulations. Skill, risk and luck often combine to produce above average returns.
I mainly try to control my greed. And fear when the market turns. The market god hates braggadocio.

Anyway, these bets that I make using the cash I hold give me some returns that may beat CDs over the short periods I commit the money. However, they entail some risks, and I am not able to find "deals" like this all the time. It takes a bit of work too, and is never risk-free.
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Old 05-26-2016, 07:04 PM   #130
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Two things here: 1) Nokia was never single segment. They sold telco equipment and services to carriers for example, and even home devices. throughout the years they've gone as wide as DSL modems, digital and analog set-top boxes, PC equipment and cards, and even televisions. 2) IPhone sales are 65% of their revenue. Depending on who you ask it's more than 65% of their profit too.

The chances that Nokia would be driven out were slim too. No telling how slim they are for Apple.
That's the problem with disruption... easy to see in hindsight... hard to predict in advance, even taking into account it's hard to predict.

Often it's the things we think couldn't possibly be disrupted that are the most painful.

Personally I loosely apply the close my eyes and imagine 20 years test.

Will I have an iPhone? No idea. Will I have an Android? No idea. Will I eat a big mac? Probably. Will I be on facebook? Maybe. Will I drink coke? Probably.

Then, of course, price matters. I worked in tech all my life and am amazed at how fast things rise and fall so I'm hesitant to invest in it .

That said... I've missed huge potential gains in Amazon, Apple, etc but I remember getting killed on a relatively modest "no brained" investment in Cisco in the late 1990s. They were, at one time, the biggest company on the planet and similarly had a pretty clear path to long term domination. Of course, they were expensive compared to apple on a P/E and cash basis.

Oh well... if only it were easy .


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