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Apple's Future

wrichcirw
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7/24/2013 12:04:27 AM
Posted: 3 years ago
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
Posts: 5,693
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7/24/2013 9:25:27 AM
Posted: 3 years ago
At 7/24/2013 12:04:27 AM, wrichcirw wrote:
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.

I think Apple has gone down hill since Steve Jobs died. I have never been a big fan of apple, but Apple's quality has definitely declined in the last few years. Where I use to never hear complaints, I am now hearing people complain constantly. In fact, people use to criticize me for complaining about apple, as if it was the golden cow of computers.

Judging by their current stock prices, they are in a desperate need of a stock split.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
wrichcirw
Posts: 11,196
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7/24/2013 2:18:25 PM
Posted: 3 years ago
At 7/24/2013 9:25:27 AM, DanT wrote:
At 7/24/2013 12:04:27 AM, wrichcirw wrote:
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.

I think Apple has gone down hill since Steve Jobs died. I have never been a big fan of apple, but Apple's quality has definitely declined in the last few years. Where I use to never hear complaints, I am now hearing people complain constantly. In fact, people use to criticize me for complaining about apple, as if it was the golden cow of computers.

Judging by their current stock prices, they are in a desperate need of a stock split.

I largely agree with this...I started getting pessimistic the moment Jobs got cancer.

About a stock split, there's really no need for one, unless you want to cater to those who have no idea what a share price indicates.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
slo1
Posts: 4,351
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7/26/2013 1:02:57 PM
Posted: 3 years ago
At 7/24/2013 12:04:27 AM, wrichcirw wrote:
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.

Declining margins as their innovative products become more and more commoditized should not have surprised anyone.

My thoughts on the matter is not much discussed. I am with the belief that the power of apple resided in their ability to simplify usability and to a lesser extent quality.

There was not a quality mp3 player in the market before apple got into it. Remember the "wheel" control on the earlier generation ipods? It was just an easier control to use that they built more intuitive interface upon.

Once they got to the ipod touch they realize they can take that awesome interface to the cell phone market and bring functionality that did not exist to the market. Booom... they took over the phone market and here we are today.

They may have created the ipad market, but their expansion as been in making things that are difficult to use pleasurable to use.

I don't believe that most people would say their TV is difficult to use, so I don't think that is going to be the game changer that gets them on track.

I don't see how creating a brand new thing like the iwatch is something that everyone needs.

Cars now have integrated radio, bluetooth phone, and other functionality. They are difficult to use and set up. If they came in and repaired that market to produce an easy to use system, they could have it in every car in america. If I recall Microsoft did the ford Sync, which is a complete failure from usability.

If they are forcing creating new markets like the iwatch they will fail miserably. If they focus on taking things that have a significant usability gap with consumers they could continue growth with their traditional high margins.

I don't think they have it in them, but they rake in too much cash and supposedly have some things coming out soon, so I'm not taking a short position at this time.
DanT
Posts: 5,693
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7/26/2013 2:15:19 PM
Posted: 3 years ago
At 7/24/2013 2:18:25 PM, wrichcirw wrote:
At 7/24/2013 9:25:27 AM, DanT wrote:
At 7/24/2013 12:04:27 AM, wrichcirw wrote:
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.

I think Apple has gone down hill since Steve Jobs died. I have never been a big fan of apple, but Apple's quality has definitely declined in the last few years. Where I use to never hear complaints, I am now hearing people complain constantly. In fact, people use to criticize me for complaining about apple, as if it was the golden cow of computers.

Judging by their current stock prices, they are in a desperate need of a stock split.

I largely agree with this...I started getting pessimistic the moment Jobs got cancer.

About a stock split, there's really no need for one, unless you want to cater to those who have no idea what a share price indicates.

A stock split would allow more people to invest, by lowering the price of the stock. Lowering the price of their stock would increase the demand for stock, as more people would be able to afford it.

Stock prices can only go so high before they become unaffordable. Having a $1,000 share is worthless if there are no buyers.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
slo1
Posts: 4,351
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7/26/2013 3:22:05 PM
Posted: 3 years ago
At 7/26/2013 2:15:19 PM, DanT wrote:
At 7/24/2013 2:18:25 PM, wrichcirw wrote:
At 7/24/2013 9:25:27 AM, DanT wrote:
At 7/24/2013 12:04:27 AM, wrichcirw wrote:
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.

I think Apple has gone down hill since Steve Jobs died. I have never been a big fan of apple, but Apple's quality has definitely declined in the last few years. Where I use to never hear complaints, I am now hearing people complain constantly. In fact, people use to criticize me for complaining about apple, as if it was the golden cow of computers.

Judging by their current stock prices, they are in a desperate need of a stock split.

I largely agree with this...I started getting pessimistic the moment Jobs got cancer.

About a stock split, there's really no need for one, unless you want to cater to those who have no idea what a share price indicates.

A stock split would allow more people to invest, by lowering the price of the stock. Lowering the price of their stock would increase the demand for stock, as more people would be able to afford it.

Stock prices can only go so high before they become unaffordable. Having a $1,000 share is worthless if there are no buyers.

Tell that to Berkshire Hathaway. It is $175,700 today per share.
wrichcirw
Posts: 11,196
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7/26/2013 4:29:14 PM
Posted: 3 years ago
At 7/26/2013 3:22:05 PM, slo1 wrote:
At 7/26/2013 2:15:19 PM, DanT wrote:
At 7/24/2013 2:18:25 PM, wrichcirw wrote:

Stock prices can only go so high before they become unaffordable. Having a $1,000 share is worthless if there are no buyers.

Tell that to Berkshire Hathaway. It is $175,700 today per share.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
Posts: 11,196
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7/26/2013 4:33:07 PM
Posted: 3 years ago
At 7/26/2013 1:02:57 PM, slo1 wrote:
At 7/24/2013 12:04:27 AM, wrichcirw wrote:
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.

Declining margins as their innovative products become more and more commoditized should not have surprised anyone.

My thoughts on the matter is not much discussed. I am with the belief that the power of apple resided in their ability to simplify usability and to a lesser extent quality.

There was not a quality mp3 player in the market before apple got into it. Remember the "wheel" control on the earlier generation ipods? It was just an easier control to use that they built more intuitive interface upon.

Once they got to the ipod touch they realize they can take that awesome interface to the cell phone market and bring functionality that did not exist to the market. Booom... they took over the phone market and here we are today.

They may have created the ipad market, but their expansion as been in making things that are difficult to use pleasurable to use.

I don't believe that most people would say their TV is difficult to use, so I don't think that is going to be the game changer that gets them on track.

I don't see how creating a brand new thing like the iwatch is something that everyone needs.

Cars now have integrated radio, bluetooth phone, and other functionality. They are difficult to use and set up. If they came in and repaired that market to produce an easy to use system, they could have it in every car in america. If I recall Microsoft did the ford Sync, which is a complete failure from usability.

If they are forcing creating new markets like the iwatch they will fail miserably. If they focus on taking things that have a significant usability gap with consumers they could continue growth with their traditional high margins.

I don't think they have it in them, but they rake in too much cash and supposedly have some things coming out soon, so I'm not taking a short position at this time.

This is very close to the opinion I have on them as well, although you've evidently given this more consideration than I have recently.

One area where I can see simplification coming to the fore is with the computerization of, well, everything. This is what Cisco has been talking about for a while now with the Internet of Things, and MSFT's obsession with computerizing the house. If AAPL maintains its lead per your thesis, it would need to be the first one into this market, and with something viable and compelling.

Smart cars would be another venue, but it seems GOOG is ahead of the pack here.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
Posts: 5,693
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7/26/2013 5:04:36 PM
Posted: 3 years ago
At 7/26/2013 3:22:05 PM, slo1 wrote:
At 7/26/2013 2:15:19 PM, DanT wrote:
At 7/24/2013 2:18:25 PM, wrichcirw wrote:
At 7/24/2013 9:25:27 AM, DanT wrote:
At 7/24/2013 12:04:27 AM, wrichcirw wrote:
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.

I think Apple has gone down hill since Steve Jobs died. I have never been a big fan of apple, but Apple's quality has definitely declined in the last few years. Where I use to never hear complaints, I am now hearing people complain constantly. In fact, people use to criticize me for complaining about apple, as if it was the golden cow of computers.

Judging by their current stock prices, they are in a desperate need of a stock split.

I largely agree with this...I started getting pessimistic the moment Jobs got cancer.

About a stock split, there's really no need for one, unless you want to cater to those who have no idea what a share price indicates.

A stock split would allow more people to invest, by lowering the price of the stock. Lowering the price of their stock would increase the demand for stock, as more people would be able to afford it.

Stock prices can only go so high before they become unaffordable. Having a $1,000 share is worthless if there are no buyers.

Tell that to Berkshire Hathaway. It is $175,700 today per share.

With a volume of 248. Apple has a volume of 7,150,000. If Berkshire had a volume of 7,150,000, they would have to split their stock if it reached $175,700 per share. They would probably have to split their stock before it even got close to $175,700 per share.

There might be 248 people willing to pay $175,700 per share, but there are not millions of people willing to pay that for a share.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
wrichcirw
Posts: 11,196
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7/26/2013 6:26:40 PM
Posted: 3 years ago
At 7/26/2013 5:04:36 PM, DanT wrote:
At 7/26/2013 3:22:05 PM, slo1 wrote:
At 7/26/2013 2:15:19 PM, DanT wrote:
At 7/24/2013 2:18:25 PM, wrichcirw wrote:
At 7/24/2013 9:25:27 AM, DanT wrote:
At 7/24/2013 12:04:27 AM, wrichcirw wrote:
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.

I think Apple has gone down hill since Steve Jobs died. I have never been a big fan of apple, but Apple's quality has definitely declined in the last few years. Where I use to never hear complaints, I am now hearing people complain constantly. In fact, people use to criticize me for complaining about apple, as if it was the golden cow of computers.

Judging by their current stock prices, they are in a desperate need of a stock split.

I largely agree with this...I started getting pessimistic the moment Jobs got cancer.

About a stock split, there's really no need for one, unless you want to cater to those who have no idea what a share price indicates.

A stock split would allow more people to invest, by lowering the price of the stock. Lowering the price of their stock would increase the demand for stock, as more people would be able to afford it.

Stock prices can only go so high before they become unaffordable. Having a $1,000 share is worthless if there are no buyers.

Tell that to Berkshire Hathaway. It is $175,700 today per share.

With a volume of 248. Apple has a volume of 7,150,000. If Berkshire had a volume of 7,150,000, they would have to split their stock if it reached $175,700 per share. They would probably have to split their stock before it even got close to $175,700 per share.

There might be 248 people willing to pay $175,700 per share, but there are not millions of people willing to pay that for a share.

What makes volume desirable? A liquid market is not necessarily a healthy market, and a buy-and-hold investment approach predicates as few transactions as possible.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
Posts: 5,693
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7/26/2013 9:34:26 PM
Posted: 3 years ago
At 7/26/2013 6:26:40 PM, wrichcirw wrote:
At 7/26/2013 5:04:36 PM, DanT wrote:
At 7/26/2013 3:22:05 PM, slo1 wrote:
At 7/26/2013 2:15:19 PM, DanT wrote:
At 7/24/2013 2:18:25 PM, wrichcirw wrote:
At 7/24/2013 9:25:27 AM, DanT wrote:
At 7/24/2013 12:04:27 AM, wrichcirw wrote:
Apple has had quite a run. If you stretch this chart, you will see that AAPL was trading in the single digits 10 years a go, and hit $600 per share last year.

http://www.google.com...

IMHO, the party is over, although I have been saying that since 2008. Luckily I did not put (too much of) my money where my mouth was, although I have actually done decent with a short position, believe it or not.

http://money.cnn.com...

Your thoughts on AAPL's future? Discuss.

I think Apple has gone down hill since Steve Jobs died. I have never been a big fan of apple, but Apple's quality has definitely declined in the last few years. Where I use to never hear complaints, I am now hearing people complain constantly. In fact, people use to criticize me for complaining about apple, as if it was the golden cow of computers.

Judging by their current stock prices, they are in a desperate need of a stock split.

I largely agree with this...I started getting pessimistic the moment Jobs got cancer.

About a stock split, there's really no need for one, unless you want to cater to those who have no idea what a share price indicates.

A stock split would allow more people to invest, by lowering the price of the stock. Lowering the price of their stock would increase the demand for stock, as more people would be able to afford it.

Stock prices can only go so high before they become unaffordable. Having a $1,000 share is worthless if there are no buyers.

Tell that to Berkshire Hathaway. It is $175,700 today per share.

With a volume of 248. Apple has a volume of 7,150,000. If Berkshire had a volume of 7,150,000, they would have to split their stock if it reached $175,700 per share. They would probably have to split their stock before it even got close to $175,700 per share.

There might be 248 people willing to pay $175,700 per share, but there are not millions of people willing to pay that for a share.

What makes volume desirable? A liquid market is not necessarily a healthy market, and a buy-and-hold investment approach predicates as few transactions as possible.

The stock market, like every other market, depends on supply and demand.

If the supply is 248 than you only need a demand of 248 at a price of $175,700.

If the supply is 7,150,000 than I highly doubt there will be a demand of 7,150,000 at a price of $175,700, but there might be a demand of 14,300,000 at a price of $220.50.

Which is more likely;
A demand of 7,150,000 shares at a price of $441 per share
or
a demand of 14,300,000 shares at a price of $220.50 per share?

The answer to this question would determine whether or not a stock split is necessary.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
wrichcirw
Posts: 11,196
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7/27/2013 1:28:07 AM
Posted: 3 years ago
At 7/26/2013 9:34:26 PM, DanT wrote:
At 7/26/2013 6:26:40 PM, wrichcirw wrote:

The stock market, like every other market, depends on supply and demand.

If the supply is 248 than you only need a demand of 248 at a price of $175,700.

If the supply is 7,150,000 than I highly doubt there will be a demand of 7,150,000 at a price of $175,700, but there might be a demand of 14,300,000 at a price of $220.50.

Which is more likely;
A demand of 7,150,000 shares at a price of $441 per share
or
a demand of 14,300,000 shares at a price of $220.50 per share?

The answer to this question would determine whether or not a stock split is necessary.

The stock market does not exist for its own sake. It exists to provide an avenue for exchange of stocks.

If the owners don't have much of a desire to exchange, then volume will be low, no matter what price you set for the stock.

Anyway, Berkshire has class B stock, and that has very high volume. 3 million shares today. I believe class B is non-voting though - you can split class A into B, but not vice versa if I recall correctly.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
Posts: 11,196
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7/27/2013 1:38:31 AM
Posted: 3 years ago
Anyway, nothing you've said here necessitates a stock split. I'm not sure what exactly your point is anymore.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
Posts: 5,693
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7/27/2013 2:04:19 PM
Posted: 3 years ago
At 7/27/2013 1:28:07 AM, wrichcirw wrote:
At 7/26/2013 9:34:26 PM, DanT wrote:
At 7/26/2013 6:26:40 PM, wrichcirw wrote:

The stock market, like every other market, depends on supply and demand.

If the supply is 248 than you only need a demand of 248 at a price of $175,700.

If the supply is 7,150,000 than I highly doubt there will be a demand of 7,150,000 at a price of $175,700, but there might be a demand of 14,300,000 at a price of $220.50.

Which is more likely;
A demand of 7,150,000 shares at a price of $441 per share
or
a demand of 14,300,000 shares at a price of $220.50 per share?

The answer to this question would determine whether or not a stock split is necessary.

The stock market does not exist for its own sake. It exists to provide an avenue for exchange of stocks.

If the owners don't have much of a desire to exchange, then volume will be low, no matter what price you set for the stock.

Anyway, Berkshire has class B stock, and that has very high volume. 3 million shares today. I believe class B is non-voting though - you can split class A into B, but not vice versa if I recall correctly.

Let's look at the 2 companies;

Apple
Price: $440.99
Shares (shares held): 908,440,000
Volume (shares traded): 7,150,000
Share/Price: 2,060,001.36
Volume/Price: 16,213.52

Berkshire
Price: $175,926
Shares (shares held): 1,650,000
Volume (shares traded): 248
Share/Price: 9.38
Volume/Price: 0.0014

Notice how Berkshire's ratios are so much smaller? That is because the high prices are the result of a lower supply of shares.

If the supply of shares being sold (not held) is low, than the shares can sell for a higher price, because the demand required to sell your share is low enough that they can afford the high prices. If the supply of shares being sold is high, than higher prices will limit the demand for those shares, because some investors might not be able to afford the investment.

You cannot invest in a share, if you can't afford it. The purpose of a stock split is to lower prices when they get too high for an investor to afford.
Steve Jobs used this tactic quite well; when stock prices reached Apple had a 2:1 stock split in 2000, and another 2:1 split again in 2005. These stock splits contributed to the apple boom, which peaked in 2012 at $691.28/ share. Since 2012 apple stock prices have been going downhill.

I think a stock split might boost the demand for shares, but instead of considering a stock split apple's new management has been paying out dividends every-time stock prices dip. In 2012 Apple paid dividends for the first time since 1995, and they have continued to pay dividends every-time apple price dip. The dividends temporarily boost stock prices, but the long term effect is a decline in stock value. Since 2012 Apple prices have been in a constant state of decline.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
wrichcirw
Posts: 11,196
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7/27/2013 5:24:38 PM
Posted: 3 years ago
At 7/27/2013 2:04:19 PM, DanT wrote:
At 7/27/2013 1:28:07 AM, wrichcirw wrote:
At 7/26/2013 9:34:26 PM, DanT wrote:
At 7/26/2013 6:26:40 PM, wrichcirw wrote:

The stock market, like every other market, depends on supply and demand.

If the supply is 248 than you only need a demand of 248 at a price of $175,700.

If the supply is 7,150,000 than I highly doubt there will be a demand of 7,150,000 at a price of $175,700, but there might be a demand of 14,300,000 at a price of $220.50.

Which is more likely;
A demand of 7,150,000 shares at a price of $441 per share
or
a demand of 14,300,000 shares at a price of $220.50 per share?

The answer to this question would determine whether or not a stock split is necessary.

The stock market does not exist for its own sake. It exists to provide an avenue for exchange of stocks.

If the owners don't have much of a desire to exchange, then volume will be low, no matter what price you set for the stock.

Anyway, Berkshire has class B stock, and that has very high volume. 3 million shares today. I believe class B is non-voting though - you can split class A into B, but not vice versa if I recall correctly.

Let's look at the 2 companies;

Apple
Price: $440.99
Shares (shares held): 908,440,000
Volume (shares traded): 7,150,000
Share/Price: 2,060,001.36
Volume/Price: 16,213.52

Berkshire
Price: $175,926
Shares (shares held): 1,650,000
Volume (shares traded): 248
Share/Price: 9.38
Volume/Price: 0.0014

Notice how Berkshire's ratios are so much smaller? That is because the high prices are the result of a lower supply of shares.

If the supply of shares being sold (not held) is low, than the shares can sell for a higher price, because the demand required to sell your share is low enough that they can afford the high prices. If the supply of shares being sold is high, than higher prices will limit the demand for those shares, because some investors might not be able to afford the investment.

You cannot invest in a share, if you can't afford it. The purpose of a stock split is to lower prices when they get too high for an investor to afford.
Steve Jobs used this tactic quite well; when stock prices reached Apple had a 2:1 stock split in 2000, and another 2:1 split again in 2005. These stock splits contributed to the apple boom, which peaked in 2012 at $691.28/ share. Since 2012 apple stock prices have been going downhill.

I think a stock split might boost the demand for shares, but instead of considering a stock split apple's new management has been paying out dividends every-time stock prices dip. In 2012 Apple paid dividends for the first time since 1995, and they have continued to pay dividends every-time apple price dip. The dividends temporarily boost stock prices, but the long term effect is a decline in stock value. Since 2012 Apple prices have been in a constant state of decline.

Sigh. Your understanding of what a stock actually is is a bit incomplete, IMHO.

When you look at publicly traded companies, share price is not nearly as important as market cap and earnings stream relative to market cap. The concept of earnings per share and ROI are much more indicative of the actual supply and demand for a company's shares than the share price, which is simply an arbitrary number, like dividing a pie into 4 pieces instead of 8. In the end, a pie is a pie. People are much more concerned with how good the pie is than whether or not the pie is sliced into 8 billion pieces.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
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7/27/2013 6:59:20 PM
Posted: 3 years ago
At 7/27/2013 5:24:38 PM, wrichcirw wrote:
At 7/27/2013 2:04:19 PM, DanT wrote:
At 7/27/2013 1:28:07 AM, wrichcirw wrote:
At 7/26/2013 9:34:26 PM, DanT wrote:
At 7/26/2013 6:26:40 PM, wrichcirw wrote:

The stock market, like every other market, depends on supply and demand.

If the supply is 248 than you only need a demand of 248 at a price of $175,700.

If the supply is 7,150,000 than I highly doubt there will be a demand of 7,150,000 at a price of $175,700, but there might be a demand of 14,300,000 at a price of $220.50.

Which is more likely;
A demand of 7,150,000 shares at a price of $441 per share
or
a demand of 14,300,000 shares at a price of $220.50 per share?

The answer to this question would determine whether or not a stock split is necessary.

The stock market does not exist for its own sake. It exists to provide an avenue for exchange of stocks.

If the owners don't have much of a desire to exchange, then volume will be low, no matter what price you set for the stock.

Anyway, Berkshire has class B stock, and that has very high volume. 3 million shares today. I believe class B is non-voting though - you can split class A into B, but not vice versa if I recall correctly.

Let's look at the 2 companies;

Apple
Price: $440.99
Shares (shares held): 908,440,000
Volume (shares traded): 7,150,000
Share/Price: 2,060,001.36
Volume/Price: 16,213.52

Berkshire
Price: $175,926
Shares (shares held): 1,650,000
Volume (shares traded): 248
Share/Price: 9.38
Volume/Price: 0.0014

Notice how Berkshire's ratios are so much smaller? That is because the high prices are the result of a lower supply of shares.

If the supply of shares being sold (not held) is low, than the shares can sell for a higher price, because the demand required to sell your share is low enough that they can afford the high prices. If the supply of shares being sold is high, than higher prices will limit the demand for those shares, because some investors might not be able to afford the investment.

You cannot invest in a share, if you can't afford it. The purpose of a stock split is to lower prices when they get too high for an investor to afford.
Steve Jobs used this tactic quite well; when stock prices reached Apple had a 2:1 stock split in 2000, and another 2:1 split again in 2005. These stock splits contributed to the apple boom, which peaked in 2012 at $691.28/ share. Since 2012 apple stock prices have been going downhill.

I think a stock split might boost the demand for shares, but instead of considering a stock split apple's new management has been paying out dividends every-time stock prices dip. In 2012 Apple paid dividends for the first time since 1995, and they have continued to pay dividends every-time apple price dip. The dividends temporarily boost stock prices, but the long term effect is a decline in stock value. Since 2012 Apple prices have been in a constant state of decline.

Sigh. Your understanding of what a stock actually is is a bit incomplete, IMHO.

It only seems like that, because you don't understand what I am saying. When you buy stock you buy a share in the company i.e the equipment, land, facilities, and so on. Owning stock makes you part owner of the company. When more stock is introduced each share represents a smaller portion of the company. If there is 100 shares, than each share represents 1% of the company, but if there are 1,000 shares each share is worth 0.1% of the company.

A stock can have value in 1 of 2 ways;
1.) the price of the share
or
2.) the dividends paid

The company is not required to pay dividends. In fact, it is often better if they don't pay dividends, because dividends are highly taxed and the money could be reinvested in the company instead, which would increase the value of each share.

When you look at publicly traded companies, share price is not nearly as important as market cap and earnings stream relative to market cap. The concept of earnings per share and ROI are much more indicative of the actual supply and demand for a company's shares than the share price, which is simply an arbitrary number, like dividing a pie into 4 pieces instead of 8. In the end, a pie is a pie. People are much more concerned with how good the pie is than whether or not the pie is sliced into 8 billion pieces.

You missed my point entirely. While 2 shares worth $220 is the same as 1 share worth $440, more people can afford the $220 share than the $440 share. A higher price makes it harder to liquidate your shares.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
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7/27/2013 7:09:51 PM
Posted: 3 years ago
Microsoft has a stock price of $31.62/share with a market cap of $263.33 billion. Compare that to Apple, who has a stock price of $440.99/share with a market cap of $400.61 billion.

Microsoft's Price is 7.2% of Apple's price, even though their Market Cap is 65.7% of Apple's. This is a pretty good indicator that Apple's prices are too high.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
wrichcirw
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7/27/2013 11:44:55 PM
Posted: 3 years ago
At 7/27/2013 6:59:20 PM, DanT wrote:
At 7/27/2013 5:24:38 PM, wrichcirw wrote:

Sigh. Your understanding of what a stock actually is is a bit incomplete, IMHO.

It only seems like that, because you don't understand what I am saying.

I understand everything you said, none of it is relevant to a stock split. You're assuming that someone with $500 in their account is going to dictate market price via trading. That's just absurd. The smaller players typically amalgamate via mutual funds, and such funds could care less if a stock was priced at $10 or $10,000.

When you buy stock you buy a share in the company i.e the equipment, land, facilities, and so on. Owning stock makes you part owner of the company. When more stock is introduced each share represents a smaller portion of the company. If there is 100 shares, than each share represents 1% of the company, but if there are 1,000 shares each share is worth 0.1% of the company.

A stock can have value in 1 of 2 ways;
1.) the price of the share
or
2.) the dividends paid

This is totally incorrect. Dividend yields are important yes, but share price alone is meaningless without other information, such as earnings per share, ROI, dividend yield, or other income factors.

That you assert that share price denotes value shows how ridiculously off base you are with your assertions, and is IMHO why you see relevance in something as meaningless as a stock split.

The company is not required to pay dividends. In fact, it is often better if they don't pay dividends, because dividends are highly taxed and the money could be reinvested in the company instead, which would increase the value of each share.

You need to learn how to stay on topic. Dividends have nothing to do with the viability of a stock split. What does any of this have to do with your point about Apple requiring a stock split?

When you look at publicly traded companies, share price is not nearly as important as market cap and earnings stream relative to market cap. The concept of earnings per share and ROI are much more indicative of the actual supply and demand for a company's shares than the share price, which is simply an arbitrary number, like dividing a pie into 4 pieces instead of 8. In the end, a pie is a pie. People are much more concerned with how good the pie is than whether or not the pie is sliced into 8 billion pieces.

You missed my point entirely. While 2 shares worth $220 is the same as 1 share worth $440, more people can afford the $220 share than the $440 share. A higher price makes it harder to liquidate your shares.

lol, by this logic, penny stocks should be highly liquid, but most are not.

Again, share price alone is meaningless in determining the supply/demand factors for a company's stock.

$600/share is still chump change when it comes to investments.

$175,000 for a share of BRKA is about the same price as a decent Mid-Western home. If you can't afford that, then you probably can't afford to invest anyway - you have more basic priorities to take care of besides investing in companies.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
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7/28/2013 2:18:35 AM
Posted: 3 years ago
At 7/27/2013 11:44:55 PM, wrichcirw wrote:
At 7/27/2013 6:59:20 PM, DanT wrote:
At 7/27/2013 5:24:38 PM, wrichcirw wrote:

Sigh. Your understanding of what a stock actually is is a bit incomplete, IMHO.

It only seems like that, because you don't understand what I am saying.

I understand everything you said, none of it is relevant to a stock split. You're assuming that someone with $500 in their account is going to dictate market price via trading.
That is not what I said.
That's just absurd. The smaller players typically amalgamate via mutual funds, and such funds could care less if a stock was priced at $10 or $10,000.

That is an over generalization.
When you buy stock you buy a share in the company i.e the equipment, land, facilities, and so on. Owning stock makes you part owner of the company. When more stock is introduced each share represents a smaller portion of the company. If there is 100 shares, than each share represents 1% of the company, but if there are 1,000 shares each share is worth 0.1% of the company.

A stock can have value in 1 of 2 ways;
1.) the price of the share
or
2.) the dividends paid

This is totally incorrect. Dividend yields are important yes, but share price alone is meaningless without other information, such as earnings per share, ROI, dividend yield, or other income factors.

That you assert that share price denotes value shows how ridiculously off base you are with your assertions,

Once again, you are taking what I said way out of context. When I said the price of the share gives the stock value, I mean the profit the investor makes when they buy or sell shares. For example; buying a share at $10 than selling it at $100 would be more valuable than buying a share at $1,000 and selling it at $1,010. When stock prices get too high, they are less likely to turn a profit.

and is IMHO why you see relevance in something as meaningless as a stock split.

A stock split is not meaningless. The whole point of a stock split is to stimulate demand for the company's stock.
The company is not required to pay dividends. In fact, it is often better if they don't pay dividends, because dividends are highly taxed and the money could be reinvested in the company instead, which would increase the value of each share.

You need to learn how to stay on topic. Dividends have nothing to do with the viability of a stock split. What does any of this have to do with your point about Apple requiring a stock split?

I am staying on topic. Steve jobs used stock splits to stimulate demand in Apple stock, while Tim Cook uses dividends to stimulate demand in Apple stock.
When you look at publicly traded companies, share price is not nearly as important as market cap and earnings stream relative to market cap. The concept of earnings per share and ROI are much more indicative of the actual supply and demand for a company's shares than the share price, which is simply an arbitrary number, like dividing a pie into 4 pieces instead of 8. In the end, a pie is a pie. People are much more concerned with how good the pie is than whether or not the pie is sliced into 8 billion pieces.

You missed my point entirely. While 2 shares worth $220 is the same as 1 share worth $440, more people can afford the $220 share than the $440 share. A higher price makes it harder to liquidate your shares.

lol, by this logic, penny stocks should be highly liquid, but most are not.

It doesn't work like that. Just because something is cheap does not mean it is easy to sell, but something that is expensive is harder to sell because not everyone can afford it. It is easier to liquidate a XBox than it is to liquidate a house, but it is not easier to liquidate an Atari 5200 than it is to liquidate an XBox.

Again, share price alone is meaningless in determining the supply/demand factors for a company's stock.

Again, I never said share price determines the supply and demand of the stock. I said share prices should be based on supply and demand. If share prices are too high, they need to be lowered with a stock split.
$600/share is still chump change when it comes to investments.

$175,000 for a share of BRKA is about the same price as a decent Mid-Western home. If you can't afford that, then you probably can't afford to invest anyway - you have more basic priorities to take care of besides investing in companies.

So if you don't have $175,000 in savings, you shouldn't buy stock? Well, that eliminates most investors.

There is a huge difference between buying a house and buying stock.

Four common reasons why people make investments are;
1.) to accumulate funds for retirement
2.) to enhance one"s income
3.) to save for a major expenditure (such as buying a house)
4.) to shelter your income from taxes.

#4 is not so much relevant to stocks as it is to Muni Bonds or Tax-Deferred Savings Plans.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
wrichcirw
Posts: 11,196
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7/28/2013 3:15:10 AM
Posted: 3 years ago
At 7/28/2013 2:18:35 AM, DanT wrote:
At 7/27/2013 11:44:55 PM, wrichcirw wrote:
At 7/27/2013 6:59:20 PM, DanT wrote:
At 7/27/2013 5:24:38 PM, wrichcirw wrote:
[bunch of crap from DanT]

Not continuing this argument with you. I am going to politely ask that you cease commenting on this thread, and to refrain from making any harassing posts on other forums.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?