The Invincibility of Apple
Gary Gordon | Aug 11, 2020 05:02PM ET
Apple is a phenomenal company. From smart phones to tablets, from music to television, the world loves what this corporation offers.
And it loves the stock. In fact, Apple (NASDAQ:AAPL) may soon hit a market capitalization of $2 trillion.
On the flip phone side, are market participants paying astronomical premiums to get a bite? Is the $2-trillion price tag for Apple akin to a real estate investor paying $500 million for a $65 million home along the shores of Malibu?
Maybe.
For the better part of the prior decade, Apple’s market capitalization vacillated around one-third (33%) of the market capitalization for the components of the small company benchmark, the Russell 2000. That changed in the fourth quarter of 2018.
At the tail end of 2018, the economy began slowing. It was not long before the stock market became spooked in an October-to-December beat-down.
The Federal Reserve quickly pivoted 180 degrees from modest tightening to outright easing. Indeed, by the fourth quarter of 2019, the Fed was already printing money again. And with 2020’s pandemic, the Federal Reserve went nuclear in its balance sheet expansion.
So now, take a look at Apple’s meteoric valuation shift since the slowing of the economy (Q4 2018). It has become nearly as large as the combined market cap for all small publicly listed corporations.
Problem? You decide.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.