Apple Is Worth $1 Trillion!
I doubt that when Apple Computer, Inc. was founded on April 1, 1976 by college dropouts Steve Jobs and Steve Wozniak, that they had any idea that it would ever reach a market capitalization of $1 trillion dollars. Well it did on Wednesday after its second quarter earnings were released. Think of this. The company is bigger than the GDP of all, but 16 countries and those countries have so much debt it is hard to say it they even have a positive net worth.
Jobs and Wozniak started out building the Apple I in Jobs’ garage and sold them without a monitor, keyboard, or casing (which they decided to add on in 1977). The Apple II revolutionized the computer industry with the introduction of the first-ever color graphics. Apple I sales jumped from $7.8 million in 1978 to $117 million in 1980, the year Apple went public.
Wozniak left Apple in 1983. He had no interest in the day-to-day running of a computer company, so Jobs hired PepsiCo’s CEO John Sculley to be the new president. That move almost ended the business, as Sculley had no idea how to run a computer company. Jobs left in 1985 and started a number of highly successful computer companies, the biggest being Pixar which was purchased from George Lucas and brought him huge success in computer animation films.
After a stock peak in 1990, Sculley’s management style continued to hurt the company and by 1996 it appeared that Apple was headed into bankruptcy. In 1997, out of desperation the board sought an old friend and invited Jobs to become an interim CEO. He wasn’t the official CEO until 2000. He immediately changed the course the company was taking and got it back on track with new products and a revamping of the existing ones.
Unfortunately, as Jobs was introducing his greatest product to date, the iPhone, he died on October 5, 2011, but the company’s future was secured by the product. Tim Cook took over as CEO and has been at the helm as Apple has reached a market value of $1trillion dollars. Where will the company be 30 years from now? Of course, no one can predict that far into the future, but with more emphasis on technology worldwide, it would difficult to bet against the company’s continuing success.
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions here with a short paragraph.
Answer: Your broker is referring to the fact that a debit spread will always have less premium risk than a credit spread. However, that doesn’t mean that it has less risk. In fact it has more risk than a credit spread with the same strike. Here is why. For the debit spread to be profitable it must overcome the premium you paid plus it must move in the price direction that you predicted when you bought it. Even if you are correct in predicting the price movement, it may not move enough to overcome the debit. In short, you have to be right and right. On the other hand, a credit spread can win three ways. The price moves in the direction you predicted, the price doesn’t move at all, or the price moves against you but not as much as the credit you sold. For my money, I would rather have three ways to win and take the larger premium risk. In the long run you can’t beat a credit spread.
The Wise Guy Report: The View From The Floor
Each week I talk about how the Wise Guys (floor traders) find the soft spots in the market and take advantage of price dislocation in three major commodity markets: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). On the equity side, I cover the MSS which is the Mister Seifert Sez Composite Index. This is a proprietary index that I created which measures the dollar flow of the four major indexes (S&P 500, Nasdaq 100, Russell 2000 and the Dow Jones Industrials) on an unweighted basis. This week let’s take a look at last’s week price action in Face Book (FB).
Face Book Collapses After Earnings (Possible Blow Off)
Once again there was little action in Gold and Crude. The equity markets for the most part have been in the August doldrums. There was some price action in interest rates but not very much as the Fed has done little to give rates a reason to move. It is not often I comment on an individual equity. I usually like to look at the broader markets but the price action in Face Book (FB) made me look twice. When FB earnings were announced, and they missed, the stock had the worst day of any major company in history. The day before earnings the stock, which has been on a tear to the upside, made lifetime highs. The next morning it opened 20% lower wiping out billions in market capitalization. Looking at the chart it appears that FB is giving investors another chance to get long on a blow off trade. It would not surprise me if Face Book made up a substantial portion of the loss in the next few weeks. It is ok not to take this trade, but the one thing you cannot do is get short the stock at these levels. That would be a definite mistake!
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The option trades and strategies offered by The Optionomics Group are very unique in that they all have limited risk while creating great leverage. Our basic BL – BR Credit Spread Strategy (and all of the others) let you control 100 shares of a $200 stock ($200*100 = $20,000) for only $500 (the spread differential) or 40:1 leverage with your risk limited to only $500. Plus our strategies produce winning transactions in four out of five possible outcomes.
The Optionomics strategies let you become the casino whereby you have a mathematical edge that lets you grind out consistent returns in any kind of market environment. These strategies are designed to produce good returns over a short to intermediate term time frame. It is an approach to the stock market which will be hot, cold or average over time, but the end result should be very good in any type of market environment.
I offer a FREE Two-Week trial to the various subscription services with no cost or strings attached. Each strategy is explained in a 5-7 page booklet which includes sample recommendations and model portfolios. I doubt that you have ever seen anything like this. During your FREE trial, you can paper trade the various strategies and get a feel for the deal without risking a penny. Simply click on the appropriate tab on the Optionomics’ Home page to access the informative booklets and then sign up for one or all of the weekly subscriptions.
- The Bullish – Bearish Credit Spread Strategy: The basic strategy of trading weekly credit spreads.
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- The Low Cost Put – Call Hedge Strategy: Sleep at night knowing your portfolio is protected for little or no cost.
- The Earnings Trade: Get in on potential big movers with little or no downside risk.
- The One Day Wonder Trade: Get ready for some real action. A one day trade with great potential.
- The Blow Off Top – Bottom Trade: A lot of action and big moves too.
Each Monday morning by 11:00 EST, the plays for the upcoming week plus updated model portfolios for each strategy are posted on the site. The prices in the reports are Monday morning’s opening prices. In addition, I have a webinar on Thursday afternoon where I discuss various option strategies, what is happening on the floor and answer any questions that you may have. Don’t worry if you miss the show. They are archived on the site. Sound Good? Good! You can subscribe to one or more of the subscriptions for only $19.95 each per month on a month to month basis with no contract or strings attached. If you subscribe to three, it is only $49.95 per month while you can subscribe to all six for only $79.95 per month, a 33% discount. I think you will agree that this is a super offer so give it a try. Click on www.optionomicsgroup.com to access the Optionomics Group web site and get started today doing what the pros do –
“Don’t Buy Them – Sell Them”.
Mr. Seifert