An interesting take on Apple and Apple’s stock from David Nelson of Belpointe Asset Management, as reported by Bloomberg:
Anyone who expects Apple Inc.’s growth to rebound after sales and earnings shortfalls last quarter is “living in denial,” according to David Nelson, chief strategist at Belpointe Asset Management LLC…
“This is no longer a hyper-growth company,” Nelson said yesterday in a telephone interview. Apple’s products are now reaching customers who are less likely to upgrade as newer models are released, he added.
“What Apple’s going through now is really a change in ownership,” according to Nelson, who said he uses an iPad for navigation when flying private planes. Investors focused on the best-performing companies are selling their stock, he said, while those seeking growth at a reasonable price are buying. Nelson outlined his views in a Nov. 15 blog posting.
In layman’s terms, what that means is that “momentum” investors are running for the hills, and their stock is being bought by more patient investors who expect Apple to deliver fine but not great returns.
Belpointe has dumped half of its Apple stock in the past two months.
Here’s more from David’s blog post:
The real cause of the slowdown is also its biggest source of strength. Apple has crossed over from a manufacturer of cutting edge products for high tech enthusiasts to must have tools for the main stream. Just walk into any Apple store today and look around the floor. A few years ago the store was flooded with early adopters eager to get the latest technology and remain on the cutting edge. Those people are still there but represent a much smaller percentage of the overall base. Today the store is filled with grandmothers and grandfathers all part of an older generation who are making the plunge for the first time. The iPad has made computing so easy they can now join the information age.
So what’s the problem, you say? At first I couldn’t see it either and then a light bulb went off. Like a junkie in need of a fix I am one of those high tech first adopters drawn into the store like a zombie to get the latest upgrade or new model. However, your grandmother and grandfather won’t have the same urge. An increasingly larger audience will hold onto their new found toys for a considerably longer time. They will not feel the urge to upgrade as often.
(via Paul Kedrosky)