Criminals often get caught and convicted when authorities follow the money trail. You can tell how well a company is doing by following the money trail. Money talks. So, when big money talks, maybe it’s time to listen.
How well is Apple doing these days? It depends upon who you ask or who you listen to. Apple’s critics in Forbes, Fortune, Business Insider, and other rags notorious for Chicken Little-isms, will tell you Apple has problems. Uh huh. Sure. So does my complexion every few weeks. If you want to see how well Apple is doing in the marketplace, follow the money trail.
Look at Apple’s own numbers. Then look at what other people with plenty of money do with their money. First, Apple. The company owns about 50-percent of the entire smartphone industry’s revenue; about 85-percent of the industry profits. Similar numbers exist with the Mac and iPad. Apple’s products– therefore revenue stream and profits– are outsized relative to marketshare and competitors.
Apple is a cash making machines and it’s been that way for years and there are no signs it is slowing down. Apple makes money everywhere. The company makes so much money it does not know what to do with it all.
Second, follow those who follow Apple. No, not the nattering nabobs of negativism that mimic Chicken Little with the sky is falling memes that dominate critics, trade rags, analysts, commentators, et al. Follow the money trail of those with money.
A good example is Warren Buffett, the really rich guy who runs Berkshire Hathaway, one of the few companies with profits that rival Apple. Philip Elmer DeWitt has a nice chart of the eight largest money funds and how much of their money they put into APPL.
Those are wealthy investment funds and the graph displays how much of their money goes into APPL. Notice that Warren Buffett’s company is on the bottom with a measly 15-percent. Yet, that’s also the largest investment in APPL.
In other words, people with very big money are investing in a company that has more money than many developed nations. Those investments expect to– and, over the past year and recent years, have received– receive a return on the money they invested; both in stock price and dividends.
My father once told me to invest wisely. I asked him how? How does someone know where to put their hard earned dollars so it grows and provides a good return. His answer was simple. Follow the money trail. Invest where the rich people invest. Well, I don’t have enough money to get into a hedge fund somewhere in the Bahamas, but I can see where Warren Buffett puts his money and a very large and growing percentage is going into Apple’s APPL.
What does that say? It says follow the money trail.