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Well ladies and gentlemen i bought some apple stock today all right i want to show you what i paid per share on these apple shares i bought here today i want to talk about if i’m planning on buying more shares i want to talk about why i bought the specific amount i did today i want to talk about why i’m very bullish on apple over the long term and why i will plan
On probably building this into a very very big position over time we’re gonna talk about all that this is just an apple dedicated video so if you enjoy apple stock and learning about apple stock and hearing my opinion on it this is definitely going to be the video for you all right so first off here apple so i bought 35 shares i paid about a hundred and forty
Five dollars per share unfortunately if i would have waited about two extra hours see i knew i should have slept in a little later today if i would have slept in an extra two hours i could have got him for about 142 a share oh well that was just over a five thousand dollar trade there so first off here i’ve haven’t owned apple directly for quite a while my wife
Has a pretty big position in apple stock but as far as me directly owning it in any of my accounts i haven’t but this is my first chance to kind of buy in and i thought $145 looks about right all right we’ll go through why i’m bullish on apple over time in just a minute now why specifically $5,000 i think this is going to be a good learning point for this video
Why did i do 5,000 dollars why didn’t i go ahead and why didn’t i do 10,000 dollars why didn’t i do i don’t know $50,000 why did i specifically do 5,000 dollars with this first initial position all right well what i like to do nowadays for the most part almost like 99% of time if i’m gonna start a position in a stock i like to buy $3,000 to $5,000 worth of that
Stock initially okay why do i go ahead and do this well what i have learned over time of me being in the stock market for 10 years is i am really bad at picking a bottom in a stock okay i can’t do it for the life of me i could never i never ever buy a stock rate at the bottom it never happens almost always like either a couple days later or a couple weeks later a
Couple months later that stock will go another five or 10 or maybe even 15% lower so the fact that i’m buying apple here at a hundred and forty-five dollars which is my initial position i could all most all homos guarantee you today will not be the bottom for apple stock okay you know if you have a huge position and you’re hoping it goes up you know good for you
But i’m just telling you like more than like the apple right now is what we call a a falling knife okay it’s a following knife stock most stocks are honestly are in the fall in this category right now like that’s just the way it is most stocks have fallen 30 40 50 some even 60 percent so most socks right now are falling falling knives apple stock it absolutely is
A falling knife like this is a stock that wasn’t not not too long ago it was like 230 bucks right that was just a few months ago and now it’s all the way down to 145 it’s a falling knife right now and when you when you try to catch falling knives which i love to do i catch falling knives all the time generally you’re not gonna get it right at the bottom okay it’s
Probably gonna go lower and most of the time when i buy my initial stake in a company it goes lower from there okay it goes another five ten maybe even sometimes fifteen percent so what i like to do is i like to get an initial position belt alright five thousand dollars something here like apple stock and then let’s say goes another 5% lower somewhere around that
Goes to let’s say like the hundred and thirty five dollar range all right what will i go ahead and do i’ll probably at least double up my position in that situation so at least buy another five thousand dollars worth if not more money than that so all of a sudden i’ll get you know basically in in the stock for ten thousand dollars that brings my cost basis and you
Know just assuming i bought five thousand dollars and five thousand dollars that brings my cost basis and then at that point to a hundred and forty dollars on the stock alright and if it goes lower and lower and i still love the stock as much which i probably will because i love the business fundamentals and all the different things that will go into in just a
Minute then i increase a position a lot of times i’ll double up the positions also then i’ll make it from a $10,000 position into a $20,000 position and then into a $40,000 position until i start getting it between usually like a good size position for me is anything between the 50k and 100k in a stock and that’s what i consider like a good size position for me
And hopefully i’ll get apple to that point at some point in time and i should get the opportunity because right now it’s just a falling night and the whole negativity around iphone that’s probably not going away anytime soon those those points is going to get reiterated this will come out downgrade the stock more say why is going you know much lower why they’ll
They’ll lower their price targets more and you just kind of get this gauntlet of bad news and it just kind of gets wrapped up into this okay now why would i start at 145 and not just hope it goes down more i think it’s dangerous to just keep hoping it goes down and never start an initial position because at the same time if you think you’re always going to pick
The perfect bottom is completely unrealistic no investor has ever done it in stocks no investor ever will do it in stocks as far as picking the perfect bottom o app will hit a hundred and thirty seven dollars that’s the absolute bottom let me buy in now and just you know like it’s so unrealistic okay so you’ve got to get a starting position built at some point
Time when i look at apple stock is very undervalued for the long term in on the short term basis so when i look at both those things i say it’s worth starting a position alright so now i want to get into apple stock a little bit and kind of like my mindset around apple stock and we’re gonna kind of go through some numbers here around apple stock in in around
The iphone and kind of just the other businesses and what nan kind of the way i look at apple stock alright so first off in regards to apple stock alright i want you to put this up on the board i like the management team there you got probably one of the best management teams of any public company out there as far as of a very diverse group of people very very
Brilliant management team they run the company very well over the long term that’s how you build one of the biggest companies in history that’s just how you do it okay so if i look at apple this thing about iphone first okay since that’s what everybody wants to get caught up in let’s say in 2019 they’re stagnant okay let’s say let’s see forever this say they
Never grow iphones again there’s just a stagnant business for them which i think is unrealistic i believe iphones will grow again when they come out with the 5g iphones but that’s probably not for at least nine months to maybe 21 months away so without a fifo –nz still quite it at a time away all right but i think they’ll grow again but let’s just assume let’s
Just assume 2019 is legit there’s just a stagnant year 2020 same thing like they just keep moving the same amount of iphones okay so i would assume they’ll probably do around 200 million iphones sold in 2019 and let’s assume they just keep doing them average selling price will have see we’re average selling price comes in and i don’t think actually apples gonna
Disclose anymore i think average selling price will probably be somewhere around $1000 okay somewhere around $1000 average selling price because obviously the the iphone 10s that starts at $9.99 and then if you go up in memory goes up more expensive the iphone 10s max actually starts at one thousand and ninety nine dollars and can go all the way up to fourteen
Hundred and forty nine dollars if you look at the iphone 10 are that starts that’s the cheaper iphone that one starts at 749 and as you go up but you can get into the eight hundreds in that so let’s assume maybe they do about $1000 a sp somewhere around the roughly two hundred million iphones so basically you know you can carry the three zeros over that would be
Around two hundred billion dollars in iphone revenue alone right there okay and if it’s not as good of a year or you know this say things are even worse than that maybe they do about 160 to 180 billion dollars that’s if it’s a real bad year for iphones at 2019 they should still do about 160 to 180 billion dollars in revenue if it’s a bad year if it’s just decent
And they should do around two hundred billion dollars in revenue alright so that covers iphone and that’s kind of what you’re looking at if iphone is a stagnant business which once again it probably will be intel 5g comes alright and you could imagine they’ll clear at least probably thirty five to forty percent of that money actually down to the net income line
So needless to say that’s a lot of profit alright and that just covers iphone there alright let’s just put this as as iphone now it’s think about their other businesses let’s think about ipad let’s think about mac these type of businesses are just consistent i don’t you know they could grow a little bit here and there i don’t expect them to grow big or anything
Like that those are just consistent businesses people that love the ipad like myself that use it all the time like they get another ipad when they’re old ones you know isn’t good anymore or when it breaks or something like that same thing with people with macs i think those are just consistent business lines so if i’m looking at apple i see a consistent business
Line in an iphone you know is it booming like it once was when they were moving nearly 250 million iphones per year no i actually i think they topped out it it was something around i think around 233 million iphones was when they had a record year if i recall alright so are they moving that no a consistent iphone consistent ipad consistent mac somewhere around
There consistent businesses all right remember this is a low p/e company i think it trades at a 4 p of 9 or 10 or somewhere around there all right now let’s think about there are other businesses this thing about i love this thing about services all right this is something that hasn’t been brought up as much especially by the pears so services is a business that’s
Exploding for them and a lot of that money just goes straight to the bottom line in this latest quarter okay they did ten point eight billion dollars in services revenue they just announced that yesterday as part of you know what tim cook came out and said ten point eight billion dollars in services revenue that’s an all-time record basically that same quarter
Last year they did about eight point four billion dollars in revenue for services so needless to say we’re talking about a massive massive increase and keep in mind i phones down big year-over-year right in that last quarter right so iphone was down big a quarter over quarter because mainly because of china is very weak right and they still really grew services
At a ridiculous rate that’s something to be very bullish about there so on a run rate this should be easily within a year two into a fifty plus billion dollar run right and maybe upwards of a hundred billion dollar typewriter weight probably within four or five years all right so that makes me very very bullish on apple over time as they continue to increase the
Services revenue and so much of that is honestly profits at then in the day all right no this thing about apple watch apple watch is another main growth pillar for the company apple watch is growing very fast i think something around sales were up something like 40% in the last quarter something like that tim cook you know mentioned on that interview with cnbc
Yesterday so needless to say apple watch is a very fast growing business now apple watch isn’t a huge revenue business because one they’re still you know moving like let’s say tens of millions of units they’ll probably move in 2019 versus hundreds and millions with iphone and also the apple watches are generally sold for $300 maybe $400 so much less of a price
Than the iphone so it’s not that type of business but it’s a very solid consistent growing business now air pods should have a very strong year they actually sold out of air pods a lot during the holiday season so air pods should be a growing business especially as they launch new air paws in 2019 and 2020 okay so needless to say when i look at apple stock i’m
Looking at stock that’s very very undervalued as it is right now i’m looking at i phone business that yeah i’m not expecting it to grow it might even shrink slightly you know for the next year year and a half but i 100% believe iphone will grow again when 5g happens but if iphone never ever grew again it was just a stagnant business i would still be more than happy
With apple shares where they’re at now because they also have these other consistent businesses and mainly because of the services business can grow at a phenomenal rate even when iphone doesn’t grow okay iphone shrunk year-over-year as far as the amount of iphones sold and they still grew revenue services at a ridiculous rate that’s a 2.4 billion dollar increase
Year-over-year in services revenue all right and keep in mind they got a lot more stuff in the pipeline as far as services go apple watch is growing very nice air pods anything that’s a home connected devices like you know the home pod things like that those are growing then i look at their massive buy back on which is taking a lot of shares off the market that
Helps a boost up the earnings per share ok as long as they can keep net income around the same as it is now especially if they can increase it over time which over the coming years i absolutely expect apple to increase over time and then on top of that you’re getting a stock that already pays over a 2% dividend yield and when i look at this they hardly pay out
Any of their money toward dividends right now i think this is something that will increase dramatically over the next five years and i think you know if you’re looking at a dividend yield of something like 2% right now i think over time that’s going to increase dramatically let’s assume like apple stock price never moved over the next 5 years it was still like 145
Dollars with how many dividend increases they’ll have over time i would expect the dividend yield to be a 4 plus percent dividend yield assuming those stock never moved or something like that ok so this will become a very nice dividend paying company over time and i don’t think that’s gonna i think every single year though can in you to increase that okay so when
A look at apple overall i’m kind of looking at this is uh definitely a stock i’m very happy with buying here at the current prices and if it goes lower i welcome it i would love to add more and more shares i would love to build this into like a $50,000 to $100,000 position as i talked about before and then on top of that the chief of the shares getting the more
And more shares apple can buy back with those massive buybacks they have on right now so i’m very i’m very confident in apple’s business model over the next you know three five seven ten years into the future if it’s one of those stocks if i bought it and i went to sleep for like ten years and i woke up like i would be happy i own that stock it’s just every once in
A while this this whole talk about iphones can’t grow any more it happens okay 2013 i remember it happened apple can’t grow our iphones anymore then also an iphone six came out and olsen you know the numbers gotten ridiculous okay then success came out and people were like oh man maybe they can’t grow iphones anymore and then iphone seven came out and they’re like
Maybe they can’t grow iphones anymore and then iphone 10 came out they were saying the same thing and then iphone 10 actually did really saw the numbers and then you know now it’s the same thing in every once in a while apple just doesn’t have a super super cycle and iphones most years it’s not a super cycle so people shouldn’t expect you know a ridiculous increase
In a number of iphones in my opinion when 5g comes that will be the next super cycle in iphones out there alright guys so hope you enjoyed this they hope you you know enjoyed kind of learning about my perspective on apple stock and kind of where my head is at with that stock in general love the company over the long term i would love to buy some more shares i hope
It gets cheaper i think if i’m if i’m trying to make short-term stock predictions i think it can probably fall to the 130 to 120 range will it fall all the way down to under $100 to like the 90 something dollar range where it was over two years ago probably not but you never know with how rough the markets been and you never know if we could actually have a legit
Recession happen a global recession something like that happens maybe you can get apple stock back into the 90s or something like that but if i’m looking at i think the most realistic case is probably in the 120 to 130 s which i would love to load up some more shares so anyways let me know what you guys think about apple over time let me know if you’ve bought any
Stock yet if you’re planning on buying any stock kind of where you see the stock going over time i would love to hear from you guys and comments-section as always here thumbs up if you enjoy this today thank you for watching have a great day
Transcribed from video
$5,000 In Apple Stock I Just Bought. Why? By Financial Education