1 00:00:00,040 --> 00:00:01,760 Yesterday we had another Apple event. 2 00:00:01,760 --> 00:00:05,200 This was the iPhone 15 event and it was focused on 2 main 3 00:00:05,200 --> 00:00:07,520 products, the Apple Watch and the Apple Watch. 4 00:00:07,520 --> 00:00:11,000 Ultra got a big upgrade, they got some designs, they got some 5 00:00:11,000 --> 00:00:14,000 new bands and the next thing was the iPhone 15. 6 00:00:14,040 --> 00:00:17,680 It got a whole new lineup with the iPhone 15 and the 15 Plus 7 00:00:17,680 --> 00:00:20,160 and the 15 Pro and the 15 Pro Max. 8 00:00:20,240 --> 00:00:22,960 Now, as always with these type of events, there's a lot of 9 00:00:22,960 --> 00:00:26,430 opinions being shared. The iPhone looks the same. 10 00:00:26,470 --> 00:00:29,430 This isn't innovation. It's the same design they had 11 00:00:29,470 --> 00:00:31,670 last year. Apple had a cringy skit to try 12 00:00:31,670 --> 00:00:34,150 to show how hard they're working on climate change initiatives 13 00:00:34,150 --> 00:00:36,350 and carbon reduction. Throughout the entire event, 14 00:00:36,350 --> 00:00:39,990 Apple never used the term AI or artificial intelligence a single 15 00:00:39,990 --> 00:00:42,500 time. Is Apple an AI company, or are 16 00:00:42,500 --> 00:00:44,060 they completely missing the mark here? 17 00:00:44,060 --> 00:00:47,380 Tim Cook's pants don't fit well. They're all bunched up at the 18 00:00:47,380 --> 00:00:49,060 feet. One of the opinions trending on 19 00:00:49,060 --> 00:00:52,140 Twitter right now is that Apple is so uninnovative that they're 20 00:00:52,140 --> 00:00:54,700 now more like Costco. They're not coming up with 21 00:00:54,700 --> 00:00:57,140 anything new altogether. So what we're going to be doing 22 00:00:57,140 --> 00:00:59,820 is looking at this event. I'll be doing a quick recap of 23 00:00:59,820 --> 00:01:02,630 it and highlighting what I think is the most important way of 24 00:01:02,630 --> 00:01:05,510 looking at this company from an investor's perspective. 25 00:01:05,550 --> 00:01:08,470 And then on the subject of Apple and Apple stock in particular, 26 00:01:08,470 --> 00:01:11,230 I'm going to be highlighting a specific Reddit post and 27 00:01:11,230 --> 00:01:14,070 responding to this post. This is of an individual asking 28 00:01:14,070 --> 00:01:18,230 for advice about Apple stock and this highlights the attitudes of 29 00:01:18,230 --> 00:01:20,670 a lot of investors you're investing alongside. 30 00:01:20,710 --> 00:01:22,950 And then finally, we got a report today that inflation 31 00:01:22,950 --> 00:01:25,730 ticked upwards slightly. Now I've already made a video 32 00:01:25,730 --> 00:01:28,570 saying that inflation is done and it's time to move on. 33 00:01:28,610 --> 00:01:31,410 So I'll be responding to this data that inflation is moving up 34 00:01:31,410 --> 00:01:33,850 slightly and what this can mean for the market. 35 00:01:33,850 --> 00:01:35,850 Now let's go ahead and jump right in before we get to the 36 00:01:35,850 --> 00:01:38,690 Apple event, I must mention for viewers that are new to the 37 00:01:38,690 --> 00:01:41,530 channel or I don't have a history of watching my videos, 38 00:01:41,770 --> 00:01:45,450 that I am a big investor in Apple and I'm not someone that 39 00:01:45,450 --> 00:01:48,010 is just boarding the train right now. 40 00:01:48,050 --> 00:01:50,530 I've been an Apple investor for a few years. 41 00:01:50,770 --> 00:01:54,330 If we look at my current holding value, it's $50,700. 42 00:01:54,550 --> 00:01:59,830 That's $21,699 in the green. So my first major buy of Apple 43 00:01:59,830 --> 00:02:02,470 was right around there on the five year stock chart. 44 00:02:02,510 --> 00:02:06,990 It was after the COVID recovery and I remember hearing a lot of 45 00:02:06,990 --> 00:02:11,270 people saying at this point in time that this was a bad buy. 46 00:02:11,590 --> 00:02:14,830 They're saying, Joseph, you're buying Apple at the peak, the 47 00:02:14,830 --> 00:02:17,510 highest it's ever traded throughout all of history. 48 00:02:17,790 --> 00:02:20,590 You're buying on the top, You're buying on the high. 49 00:02:21,160 --> 00:02:23,680 But at the time, I thought that Apple was exploding in 50 00:02:23,680 --> 00:02:26,480 popularity. COVID gave consumers a lot of 51 00:02:26,480 --> 00:02:30,000 money to spend on devices. It was enhancing Apple's install 52 00:02:30,000 --> 00:02:32,640 base, they were selling more services than ever, and they 53 00:02:32,640 --> 00:02:34,960 were releasing new products that I thought a lot of people would 54 00:02:34,960 --> 00:02:36,880 like. And on top of that, the 55 00:02:36,880 --> 00:02:39,800 valuation for Apple was extremely undemanding. 56 00:02:40,120 --> 00:02:44,120 The company was trading at a 19 Ford P/E ratio at the time. 57 00:02:44,200 --> 00:02:46,520 So despite all the warnings that I was buying the stock on the 58 00:02:46,520 --> 00:02:50,080 high, I didn't see any logical way of me losing money on the 59 00:02:50,080 --> 00:02:53,040 company at that point in time. I thought the risk reward was 60 00:02:53,040 --> 00:02:56,200 incredibly lopsided. To the upside, I bought apple in 61 00:02:56,200 --> 00:02:59,880 two different time periods, one of them right here in this dip 62 00:03:00,240 --> 00:03:02,920 and the other one right here in this dip. 63 00:03:03,390 --> 00:03:06,390 That's the second group of buys I did in apple stock, The two 64 00:03:06,390 --> 00:03:08,710 dips right around me. Now of course apple stock has 65 00:03:08,710 --> 00:03:10,270 traded up quite a bit since then. 66 00:03:10,270 --> 00:03:12,710 It's gone from the one 20s up to the one 70s. 67 00:03:12,710 --> 00:03:15,870 Now currently the company's trading all the way up to 175, 68 00:03:16,150 --> 00:03:18,470 but as you can see, it has a little downward pressure. 69 00:03:18,470 --> 00:03:21,430 On a Green Day, apples down .65%. 70 00:03:21,430 --> 00:03:23,510 While the rest of the markets in the green and apples had a 71 00:03:23,510 --> 00:03:26,790 pretty tough month as well. The stock got all the way to a 72 00:03:26,790 --> 00:03:31,550 high of 195 and now it's traded all the way back down to 176. 73 00:03:32,020 --> 00:03:34,940 And the new Apple event doesn't seem to be helping the stock. 74 00:03:34,940 --> 00:03:37,180 In fact, a lot of people have proclaimed that now is the 75 00:03:37,220 --> 00:03:39,860 demise of Apple. The story is over, the thesis 76 00:03:39,860 --> 00:03:43,180 has ended, and the evidence that Apple's lost its touch and it's 77 00:03:43,180 --> 00:03:46,060 reached its top and it's all downhill from here is this 78 00:03:46,060 --> 00:03:48,460 latest iPhone event, the iPhone 15. 79 00:03:48,460 --> 00:03:51,540 So let's go ahead and just take a quick summary of what happened 80 00:03:51,540 --> 00:03:53,820 in this event. Now, the event starts off with 81 00:03:53,820 --> 00:03:56,820 this video and it doesn't really tell you what it is to begin 82 00:03:56,820 --> 00:03:58,020 with. You just have to figure it out 83 00:03:58,020 --> 00:04:00,630 as you go along. But I believe this was one of 84 00:04:00,630 --> 00:04:02,470 the strongest points of the entire event. 85 00:04:02,710 --> 00:04:05,350 It shows a group of families preparing for a birthday 86 00:04:05,350 --> 00:04:08,790 celebration, all these different families in a montage, and the 87 00:04:08,790 --> 00:04:11,350 event shows that each one of these families have the loved 88 00:04:11,350 --> 00:04:15,190 ones that their lives were saved and extended because of Apple 89 00:04:15,190 --> 00:04:17,310 devices. Tasha for example, had the Apple 90 00:04:17,310 --> 00:04:20,430 Watch notify her of a low heart rate, she went to the hospital 91 00:04:20,430 --> 00:04:23,030 to get it further checked and then she required a pacemaker 92 00:04:23,030 --> 00:04:25,710 surgery. This is a life saving event and 93 00:04:25,710 --> 00:04:28,110 Apple's highlighting this in a brilliant way. 94 00:04:28,550 --> 00:04:31,150 I've said before that I believe Apple's becoming a healthcare 95 00:04:31,150 --> 00:04:33,030 company. You can define healthcare in a 96 00:04:33,030 --> 00:04:36,430 lot of ways, but I think that if you directly save people's lives 97 00:04:36,710 --> 00:04:39,910 on a consistent and routine basis, then you're basically a 98 00:04:39,910 --> 00:04:41,350 healthcare company at that point. 99 00:04:41,590 --> 00:04:44,110 And Apple's proving that and highlighting some examples of 100 00:04:44,110 --> 00:04:46,550 it. So this little montage I think 101 00:04:46,550 --> 00:04:49,030 was one of the strongest points of the entire presentation. 102 00:04:49,150 --> 00:04:51,390 And then we move on to the Chief Operating Officer where he 103 00:04:51,390 --> 00:04:55,110 introduces the Apple Watch Nine. For the most part, it looks very 104 00:04:55,110 --> 00:04:58,660 similar to every other Apple Watch, and that's a difficult 105 00:04:58,660 --> 00:05:02,020 justification or rationalization for upgrading from one to the 106 00:05:02,020 --> 00:05:03,900 other. If people are watching this and 107 00:05:03,900 --> 00:05:06,460 you're wearing an Apple Watch that works just fine, you're 108 00:05:06,460 --> 00:05:09,140 going to have a difficult time saying I need this new one. 109 00:05:09,460 --> 00:05:13,700 Overall, the improvements are better transistors, better tech 110 00:05:13,700 --> 00:05:16,580 behind it, the better screen, the better battery life, some 111 00:05:16,580 --> 00:05:19,850 different things like that. But there was one really cool 112 00:05:19,850 --> 00:05:23,170 feature that I think was a pretty unique innovation for 113 00:05:23,170 --> 00:05:25,250 Apple, and for any company for that matter. 114 00:05:25,250 --> 00:05:27,490 The feature is called double tap, and this is pretty 115 00:05:27,490 --> 00:05:29,370 impressive. You put your index finger and 116 00:05:29,370 --> 00:05:32,570 your thumb together twice and you can activate different 117 00:05:32,570 --> 00:05:36,250 actions on the Apple Watch. Hi Deidre. 118 00:05:36,250 --> 00:05:40,490 Hey Jeff, see you later. OK, bye. 119 00:05:40,490 --> 00:05:44,280 Aside from iterative upgrades and new Apple Watch bands, this 120 00:05:44,280 --> 00:05:47,120 is the only real change that I saw that was a major leap 121 00:05:47,120 --> 00:05:50,240 forward in the technology of the Apple Watch, and I think this is 122 00:05:50,240 --> 00:05:52,200 a pretty cool feature. If you want to do any type of 123 00:05:52,200 --> 00:05:56,120 action Handsfree, you can simply just tap your fingers together 124 00:05:56,120 --> 00:05:58,040 twice. Another thing that I thought was 125 00:05:58,040 --> 00:06:00,800 interesting throughout this event is while every other 126 00:06:00,800 --> 00:06:05,080 company seems eager to throw in the words a I and artificial 127 00:06:05,080 --> 00:06:07,160 intelligence, Apple never does it. 128 00:06:07,560 --> 00:06:09,720 Even when they're talking about the gyroscope, the 129 00:06:09,720 --> 00:06:13,210 accelerometer, and they talk about the advanced modeling, the 130 00:06:13,210 --> 00:06:16,890 machine learning that Apple Watch uses to have this gesture 131 00:06:16,890 --> 00:06:19,290 work, They don't call it AI everywhere. 132 00:06:19,290 --> 00:06:21,610 Where they talk about something that most companies would refer 133 00:06:21,610 --> 00:06:25,010 to as artificial intelligence, Apple calls it machine learning. 134 00:06:25,130 --> 00:06:27,250 But in technical terms, machine learning and artificial 135 00:06:27,250 --> 00:06:30,170 intelligence are extremely similar, if not used 136 00:06:30,210 --> 00:06:32,570 interchangeably. And in this case, machine 137 00:06:32,570 --> 00:06:35,170 learning arguably describes what's going on with more 138 00:06:35,170 --> 00:06:37,680 accuracy. Then we move on to the iPhone 15 139 00:06:37,680 --> 00:06:39,600 Pro. The big news is that it's made 140 00:06:39,640 --> 00:06:42,640 out of titanium. You can see the new design and 141 00:06:42,640 --> 00:06:44,960 they highlight the differences in the qualities of material 142 00:06:44,960 --> 00:06:47,320 hair. So we have overall a material 143 00:06:47,320 --> 00:06:49,840 upgrade, which also makes it look a little bit different. 144 00:06:49,920 --> 00:06:53,120 The biggest criticism at this point is that the design looks 145 00:06:53,120 --> 00:06:56,240 the same as the previous year. They line it up and show the 146 00:06:56,240 --> 00:06:58,440 different phones. And the big reaction here, I 147 00:06:58,440 --> 00:07:02,240 believe from most people is that this is just another iPhone. 148 00:07:02,320 --> 00:07:05,420 There's nothing super unique about it, and I think this is 149 00:07:05,420 --> 00:07:07,300 the tough situation that Apple's in. 150 00:07:07,660 --> 00:07:10,580 They've already had the phone get to a point where it's so 151 00:07:10,580 --> 00:07:13,660 good and the design of it's so good that they don't want to 152 00:07:13,660 --> 00:07:16,420 dramatically change it. Apple doesn't want to change it 153 00:07:16,420 --> 00:07:19,500 to do a flip phone or a star shaped phone. 154 00:07:19,740 --> 00:07:21,940 They're going to make their rectangular shaped phones. 155 00:07:22,260 --> 00:07:25,020 For the most part, the design's going to look similar to every 156 00:07:25,020 --> 00:07:27,420 previous design. The iterations, of course, 157 00:07:27,420 --> 00:07:30,100 change from year to year. Apple upgraded the materials 158 00:07:30,100 --> 00:07:32,700 it's made out of the screen that it's made out of the processor, 159 00:07:32,900 --> 00:07:36,460 the battery, the charging port, the camera, and the software. 160 00:07:36,500 --> 00:07:39,100 Almost every part of the phone is upgraded from the previous 161 00:07:39,100 --> 00:07:41,260 year. It's objectively better, but 162 00:07:41,260 --> 00:07:43,620 Even so, it still looks mostly the same. 163 00:07:43,820 --> 00:07:46,180 So you look at the iPhone and you say that this is basically 164 00:07:46,180 --> 00:07:49,900 the same as it was last year. So the Apple event overall felt 165 00:07:49,900 --> 00:07:52,540 a little underwhelming. That is the most common word 166 00:07:52,540 --> 00:07:55,300 used to describe it from investors that were observing 167 00:07:55,300 --> 00:07:58,360 this event, and especially if you look on Twitter, a lot of 168 00:07:58,360 --> 00:08:01,400 people are describing the vent as not only underwhelming, but a 169 00:08:01,400 --> 00:08:03,840 bad sign for Apple. We have viral posts like this 170 00:08:03,840 --> 00:08:06,360 from Frazad that says Apple is the perfect example of what 171 00:08:06,360 --> 00:08:10,480 happens to companies that lose a sense of urgency and begin 172 00:08:10,480 --> 00:08:13,160 prioritizing the bottom line to please investors. 173 00:08:13,520 --> 00:08:16,080 They still make good stuff and they'll be around forever, but 174 00:08:16,080 --> 00:08:19,010 the magic is completely gone. They're no different than 175 00:08:19,010 --> 00:08:21,490 Costco. So Apple's now Costco and this 176 00:08:21,490 --> 00:08:23,850 has hundreds of comments and 4000 likes. 177 00:08:23,850 --> 00:08:25,490 And it's not just commentators on Twitter. 178 00:08:25,490 --> 00:08:29,050 Wall Street also isn't excited quote We see a September event 179 00:08:29,050 --> 00:08:32,169 as a modest negative for Apple given a lack of expected price 180 00:08:32,169 --> 00:08:35,130 increases for the Pro model, features that lack compelling 181 00:08:35,130 --> 00:08:38,330 motivation for consumers to upgrade, and modestly less 182 00:08:38,330 --> 00:08:40,370 aggressive promotions from carriers. 183 00:08:40,450 --> 00:08:43,650 Evercore ISI, analysts said, quote investors typically go 184 00:08:43,650 --> 00:08:46,920 into this event with relatively low expectations given it has 185 00:08:46,920 --> 00:08:50,200 been a long time since we've seen a major change in the 186 00:08:50,200 --> 00:08:53,480 iPhone design or functionality. But investors were hoping to see 187 00:08:53,480 --> 00:08:56,840 $100 bump to the cost of the Pro, which would have helped 188 00:08:56,840 --> 00:09:00,320 offset any potential headwinds from Huawei's Mate 60 Pro 189 00:09:00,320 --> 00:09:02,160 launch. So they kept their price target, 190 00:09:02,160 --> 00:09:04,640 but they called September mildly disappointing. 191 00:09:04,720 --> 00:09:07,920 Overall, aside from Dan Ives, most analysts weren't impressed. 192 00:09:07,960 --> 00:09:09,440 They didn't move their price targets up. 193 00:09:09,640 --> 00:09:11,640 They either moved them down or kept them the same. 194 00:09:11,720 --> 00:09:14,520 So overall, investors believe the Apple event was 195 00:09:14,520 --> 00:09:16,320 underwhelming, mildly disappointed. 196 00:09:16,400 --> 00:09:20,080 Joining now my initial gut reaction as an investor in Apple 197 00:09:20,080 --> 00:09:22,120 and someone that's done really well with this company in the 198 00:09:22,120 --> 00:09:25,600 past is to say that you're all wrong and to go in and to start 199 00:09:25,600 --> 00:09:28,160 nitpicking other people's arguments, to go into the 200 00:09:28,160 --> 00:09:30,320 analysts and highlight where they got things wrong. 201 00:09:30,400 --> 00:09:32,680 But instead I decided to consider their arguments. 202 00:09:32,840 --> 00:09:36,360 What if they're right? What if Apple really is a washed 203 00:09:36,360 --> 00:09:39,520 up company that's not coming out with anything revolutionary 204 00:09:39,520 --> 00:09:41,040 anymore? What if that's right? 205 00:09:41,040 --> 00:09:43,440 What if Apple is no different than Costco? 206 00:09:43,640 --> 00:09:45,320 That's an interesting question. To me. 207 00:09:45,750 --> 00:09:48,670 This was proposed as something negative for Apple. 208 00:09:48,710 --> 00:09:51,790 Judging by the comments, 99% of the people that read this 209 00:09:51,790 --> 00:09:53,990 thought this was a negative for Apple. 210 00:09:54,110 --> 00:09:56,710 Now you know me, I'm a fan of Costco. 211 00:09:56,710 --> 00:10:00,470 In My Portfolio under the consumer category, I only own 212 00:10:00,470 --> 00:10:04,310 one company that's in retail. That company is Costco. 213 00:10:04,630 --> 00:10:07,710 And I've talked glowingly about this company many times in the 214 00:10:07,710 --> 00:10:09,590 past. In fact, I've spoken so boldly 215 00:10:09,590 --> 00:10:12,190 about Costco, to call it the greatest company in the world, 216 00:10:12,510 --> 00:10:16,190 and I said that non ironically. I think Costco is, if not the 217 00:10:16,270 --> 00:10:18,750 best, one of the best companies in the world. 218 00:10:18,830 --> 00:10:21,870 Costco's also a company that I've stood by my words. 219 00:10:22,110 --> 00:10:24,750 I've invested in this company since the very beginning with 220 00:10:24,750 --> 00:10:29,110 Apple since 2018 and have only ever added to this position. 221 00:10:29,430 --> 00:10:34,270 Costco's now a $48,000 position, nearly as big as Apple with 222 00:10:34,270 --> 00:10:38,130 $11,600 in gains. Costco's done so well over the 223 00:10:38,130 --> 00:10:40,610 past five years that it's tripled the performance of the 224 00:10:40,610 --> 00:10:42,890 SP500. So going back to the comparison 225 00:10:42,890 --> 00:10:45,570 of Apple being quote, no different than Costco and the 226 00:10:45,570 --> 00:10:48,610 magic being completely gone, this is used in more of an 227 00:10:48,610 --> 00:10:51,930 insulting way for Apple. But to me this is actually a bit 228 00:10:51,930 --> 00:10:54,650 of a positive. The fact that Apple is now being 229 00:10:54,650 --> 00:10:57,250 accurately compared to one of the most reliable consumer 230 00:10:57,250 --> 00:11:00,130 defensive companies in the world and one that has largely 231 00:11:00,130 --> 00:11:03,330 outperformed the market for decade after decade with 232 00:11:03,330 --> 00:11:07,470 incredibly resilient economics is a positive, not a negative. 233 00:11:07,590 --> 00:11:10,630 And I think it's ironic that I consider Apple to be one of the 234 00:11:10,630 --> 00:11:13,190 greatest companies in the world. And the people that are 235 00:11:13,190 --> 00:11:16,190 criticizing Apple are now comparing it to another company 236 00:11:16,390 --> 00:11:18,750 that I believe is one of the greatest companies in the world. 237 00:11:18,750 --> 00:11:21,430 When we further consider the idea of Apple being like Costco, 238 00:11:21,590 --> 00:11:24,430 it reminds me of another subject entirely that is the subject of 239 00:11:24,430 --> 00:11:27,110 Warren Buffett's buy of Apple. Warren Buffett bought around $30 240 00:11:27,110 --> 00:11:29,830 billion worth of Apple. The performance on that $30 241 00:11:29,830 --> 00:11:33,030 billion has around 5X. It's been an incredible 242 00:11:33,030 --> 00:11:36,470 outperformer and the best purchase that Buffet it has done 243 00:11:36,710 --> 00:11:39,430 in his career over the past 20 years. 244 00:11:39,470 --> 00:11:41,310 He doesn't consider this a timely trade. 245 00:11:41,510 --> 00:11:44,270 He considers it partnering with a company that's now a part of 246 00:11:44,270 --> 00:11:46,390 Berkshire. He is the largest holder of 247 00:11:46,390 --> 00:11:49,270 Apple aside from Vanguard and BlackRock. 248 00:11:49,310 --> 00:11:51,830 And here's what Buffett said about Apple in the most recent 249 00:11:51,830 --> 00:11:55,550 Berkshire Hathaway meeting. They're good businesses and to 250 00:11:55,590 --> 00:12:02,550 think that our criterion, our criteria for Apple is different 251 00:12:03,230 --> 00:12:05,390 than the other businesses we own, it just happens to be. 252 00:12:06,160 --> 00:12:08,640 A Better Business than any we own. 253 00:12:08,960 --> 00:12:12,720 Buffett says Apple happens to be a Better Business than any other 254 00:12:12,720 --> 00:12:14,520 business we own. That wasn't a misstep. 255 00:12:14,520 --> 00:12:17,560 He didn't accidentally say that. He says that he's judging Apple 256 00:12:17,560 --> 00:12:21,040 alongside every other investment he's ever made, and Apple is a 257 00:12:21,080 --> 00:12:22,920 better company than the rest of them. 258 00:12:22,960 --> 00:12:25,920 Buffett calling Apple a better company than any other one that 259 00:12:25,920 --> 00:12:29,080 he owns is astounding when you consider the quality of company 260 00:12:29,080 --> 00:12:31,710 in his portfolio. He holds companies like American 261 00:12:31,710 --> 00:12:35,550 Express, Visa and MasterCard. He owns monopolistic duopolies 262 00:12:35,550 --> 00:12:38,350 like Moody's Corporation. He owns energy companies that 263 00:12:38,350 --> 00:12:41,150 have been around for decades. He owns Cocacola. 264 00:12:41,190 --> 00:12:43,590 But Apple, according to Buffett, is better than the rest. 265 00:12:43,630 --> 00:12:46,230 So there seems to be a massive disconnect here between Buffett 266 00:12:46,270 --> 00:12:49,190 and most retail investors, at least the popular ones online. 267 00:12:49,230 --> 00:12:51,750 Buffett saying that Apple's the best business of anyone that he 268 00:12:51,750 --> 00:12:53,710 owns. He has it as 51% of his 269 00:12:53,710 --> 00:12:56,630 portfolio and retail investors are saying that Apples at the 270 00:12:56,630 --> 00:12:59,990 top and the company struggling. So why is Buffett so attracted 271 00:12:59,990 --> 00:13:02,230 to Apple stock? Why does he like this company so 272 00:13:02,230 --> 00:13:03,550 much? There's all the normal 273 00:13:03,550 --> 00:13:06,350 fundamentals we could look at. Apple has a history of revenue 274 00:13:06,350 --> 00:13:10,350 growth and free cash flow, massive positive economics, good 275 00:13:10,350 --> 00:13:12,150 earnings growth over long periods of time. 276 00:13:12,390 --> 00:13:15,030 It pays a growing dividend. It has a very strong balance 277 00:13:15,030 --> 00:13:16,990 sheet. He loves the share buybacks. 278 00:13:16,990 --> 00:13:20,070 We already know all of these great characteristics of Apple. 279 00:13:20,230 --> 00:13:22,390 This is one of the most studied stocks in the world. 280 00:13:22,430 --> 00:13:24,710 So I think there's something else that attracts Buffett to 281 00:13:24,710 --> 00:13:26,790 Apple stock. Let's rewind time all the way 282 00:13:26,790 --> 00:13:29,800 back to 1995. This is Berkshire Hathaway's 283 00:13:29,800 --> 00:13:33,520 shareholder letter, and this was before Warren Buffett had any 284 00:13:33,520 --> 00:13:37,400 idea of owning Apple stock. Again, 1995 is when this was 285 00:13:37,400 --> 00:13:41,000 written. He owned Apple stock in 2016, so 286 00:13:41,000 --> 00:13:44,200 over a decade later. But Even so, this has a lot of 287 00:13:44,200 --> 00:13:46,840 the investing fundamentals and lessons that Warren Buffett's 288 00:13:46,840 --> 00:13:49,520 trying to teach other investors. Buffett's highlighting the story 289 00:13:49,520 --> 00:13:52,440 of RC Willey and the amazing success that is, and he has a 290 00:13:52,440 --> 00:13:54,480 couple notes on the retailing business. 291 00:13:54,480 --> 00:13:56,670 He says retailing is a tough business. 292 00:13:56,830 --> 00:13:59,470 During my investment career, I've watched a large number of 293 00:13:59,470 --> 00:14:02,910 retailers enjoy terrific growth and superb returns on equity for 294 00:14:02,910 --> 00:14:06,630 a period and then suddenly nosedive often all the way into 295 00:14:06,630 --> 00:14:09,070 bankruptcy. This shooting star phenomenon is 296 00:14:09,070 --> 00:14:12,670 far more common in retailing than it is in manufacturing or 297 00:14:12,670 --> 00:14:15,470 service businesses. In part this is because a 298 00:14:15,470 --> 00:14:18,230 retailer must stay smart day after day. 299 00:14:18,520 --> 00:14:21,160 Your competitor is always copying and then topping 300 00:14:21,160 --> 00:14:23,440 whatever you do. Shoppers are meanwhile beckon in 301 00:14:23,440 --> 00:14:26,600 every conceivable way To try a stream of new merchants in 302 00:14:26,600 --> 00:14:30,120 retailing to coast is to fail. Now we get to the important part 303 00:14:30,120 --> 00:14:32,680 here, quote. In contrast to this have to be 304 00:14:32,680 --> 00:14:36,560 smart everyday business there is what I call have to be smart 305 00:14:36,560 --> 00:14:38,920 once business. For example, if you were smart 306 00:14:38,920 --> 00:14:41,760 enough to buy a network TV station very early in the game, 307 00:14:42,040 --> 00:14:44,800 you could put in your shiftless and backwards nephew to run 308 00:14:44,800 --> 00:14:47,400 things and the business would still do well for decades. 309 00:14:47,780 --> 00:14:50,900 You do far better, of course, if you put in Tom Murphy, but you 310 00:14:50,900 --> 00:14:53,620 could stay comfortably in the black without them. 311 00:14:53,940 --> 00:14:57,020 For a retailer, hiring a nephew would be an express ticket to 312 00:14:57,020 --> 00:14:59,100 bankruptcy. Ultimately, what Buffett does 313 00:14:59,100 --> 00:15:01,420 here is he highlights two different types of companies. 314 00:15:01,700 --> 00:15:04,100 There's ones where you have to be smart every day. 315 00:15:04,220 --> 00:15:05,580 That's the type of business you run. 316 00:15:05,860 --> 00:15:08,580 And then there's businesses where you have to be smart once. 317 00:15:08,740 --> 00:15:11,340 When Buffett chooses between these two types of businesses, 318 00:15:11,580 --> 00:15:15,300 he has a very, very strong preference for have to be smart 319 00:15:15,380 --> 00:15:18,400 once businesses. Businesses where you can set 320 00:15:18,400 --> 00:15:22,360 things into motion one time and then you can coast from there. 321 00:15:22,680 --> 00:15:25,880 From there, it's gains and money and gains and money. 322 00:15:25,960 --> 00:15:28,760 The interesting dichotomy between Warren Buffett and other 323 00:15:28,760 --> 00:15:32,080 investors is most investors look for companies that require 324 00:15:32,080 --> 00:15:35,200 constant change in innovation to continue their business. 325 00:15:35,480 --> 00:15:39,200 Buffett does just the opposite. He actively seeks companies that 326 00:15:39,200 --> 00:15:42,880 do not require constant change or innovation, with Apple being 327 00:15:42,880 --> 00:15:45,470 his top holding. It matches well with many of the 328 00:15:45,470 --> 00:15:47,310 criticisms that Apple's receiving. 329 00:15:47,350 --> 00:15:50,310 The new iPhones look very similar to the iPhones last 330 00:15:50,310 --> 00:15:53,470 year, the iPhones last year look very similar to the iPhones the 331 00:15:53,470 --> 00:15:56,710 year prior and the iPhones the year prior to that, and the 332 00:15:56,710 --> 00:15:59,390 iPhones before that and the iPhones before that. 333 00:15:59,870 --> 00:16:03,310 Apple has done the same thing every single year for over a 334 00:16:03,310 --> 00:16:07,510 decade now, and it all started with one brilliant innovation. 335 00:16:07,750 --> 00:16:11,720 Steve Jobs revealing the iPhone. One the first iPhone. 336 00:16:11,800 --> 00:16:14,440 This was true innovation. Steve Jobs revolutionized the 337 00:16:14,440 --> 00:16:18,000 world by renewing the way that we looked at consumer technology 338 00:16:18,000 --> 00:16:21,120 in general, completely changing the way we looked at phones and 339 00:16:21,120 --> 00:16:23,040 technology and computers altogether. 340 00:16:23,040 --> 00:16:25,400 And this is arguably the most important product innovation of 341 00:16:25,400 --> 00:16:27,400 all time. But since then, Apple hasn't 342 00:16:27,400 --> 00:16:29,960 done nearly as much. It's basically just been the 343 00:16:29,960 --> 00:16:33,000 same thing year after year. But despite the fact that 344 00:16:33,000 --> 00:16:36,280 Apple's done the same thing basically every year for 20 345 00:16:36,280 --> 00:16:39,400 years now, their profits and their market have expanded 346 00:16:39,400 --> 00:16:42,520 dramatically out, pacing the rest of the market as a whole. 347 00:16:42,840 --> 00:16:46,880 Apple has essentially turned into a have to be smart once 348 00:16:47,080 --> 00:16:49,480 business. The one time they were smart was 349 00:16:49,480 --> 00:16:52,000 with the iPhone. One every other iteration of 350 00:16:52,000 --> 00:16:54,920 that is a spawn off of the iPhone 1 success. 351 00:16:55,160 --> 00:16:58,000 That was the single greatest innovation Apple's ever done, 352 00:16:58,120 --> 00:17:00,840 and nearly all of their economic gains can be attributed to that 353 00:17:00,840 --> 00:17:03,840 single innovation. Apple's not a business that has 354 00:17:03,840 --> 00:17:07,400 to be smart every single day. In fact, Apple can act foolishly 355 00:17:07,400 --> 00:17:09,640 in a lot of different ways and still have a pretty good 356 00:17:09,640 --> 00:17:11,440 business. So while most investors are 357 00:17:11,440 --> 00:17:14,240 fixated on what the latest feature is or the latest specs 358 00:17:14,240 --> 00:17:17,200 of the latest camera, I believe Buffett is more inclined to 359 00:17:17,200 --> 00:17:19,400 focus on the predictability of the company. 360 00:17:19,760 --> 00:17:23,160 If Apple can continue to come out with the relatively same 361 00:17:23,160 --> 00:17:25,960 product and simple iterative upgrades, but continue to 362 00:17:25,960 --> 00:17:29,220 generate the type of economics they have historically, that is 363 00:17:29,220 --> 00:17:31,620 a very good business. So overall, when I look at 364 00:17:31,620 --> 00:17:34,620 Apple, I agree with Buffett and investing in companies that are 365 00:17:34,620 --> 00:17:38,180 have to be smart once companies, companies that can invent the 366 00:17:38,220 --> 00:17:42,820 iPhone one time and then derive gains from it for 2030 and 40 367 00:17:42,820 --> 00:17:45,300 years in the future. Making that one critical 368 00:17:45,300 --> 00:17:48,820 decision and then creating a Moat around it is what Apple's 369 00:17:48,820 --> 00:17:51,820 done and this company should derive gains and economic 370 00:17:51,820 --> 00:17:54,860 benefit for decades to come. Now moving on, I wanted to 371 00:17:54,860 --> 00:17:57,740 highlight this Reddit post because I think this really 372 00:17:57,740 --> 00:18:01,820 shows the quality of investor you find on different investing 373 00:18:01,820 --> 00:18:04,780 forms like Reddit. We have here the post title. 374 00:18:04,900 --> 00:18:07,780 I bought Apple at its height and I now regret it. 375 00:18:07,900 --> 00:18:12,540 This individual says I bought Apple stock at $195.60 per share 376 00:18:12,660 --> 00:18:14,780 this year. Literally one minute after I 377 00:18:14,780 --> 00:18:17,140 bought it, it crashed back to around 184. 378 00:18:17,420 --> 00:18:20,620 Now it's 176 and I don't know what to do. 379 00:18:20,900 --> 00:18:23,380 The bulk of my active portfolio is Apple. 380 00:18:23,540 --> 00:18:26,540 My salary is very low and it takes me a while to save up 381 00:18:26,620 --> 00:18:29,910 $4000. Tim Cook just permanently 382 00:18:29,950 --> 00:18:33,910 destroyed $500 plus of my hard earned salary. 383 00:18:34,470 --> 00:18:37,670 Even if Apple rises back up again, the likelihood it will 384 00:18:37,670 --> 00:18:41,430 rise significantly above $200.00 is really rare and it will 385 00:18:41,430 --> 00:18:45,430 probably take two plus years. Remember I bought 18 shares of 386 00:18:45,430 --> 00:18:50,390 Apple at $195.60. Should I just cut my losses? 387 00:18:50,710 --> 00:18:54,830 I should just sell all my apple and use it to buy the QQQ or 388 00:18:54,830 --> 00:18:57,390 something else? That's the post. 389 00:18:57,810 --> 00:19:00,250 Now since this individual is asking publicly for advice on 390 00:19:00,250 --> 00:19:02,090 this, I'm going to give advice directly. 391 00:19:02,170 --> 00:19:05,570 The best advice I would give is to simply sell out of your 392 00:19:05,570 --> 00:19:07,930 individual stocks and buy an ETF. 393 00:19:08,370 --> 00:19:12,010 Buy an ETF and dollar cost average into it and give up the 394 00:19:12,010 --> 00:19:14,010 idea of doing individual investments. 395 00:19:14,410 --> 00:19:17,770 Individual stock picking can be extremely rewarding. 396 00:19:17,770 --> 00:19:20,650 It can be fun, it can be a passion, and you can also 397 00:19:20,650 --> 00:19:23,170 outperform the market if you're wise. 398 00:19:23,170 --> 00:19:25,610 If you're shrewd and you have the right temperament for 399 00:19:25,610 --> 00:19:28,530 picking individual companies, which is clearly something that 400 00:19:28,530 --> 00:19:32,250 this investor has illustrated that they're not capable of, at 401 00:19:32,250 --> 00:19:35,130 least not yet. Buying Apple stock at the 402 00:19:35,210 --> 00:19:40,050 absolute peak after a run up of 45% year to date, and then 403 00:19:40,050 --> 00:19:44,090 complaining when the stock has a slight pullback, That is a giant 404 00:19:44,090 --> 00:19:47,410 red flag that you're not ready to hold individual companies. 405 00:19:47,770 --> 00:19:51,730 The next big red flag is that you're outwardly blaming Tim 406 00:19:51,730 --> 00:19:55,010 Cook for your own mismanagement of stocks. 407 00:19:55,480 --> 00:19:57,800 Not only are you complaining in the short term that the stock 408 00:19:57,800 --> 00:20:01,240 went down, but you're directly blaming Tim Cook that you lost 409 00:20:01,240 --> 00:20:05,520 $500.00 of your salary. Tim Cook, who is possibly one of 410 00:20:05,520 --> 00:20:09,640 the best CEO's in the world and has 10X Apple stock since his 411 00:20:09,640 --> 00:20:14,120 CEO tenure crushing the market, Tim Cook has nothing to 412 00:20:14,120 --> 00:20:16,960 apologize to you for. Tim Cook knows what he's doing, 413 00:20:17,040 --> 00:20:18,600 and you have no clue what you're doing. 414 00:20:19,050 --> 00:20:22,610 Blaming the CEO of a company is a massive red flag, especially 415 00:20:22,610 --> 00:20:24,530 when you're blaming one as good as Tim Cook. 416 00:20:24,530 --> 00:20:27,290 The next thing that's perplexing about this comment is the fact 417 00:20:27,290 --> 00:20:30,970 that you argue in the second paragraph the Apple stock can't 418 00:20:30,970 --> 00:20:33,450 realistically go above $200.00 per share. 419 00:20:33,930 --> 00:20:37,450 Well, just a couple months ago you bought the stock at 195. 420 00:20:37,970 --> 00:20:41,650 Did you buy the stock at 195 believing that it couldn't go 421 00:20:41,650 --> 00:20:45,890 above $200.00 per share? And if not, why did you buy the 422 00:20:45,890 --> 00:20:47,480 stock? The only reason that you would 423 00:20:47,480 --> 00:20:50,160 buy an individual stock is if you see substantial upside. 424 00:20:50,560 --> 00:20:54,560 So you paid 195 for it, but now that it's gone down to 176, you 425 00:20:54,560 --> 00:20:56,760 don't believe it can go above $200.00 per share. 426 00:20:57,120 --> 00:20:59,680 What changed? What thesis changed over the 427 00:20:59,680 --> 00:21:02,320 past two months? Was it this Apple event? 428 00:21:02,360 --> 00:21:04,680 Was it substantially different than you predicted? 429 00:21:05,160 --> 00:21:07,720 I think the only thing that has changed is the price. 430 00:21:08,120 --> 00:21:10,240 The stock moved down a little bit, so now you're second 431 00:21:10,240 --> 00:21:13,080 guessing your thesis. Investing in individual stocks 432 00:21:13,080 --> 00:21:16,360 like Apple requires being anchored to the fundamentals, to 433 00:21:16,360 --> 00:21:19,400 the valuation, to the longterm growth prospects of the company, 434 00:21:19,760 --> 00:21:22,640 not to the volatility and price movements day-to-day. 435 00:21:22,720 --> 00:21:25,240 If you allow yourself to be anchored by price movements, 436 00:21:25,240 --> 00:21:27,240 you're going to have no clue what to do if the stock goes 437 00:21:27,240 --> 00:21:30,720 down even a small percentage like you are with this post. 438 00:21:30,760 --> 00:21:33,280 So my advice for this individual or anyone else that finds 439 00:21:33,280 --> 00:21:37,030 themself in this situation it is to simply give up stock picking 440 00:21:37,070 --> 00:21:40,310 and buy an ETF. If you're blaming CEO's, if 441 00:21:40,310 --> 00:21:43,190 you're trading based on shortterm sentiment, if you have 442 00:21:43,190 --> 00:21:46,990 no anchoring to fundamentals, then it's time to buy an ETF and 443 00:21:46,990 --> 00:21:49,630 forget about stock picking. Because if you make decisions 444 00:21:49,630 --> 00:21:51,390 this way you're going to lose a lot of money. 445 00:21:51,550 --> 00:21:54,150 And the last thing I'd like to point out with this post is 446 00:21:54,150 --> 00:21:57,670 whenever you see studies of the average investors returns, this 447 00:21:57,670 --> 00:22:00,430 is the type of investor that's included in those averages. 448 00:22:00,430 --> 00:22:02,190 If you do have the right temperament and the right 449 00:22:02,190 --> 00:22:05,320 strategy, investing in individual stocks, you can have 450 00:22:05,320 --> 00:22:07,600 very good outcomes. Now, we also received the 451 00:22:07,600 --> 00:22:10,240 inflation report today and inflation was a bit above 452 00:22:10,240 --> 00:22:13,000 expectations. They mostly attribute this to 453 00:22:13,000 --> 00:22:15,920 increased gasoline prices. Now I came out with a video a 454 00:22:15,920 --> 00:22:18,280 while back saying that inflation's done, that the 455 00:22:18,280 --> 00:22:21,360 subject is basically over and we're moving on from it. 456 00:22:21,720 --> 00:22:24,760 By that, I don't mean that inflation is never going to tick 457 00:22:24,760 --> 00:22:27,840 up slightly in the future. I think the battle of getting it 458 00:22:27,840 --> 00:22:33,430 below 4% and 3% down to 2% is going to be an ongoing battle. 459 00:22:33,430 --> 00:22:35,990 Some months it will go up slightly, some months it will go 460 00:22:35,990 --> 00:22:38,790 down. But by inflation being done, it 461 00:22:38,790 --> 00:22:41,910 means that no longer is it the driving narrative of the stock 462 00:22:41,910 --> 00:22:44,110 market. Inflation used to be the thing 463 00:22:44,110 --> 00:22:47,110 that dictated stock prices. It was a number one thing that 464 00:22:47,110 --> 00:22:50,190 every investor looked at. And now the storyline has 465 00:22:50,190 --> 00:22:52,110 shifted. Inflation has gone down enough 466 00:22:52,110 --> 00:22:54,510 that most investors have moved past this narrative. 467 00:22:54,830 --> 00:22:57,960 This is evidenced by the fact that even though inflation was 468 00:22:57,960 --> 00:23:00,480 up slightly, the markets are still up today. 469 00:23:00,640 --> 00:23:02,840 In the next meeting, the Federal Reserve is going to keep the 470 00:23:02,840 --> 00:23:05,280 interest rates the same and then they'll say how they're still 471 00:23:05,280 --> 00:23:08,640 focused on inflation and they'll be watching the data closely. 472 00:23:08,680 --> 00:23:11,640 But as of right now, I think that inflation has moved from 473 00:23:11,640 --> 00:23:15,040 the top of mind, subject down somewhere towards the bottom. 474 00:23:15,040 --> 00:23:17,680 It's no longer the driving narrative behind the market. 475 00:23:17,680 --> 00:23:19,120 Now that's going to be it for this episode. 476 00:23:19,120 --> 00:23:21,160 If you like this type of content, make sure to subscribe 477 00:23:21,200 --> 00:23:24,200 and you can check out more exclusive videos in the Patreon. 478 00:23:24,550 --> 00:23:29,310 I can't believe it.