It is more valuable than the economy of Taiwan and is fast catching Saudi Arabia, the world’s No 1 oil exporter. The death of its founder in October was met with public grief usually reserved for Korean dictators. Eulogies on front pages lionised a Visionary, a Man Who Changed The World.
At nearly $546 billion, or £344.6 billion, the world’s most valuable company is more valuable than ever. Had anyone had the foresight to buy £100 of shares when it floated in 1980 and hung on, they would be sitting pretty on £23,322.80 today.
By the end of this year, its pockets are expected to be stuffed with $150 billion in cash, about a tenth of that held by all corporate America. Its brand alone is priced at more than $70 billion.
Believe the 55 or so analysts who cover the company and the shares can only go one way from here. Stratospheric.
Starry-eyed Katy Huberty at Morgan Stanley, one of the 48 scribblers urging clients to back up the truck, wouldn’t be surprised were these shares to stand nearly two thirds higher again this time next year. Even for a company that provokes hyperbole like no other — there it is again — this is punchy.
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Should she prove right, the Californian Republic of Applestan would be worth about $1.1 trillion and pushing for a place among the top 10 economies in the world.
For now, Apple’s i’s have it. The ubiquitous books and tunes, pods and pads, the latter as de rigueur for City folk as chalk-stripe and pinky ring.
But let’s say, for the sake of the hysterical argument that it is sure to provoke, that an investor were to subscribe to the old stock market adage that when everyone agrees about anything, the way to make proper money is to do the polar opposite. How best to bet against Apple and its long-term world domination?
The financial spread-bet is the most ready way to wager against a share price. Open an account with a City bookie and “sell” the price offered at, say, £10 a point and for every cent Apple’s shares fall below that quote, punters will be a tenner to the good.
The danger here is that Apple rises in the short-term, as a majority expect. Even if it fell later, every cent higher now costs £10. Before long, the spread-betting company would politely demand more money to cover nasty losses. Not all of them pick up the phone. Chances are, the off-side Apple position would simply be closed automatically and the punter carried out feet first.
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Contracts for difference, essentially spread-bets for grown-ups, carry the same risks. So does selling short.
Perhaps it would be safer to buy shares in some of Apple’s bombed-out competitors in the hope they will close the gap? Then again, glance at names such as Nokia or Research in Motion — perhaps not.
If investors think a company too cheap, there is a simple and fairly safe course of action. Buy the shares and wait. They may fall in the short term, but there are no painful margin calls demanding a wheelbarrow more cash while you wait for the rally.
Should they think a share frothy, it is much trickier to take a similarly low-risk position and wait to profit from being proven right. To remove the risk of acute short-term pain, the more sophisticated investor could make use of a “put” option.
Simplest of all is the fixed-odds bet. Cantor Index is offering 2-5 that Apple shares are below $550 three years from now, 7-4 for below $450 in five years’ and 8-1 for below $400 in ten years’, assuming no new shares are issued in the meantime.
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Here, old-fashioned fixed odds are still the safest way to play against the very latest word in consumer electronics.