You SHOULD be scared of the overall stock market as well as the overall world economy, VERY scared. Since August 1999 the world economy has been nothing but smoke and mirrors. But unless you're the world's most patient human, sometimes you just gotta own SOMETHING. Let us explain to you why Apple is a great place to park about 25% of your nest egg....

NEAR-TERM YUMMY NUGGETS-- from the earnings last night...

1. Calling all GIANT iPhone Xs... Calling all GIANT iPhone Xs
Everyone on Wall St running with heads cut off today bc Apple didn't post year over year iPhone unit growth. But people are missing one big point which will allows 2018 revenues and unit sales to exceed 2017: BIG PHONE.
The iPhone X came out in one-size-fits-all, which is simple. Many iPhone-buyers need to be on the latest techology either because their phone is their living, or the lesser reason which is to make a showy statement. Don't hate iPhone X owners, some people really use their phone tool a lot, so why not pony up the "grand"? But don't forget there's a LOT of pragmatists out there, who LOVE giant phones. These types will shy away from the hype of the new phone, and center on getting what they want, even waiting for what they want. This can be a big group too. Remember when the iPhone 6 broke the mold by being the first iPhone to pack the insanely big screen size? That was when Apple's sales did the "super-cycle" everyone is now yapping about. In particular, since Samsung has always been a leader in gargantuan phones, when Apple matches there tends to be a LOT of buyers who shed Samsung allegiance for the better quality Apple phones. This will be true again, when in 2018 Apple launches TWO OLED-screened phones and one of them is the stupidly-big size. Remember when Samsung plus-size phone was setting fire to airline seats? That was just a year ago, but people don't forget crappy quality and engineering (ever hear of a Pinto?). So when Apple launches a 6 inch phone whose screen takes up the entire front profile so you can host movie-night from your lap, expect a large take-up rate from those who held out for it, and for those wishing they didn't have Samsung's low quality phone LITERALLY "burning a hole in their pocket". This effect will take hold as early as July when Apple gives guidance for Q3 2018, and again in September when pre-orders roll in.

2. November 3, 2017
iPhone X launched late, due presumably to supplier problems making the phone in bulk. Apple is the best manufacturer in the world bar none, and they solved this backlog before the quarter ended, but the window of opportunity from when Apple announced the phone to big fanfare was lost. Typically sales of the newest and best phone in Apple's lineup begin in the last weeks of the September 30-ended quarter, but THIS YEAR was different and Apple got a late start. While some sales are lost entirely to this delay, many sales are simply delayed, especially for the task of compiling unit sales for the December quarter about which everyone is screaming. In short, the December quarter in 2016 had no such delay, so iPhone X had a tougher task to help beat the unit numbers year over year. But iPhone X WOULD have done it, had it launched on time. Management said sell-thru growth year-over-year is actually ACCELERATING in the current March-ended quarter thru all of January. That is a sign that the annual unit-sales growth metric from December won't indicate the growth number in March quarter which will allow for 13-17% year/year growth in revenues.

3. 13 weeks does not equal 14 weeks
This one is simple, so we won't elaborate, quarters are done in whole weeks, and the December-ended quarter for Apple this year was 13 weeks, whereas last year it was 14 weeks. This via simple math would've boosted Apple's sales by over 7%. As obvious as this is, Wall St is lazy and focuses on the final number more times than we can count. Needless to say, expect Apple to report a sexier growth number for the March ended-quarter which will have no such inequality-of-weeks problem.

4. FIRST-WORLD GAINS = best signal you can ask of a company
If you listened closely to the AAPL conference call, you'd have noted the CFO saying that in 1st-world markets like the UK and Japan, Apple was gaining market share and becoming a dominant force. This is important bc first-world markets LEAD 2nd and 3rd-world markets in time, thus eventually what happens in first-world markets translates to ALL markets. Why is this important? Apple has between 14-20% worldwide cellphone market share, that's why it matters. Ever hear of a little monopoly called Microsoft? Over a span of 20 years they grew to a desktop and laptop computer market share of over 90%. This is what's happening long-term in Apple's iPhone, which also translates to iPads, Macbooks, and even peripherals like AirPods, Wireless charge-pads, smartWatches, and augmented-reality-glasses (some day). In other words, if you focus too much on near-term growth even while considering factors 1 thru 3 above, you could miss the forest thru the trees. Apple isn't the next Microsoft, Apple is the next Standard Oil. Quarterly and even annual growth rates are mere noise on the way to the final super-growth period for Apple when they officially become a computing-platform monopoly.

Ok, we're done with discussing the December quarter and the upcoming March quarter for Apple, it's time to take the advice in 4. above and talk about the forest, not the trees:

LONG TERM Apple is a natural MONOPOLY

How do we know Apple is a monopoly that hasn't quite happened yet? We know from the natural tendency of all markets to monopolize, whether "naturally" (without "trusts" forming-- aka acquisitions of largest competitors-- John Pierpont Morgan-style) or via consolidation. Don't believe us? Go look up how many large cell carriers there are in every country in the world and how that has progressed since the 1980s when cell carriers were nascent. MANY MANY cell carriers become 2 or 3 or in the US case 4 (Verizon, AT&T, T-Mobile, Sprint). The US has become four cell carriers but it probably would be TWO by now if the government didn't shut down all the mergers of the past decade or two.
Apple needs no such mergers or acquisitions (M&A), it's forming a natural monopoly gained from having a business model which creates a monopoly situation all by itself. How?

Computers are natural monopolies due to software, and Apple is no exception. Apple's App Store is a platform onto which other businesses create businesses on top of that foundation. Remember the hot Pokemon game? Those types of new games using the latest technology are complicated to build, and take months and years to develop. When Apple adds some new features to it's operating system like it's Augmented-Reality (AR) software platform, the very BEST app developers move quickly to use those new features to differentiate themselves. These developers want to build their game and be done, get paid while they think up new games. What they do NOT like doing, is building the game all over again on another platform. Don't believe us? Just ask Snapchat's CEO Evan Spiegel. Snap just wasted the last two years trying to get their app to perform well on Android's over-segmented wobbly platform, and perhaps it's STILL not on the same par as their iOS app. These app developers are risking BILLIONS to develop on a platform, and they will cater to the biggest and best platform with the users with the highest-disposable incomes FIRST. Hmmm, where do we find people with the highest disposable incomes in the world? FIRST WORLD COUNTRIES like Japan, the US, and the UK! Hmmm, didn't you say that's where Apple in the December quarter is performing best? Apple's new 3D-face-measuring chip in the front of their iPhone X, and their AR platforms are the main features of the iPhone X. The hot Pokemon game is among the first to take advantage of these new features, as is wildly popular Snapchat with their hilarious CONTOURED-TO-YOUR-PERSONALIZED-FACE masks.

Guess what? Pokemon and Snap don't have a ton of extra time, the developers making these iOS apps get paid in high 6 digits and don't like repeating themselves, even a little bit. Now, sure, there's been some dichotomy in the smartphone operating system market, with Android getting some love in the emerging markets where they focus on cheap phones which can download MAYBE two apps before the phone get slow and nearly inoperable. Apple's iOS focuses on the high end PROFITABLE market with disposable incomes, the markets which allows a smartphone to have pages of apps running in the background with barely noticable effect on phone speed and battery. How many apps do you have on YOUR phone? If you paid over $400 for a smartphone, or own an iOS device, probably a LOT. If you have a low-end Android phone (bc you live in the Indonesian jungle) you're probably smart to keep apps downloaded to a minimum so you can still make phone calls without bashing hollow coconuts off your head. Now remember that Pokemon and Snapchat are just two large apps, and those guys have enough at stake to actually, for now, build the TWO apps for each operating system. Go down the line, to smaller companies, and they don't have the time, they just pick an operating system and hope they made the right choice. But that "right choice" is being told to you, oh dear investor, it was told to you by the CFO of Apple last night. Japan, UK, US? Those are the places you want to be having outsized market share, and GAINING market share. Those are the markets Apple is beginning to dominate. Units? Nah Loc, the game isn't about units at first, it's about profits and having the disposable-income crowd be your best customer in the beginning.
Apple, it's the long term call, and it doesn't end with smartphones, it ends when everything in your house and car that needs a computer has one, and talks to your phone and watch and headset (AirPods, smartGlasses). We're not there yet, and therefore there's a LOT of innings of this mobile-computerization monopoly ballgame left to play.

PROFIT GROWTH COMES AT THE END-PEAK OF MONOPOLIZATION

Facebook has never looked better than they do right now. Revenue and especially earnings growth are stupendous, yet in Q4 they just reported they didn't grow daily users from Q3 to Q4 for the first time ever. We think Facebook is kinda done, Zuckerberg didn't see the warning signs bc he was too busy gobbling easy profits via methods which ruined his product. Growing EPS is nice, but you can't sacrifice your good name/brand to get them, ever, if you wanna stay on top. Facebook is making that mistake, yet doesn't seem to be paying for it on the profits end of things? Things look great before they don't. Zuckerberg is right to fear fake-news and crypto, those WILL be threats to his business. Our main point, however, is just that there isn't much for Facebook to announce at this point that they haven't already announced (Augmented Reality, signing up 3rd-world users, signing up every advertiser from the local pizza boy to GM). This peak of good news, typically marks a turning point, one we don't see in Apple. Apple hasn't yet monopolized the market, and hasn't yet taken over the 2nd and 3rd world markets. Face-ID and AR and AirPods/Siri compatibility form networks of "moated castles" upon which many other businesses put their foundations. This all begun when Apple released the App Store in 2008, but it's now intensifying bc Samsung cannot hope to catch up by standardizing or commoditizing the features which Apple has blazed a new trail. Apple has already won the Research & Development contest, now begins the fun part where Apple's sales and services surprise everyone by gaining the market shares they don't already have, while benefiting profit-wise from their massive scale over the next decade.

Should you bank on the world economy continuing unabated like it has from 1980 to present? Definitely not. But can you predict when we'll enter the next down-phase where all ships sink with the lowering tide? Most likley not. So if you wanna ride the tail end of the great world economy, you have to center on the fewer and fewer larger names, we already learned this lesson from the teachings of Ben Graham and other business thinkers looking at history. Apple is as big as they come, yet they still have plenty of growth ahead. Heck, they haven't even done their full-screen flat TV + Gaming Console concept yet, and we hear it will allow gaming without paddles (hand/arm/leg gestures)!
So assuming you want to own SOMETHING while the world economy decides whether to topple or rip northwards for one last party rebel yell, we think Apple is a great place to do it.

Risk/Reward & Allocation

We believe less is better, it's hard enough to one thing much less a dozen or more. But since it's hard to put all eggs in one basket, we think it's best to TRY to own about 4 stocks, with the goal being 25% in each stock. This never works out right, bc you should be vetting new ideas, and the timing of taking a large 25% position is never the same, but for any stock-picking recommendation one must assume talking to an audience with 100% cash invested, looking for an idea or four. We think Apple is a very strong and mostly safe valuation given it's business strength, thus meriting a large-sized position in general, but especially if your goal is just four total positions. The large position size also comes with the risk/reward.
Risk first: Apple makes roughly $11.50 per share in operating profits at a 23% tax rate, and has over $30 per share in balance sheet value (mostly in the form of a huge cash pile minus their stock-buyback debt). We've seen Apple's worst days, when analysts in 2012 declared Apple's iOS had been defeated by Android; the worst valuation we've seen is about 6 times earnings if you can believe that. Wall Street probably learned their lesson from such an absurd valuation to let it happen twice in half a decade,but let's assume they get all bearish again on Apple (like today but for months more) and push the valuation back to a raunchy 7x earnings. At that point, Apple is once again a screaming buy. That means AAPL could get down to about $110 or so. Stock price is now $164. So $54 of downwards risk.
Reward: It SEEMS insane to say it, but we think Apple can more than triple revenues, while at the same time increasing profit margins. In short, we think profits could go up almost 5x in 5 years as Apple becomes a runaway freight train. Think this is nuts? Microsoft had $6 billion in revenues in their 1995 ended fiscal year and $1.4 billion in income. By fiscal 2000 MSFT had $23 billion in revenues (almost 4x) and $9.4 billion (almost 7x) in net income. This is how monopolies look at the end, yo! (also, see our "Epilogue" below) The first big-time handheld "computer" came out right after that, the iPod in October 2001. The iPod would signify the massive change in computing from desktops to pocket-computers. Whatever defeats Apple's monopoly in the end (most likely a government via Anti-trust, years from now), ultimately, won't look like an iPhone anymore than the iPod should have made Microsoft scared they would lose computing dominance in 2001. (we can still hear Ballmer screaming iPod was insignificant back then).
Back to "reward": Apple would make about $50 per share, and likely have over $100 in net cash on the balance sheeet, such that even a ten-multiple (microsoft in early 2000 likely had a fatter valuation than that!) would equal an Apple stock price of over $600 per share, and more like $1,000 if they got an Emperor's multiple like Microsoft did at the end of their dominance.

We won't publish a disclaimer, sue us if you lose money, tell'm it's our fault. Standard Oil, look it up.

EPILOGUE

“Would I trade 96% of the market for 4% of the market? (Laughter.) I want to have products that appeal to everybody.
Now we'll get a chance to go through this again in phones and music players. There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get." -- Steve Ballmer, 2007/2008-ish

"In the case of music, Apple got out early. They were the first to really recognize that you couldn't just think about the device and all the pieces separately. Bravo. Credit that to Steve (Jobs) and Apple. They did a nice job.
But it's not like we're at the end of the line of innovation that's going to come in the way people listen to music, watch videos, etc. I'll bet our ads will be less edgy. But my 85-year-old uncle probably will never own an iPod, and I hope we'll get him to own a Zune.”—Ballmer in a 2007 interview with USA Today.

“Apple gained about one point, but now I think the tide has really turned back the other direction ... Paying an extra $500 for a computer in this environment—same piece of hardware—paying $500 more to get a logo on it? I think that’s a more challenging proposition for the average person than it used to be.,”— Ballmer speaking about PC market share at a conference in New York in 2009.

We like Steve Ballmer, guy's got tremendous passion and loyalty, so don't let the quotes let you think we don't; we just recognize massive monopolies for what they are, before other people years later make the same comparisons (to Microsoft, to Standard Oil)