Apple – Not Saying Goodbye

I’ve written more articles about Apple than any other company we’ve ever owned. If I were to lie on Dr. Freud’s couch, then you’d find there were two Vitaliys writing these articles. First, there was Vitaliy the contrarian. Despite Apple’s ginormous size and the several dozen Wall Street analysts following the company, I felt it was misunderstood by investors. Wall Street rarely looked beyond the next quarter or two. Investors always drew parallels between Apple and Nokia/Blackberry, expecting the iPhone to eventually follow their path into oblivion.

This was the theme of my earlier articles on Apple: Look past the next year or two; Apple is not Nokia; the iPhone is software in a hardware package, and thus there is a recurrence of revenue that is underappreciated. (Nokia with its Blackberry did not have the brand relationship nor the recurrence).

And then there was Vitaliy the geek, who – I am almost embarrassed to admit – has owned every iPhone (except 8: I skipped to X). I cannot remember a single company I ever owned that elicited such a strong emotional response from me, both as a stock and as a maker of great products.

But lately my articles about Apple have been of a different kind: bittersweet goodbye letters to the stock. I became disillusioned with Tim Cook’s efforts to create a new category of products (Apple failed at building a car), and the stock price has appreciated to the point where the valuation demands that I have to a clearer crystal ball about Apple’s future than I possess.

I get a feeling I am not saying final goodbyes. Investors’ relationships with Apple are somewhat binary – it’s either love or hate; there is no middle ground. Today Apple is loved. At some point in the future that will not be the case.

Read this before you buy your next stock

Key takeaways

• My history with Apple stock has been shaped by two sides of me: the contrarian investor who saw Wall Street’s blind spots, and the geek who genuinely loved Apple’s products.
• Early on, I argued Apple was misunderstood — unlike Nokia or Blackberry, the iPhone was really software wrapped in hardware, creating sticky recurring revenue streams.
• Over time, my writing on Apple shifted from bullish contrarian notes to bittersweet farewells, as the stock’s valuation demanded more foresight than I could honestly claim.
• Tim Cook’s Apple has struggled to create entirely new categories (the failed car project being the clearest example), which makes me more cautious about long-term growth.
• Relationships with Apple stock are never neutral — today the market loves it, but the day will come again when love turns to hate, and that may create opportunity.