Apple’s Puberty
Pfäffikon SZ, Switzerland – The financial markets require more attention than current prices seem to suggest. The bubble in raw materials continues to deflate which poses great challenges for the energy sector. This process results in opportunities for investors where one shouldn’t be thinking about Royal Dutch Shell. In this context Saudi Arabia’s bond issuance to cover the holes in its budget is noteworthy. But China and the end of the bull market in bonds are not leaving investors unmoved. The talk of the day however, is Apple, which market-wise is slowly falling off of its pedestal.
Little Worm
First of all, yours truly is a fervent user of Apple products. I have taken a look at Apple before in relation to the power of its large figures. Today, the figures are large as well, seeing 100 billion in market capitalization evaporate in less than a month is no trifle matter. You may perhaps not realise it but there is a big chance you are a stockholder in Apple through your pension, index investment or obscurely polished up ETF. The creation of wealth on part of Apple is, without a doubt, impressive. However, now there seems to be a little worm crawling into Apple.
Conflict
We have also, to our satisfaction, held Apple in our portfolio. But before, when the rumours spread about the Apple Watch, we said our goodbyes to the renowned corporation. The Apple Watch isn’t able to charm us and moreover it resulted in a conflict within our portfolio. Apple, with a giant mountain of cash, is looking for new challenges, and that turns out to be difficult. Apple has lost its innovator’s luster, and that is regrettable.
Automotive
Less well known is the visit that Apple recently brought to the BMW head office. According to persistent rumours, Apple would be interested in the BMW i3 platform. BMW, allegedly played for time, at least for now. Building a car is a logistical nightmare, and this is something they know all too well in Munich. It feeds into the many rumours that Apple wishes to enter the automotive industry, now that the self-driving car is coming closer. Google has also recently set up its own auto company. It is positive that the Dutch minister Schultz van Haegen of Infrastructure and Environment is making progress with the required legislation. In this manner the Netherlands can play an innovative role in the boundaryless possibilities of the car of the future.
Competitor
Little imagination is needed to see that Apple can truly change the automobile industry with its technology. It’s not without reason that VW has recently come out saying that they see Apple and Google as serious competitors. With this the gentlemen in Wolfsburg hit the nail on its head. The acquisition of Nokia’s card division HERE by BMW, Daimler and Audi speaks volumes about the desire for action on part of the German automobile industry. On the other hand Apple knows that breaking open a closed and complex industry is not a sinecure.
Bernoulli
Apple, apparently, is looking for a European solution for the billions that have been parked in Ireland without purpose. The company is in the process of outgrowing puberty which won’t be an easy ride. Moreover, Bernoulli’s law is tripping Apple up. It wouldn’t surprise me if the current stockholders of Apple would need to suffer some more losses in market capitalisation before the Cupertino company is truly able to leave puberty behind.
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has postion in BMW and Google and no position in the other above mentioned shares and has no intention of doing so in the next 72 hours.
