The shares of Apple ($AAPL) keep going higher because they are NOT spending on AI.
All the money has to go somewhere, so instead of taking it out of the market, they put it into Apple — in the great rotation that has highlighted trading in the last few weeks.
Apple recently had a poor quarter and its shares sold off on the basis of its fundamentals — but it’s now going straight up just due to flows.
Apple’s top and bottom-line growth since 2000 is uninspiring as it is basically a giant company that has not innovated anything for about the last 10-15 years since Steve Jobs died and has conspicuously slowing growth.
Apple is a large cash-generating machine that has lived off of taking price up for its products, buybacks and passive money flows into their stock (because it is such a big index component).
Now it is trading at 40x and at its all-time high — as it has a love fest with momentum-based investors.
This speaks volumes about what the equity markets have become and how things are valued.
I don’t typically short value but I am considering an AAPL short.
Doug Kass is a world-renowned hedge fund manager with decades of experience and success navigating through some of the most turbulent periods in market history. He is known for his time-tested analytical skills and ability to look past the current noise and herd mentality.
On TheStreet Pro, Kass provides frequent market commentary and investing ideas for active investors throughout each trading day in Doug’s Daily Diary. He also serves as president of Seabreeze Partners Management Inc. Previously, he served as a senior manager at Omega Advisors, a $6 billion investment partnership. He co-authored a book with Ralph Nader and the Center for the Study of Responsive Law called “Citibank: The Ralph Nader Report” and can be found as a guest host on CNBC's "Squawk Box."
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