Investing in Apple is the equivalent of investing in the financial death of America. Apple Inc. paid an income tax rate of only 1.9 percent on its earnings outside the U.S. in its latest fiscal year, a regulatory filing by the company shows. The world's most valuable company paid $713 million in tax on foreign earnings of $36.8 billion in the fiscal year ended Sept. 29, according to the financial statement filed on Oct. 31. The foreign earnings were up 53 percent from fiscal 2011, when Apple earned $24 billion outside the U.S. and paid income tax of 2.5 percent on it. The tech giant's foreign tax rate compares with the general U.S. corporate tax rate of 35 percent. Apple may pay some income taxes on its profit to the country in which it sells its products, but it minimizes them by using various accounting moves to shift profits to countries with low tax rates. For example the strategy known as "Double Irish With a Dutch Sandwich," routes profits through Irish and Dutch subsidiaries and then to the Caribbean. Other multinational corporations also use such tax techniques, which are legal. Like other big companies, Apple leaves cash overseas. If it brought it home to the U.S., it would have to pay U.S. corporate taxes on the money. The cash that Apple has left overseas as of Sept. 29 has mounted to a stunning $82.6 billion, up from $74 billion as of June 30.
Well guess I glad I just thought about investing in AAPL instead of actually doing it. Although if it keeps dropping maybe I will jump in.
Apple has successfully avoided paying any significant amount of taxes since before Obama hit puberty.
http://www.usatoday.com/story/tech/2013/01/14/apple-demand-future-innovation/1827607/ Stock plunge woes Apple needs a new game-changing product to nudge the stock. Shares of Apple have drooped about 29% since they hit an all-time high of $705.07 last year. Investors are concerned Apple can't keep growing at the same rate without consuming another industry. The big problem is, Apple has run up against the law of numbers: To grow on a significant percentage basis -— Wall Street's quarterly fix — requires massive growth. "They fight the law of large numbers — the company will need to go to new markets" to keep growth up, says Edward Jones analyst Bill Kreher. "There's a lot of concern about innovation and what Jobs brought to the table." Without a new invention, Apple needs to sell an ever-increasing number of iPhones and iPads. "They've had such a fabulous run. It's just hard to sustain such high growth once you get that big," says Richard Sloan, a professor at the University of California at Berkeley. "Apple was sort of the king of the glamour stocks since about 2009 with increased visibility on increased sales in iPhone and iPad." The run, at this rate, had to end. "Everyone thinks this is going to be a flat quarter" compared with a year ago, Sloan says. ... Still, both television makers and content owners are on notice that next in line is a game-changing TV. Rumors are rampant Apple will do just that — to be followed by more years of fat sales, burgeoning market share and investment by Apple. But some signs point in another direction. Studios and cable providers have made it clear they don't want to work with Apple and would prefer to create their own business models, notes Keith Bachman of BMO Capital Markets. "We remain skeptical on Apple's eventual foray into TVs," he wrote last week to clients. "We think this will be a niche market opportunity for Apple." Needham & Company analyst Charles Wolf concurred. "I frankly would be surprised if they launched a TV," he says. "The economics of a TV are so difficult. It's low-margin; the upgrade cycle is really slow."
Yeah, nice! Just saw this today. So is there a reason you avoid these? If you think in general these are a bad buy then do you like selling far OTM options?
I only buy options in the direction of the perceived trend. So in this case, when you brought it up, I would have been looking at buying puts instead of calls (although I wouldn't have had the balls to go with puts against aapl, so I wouldn't have actually bought them here). But I avoid far OTM calls and puts. There are a couple reasons why I do. One reason is that you're purely paying for time premium. There is no intrinsic value, so you're just paying for the time / extrinsic value. Which means even if you guess the direction of the underlying stock correctly, you can still lose all of your money if you get the amount of the direction wrong. Second... with OTM calls, you're also paying a premium on the implied volatility since there is a volatility "smile" that makes far OTM options even more expensive. The problem with this is that if the underlying stock starts moving up, the implied volatility of your call option will drop and make your option worth less. Implied volatility is what is used in the Black-Scholes equation to value options. So you may have guess the stock direction correct, and the amount of the direction, but if you over paid for implied volatility, you can still lose all of your money. When I sell options, I usually only sell slightly OTM calls, but I do it by selling vertical call spreads. I do this because of the implied volatility issues I mentioned above. I realize there is the draw of the high leverage with deep OTM options, but if you take a look at the delta on ITM options, you still get a lot of leverage. For example, January 2014 the at-money calls on AAPL have a delta of 0.54, which gives you about a 4.5X leverage. That is still pretty high and removes some of the implied volatility concerns.
Apple's stock always takes a nice tumble before an earnings call. Their P/E ratio is half that of their major competitors, and there's talk of some stock manipulation happening with the recent "cutting hardware orders in half" story where the number they supposedly cut in half was exactly double their normal order (65 million units down to 37.5 million where a normal quarter for them is 30-40 million units). I really don't like Apple stock right now, because it's such a target. The company is doing fine, but the stock is being ridden like the a prom date.
I'm kind of joking. I enjoy reading seekingalpha for entertainment, but damn some of those guys write some terrible stuff that makes me just shake my head.
