iWatch: inevitable innovation

A client asked about Apple stock. It is concerning as it keeps on dropping.

Many big funds are bailing out. Why? They got hurt, and they don't like their positions. They don't really have special insights as to how Apple as a business will do in the next 5-10 years. They herd on the way up and on the way down, along with wall street analysts.

Apple's cash hoard is huge. But how to return the cash to investors isn't a big issue. Apple may need it for product development, supply chain investment, or acquisitions. Increasing dividends from 2% to 4% or 6% does nothing to creating enterprise value.

Key will be product innovations. Sometimes the leader can be out-done by imitators or by new technologies. I have enough faith in the company to think that they'll stand still or lose their touch.

I don't want to speculate what's coming next, but something that would extend its iOS ecosystem will come to the market sooner or later.

iWatch appears to be very believable. Let me link to a nice article that says that iWatch fits Jonathan Ivy's definition of "inevitable innovation." From here, you start to see a closer link to the iPayment service that one day will deal away with cash and cards.

And, how about iCar?  Evidence:



However, news like these do very little for AAPL stock these days. Bad news get reflected, good news don't. This has to be the best time to buy AAPL shares and wait.

I have to agree with Barry Ritholtz on his take that Wall Street probably never understood Apple, although his use of the term "law of large number" is ridiculous.