A lot of people believe that Apple’s (NASDAQ:AAPL) growth has to slow down because it is already the most valuable public company in the world. However, in “Yes, Apple Can Double From Here” Raymond Meyers made the case that Apple still has plenty of room to grow. In order to double, however, Apple must create an additional $700 billion of value. An opportunity that large should not require us to squint to see it. The problem is that each of us only sees a piece of the puzzle. By sharing our firsthand experiences, we can all get a clearer picture of where Apple’s next big opportunity lies and perhaps give us all an edge on Wall Street.
Raymond outperformed the top performing mutual fund manager for the last 10 years, in part, by ignoring Wall Street’s numerous recommendations to sell Apple. He is not the only Marketocracy Master to discover that Wall Street is often wrong when it comes to Apple. Marketocracy Masters Eugene Groysman and David Canaan have also outperformed Wall Street, in part because of the way they traded Apple. It is rare to find a stock on which 3 Masters agree.
To beat Wall Street, individual investors have to think differently. (photocredit:... [+]
You can’t beat Wall Street by betting on whether Apple will beat the Street’s expectations each quarter. Wall Street will always have better access to company management than individual investors, so they will always be first in line when any news is disseminated. But even though individual investors are not the first to get the news, there are those among us who have the best judgment to determine what the news means. These judgment calls don’t enable us to make quick scores by buying or selling milliseconds before everyone else. Instead, these judgment calls make money by keeping us in a stock for as long as the company is doing a good job of growing profits by satisfying customers and finding new opportunities.
Wall Street will never be as good as the best individual investors when the game is played this way. Why? Because the people who understand an industry best are those with firsthand experience in the industry. Since most Wall Streeters don’t have firsthand experience in any other industry (but finance), they are at a disadvantage to knowledgeable individual investors when it comes to every other kind of company.
In his book, “One Up On Wall Street”, Peter Lynch said, “Your investor's edge is not something you get from Wall Street experts. It's something you already have. You can outperform the experts if you use your edge by investing in companies or industries you already understand.”
Firsthand research combines Peter Lynch’s insight with this from Mark Twain “It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.”
Asking the right questions of the right people is the key to firsthand stock research. Each of us has an advantage in a part of this investment puzzle. By putting together each of our pieces of the puzzle, we can all gain an advantage over Wall Street.
Here is what I would like to know from people with firsthand experience with these Apple products.
Apple Pay
1) How often do you use Apple Pay?
2) Have you ever been asked to authorize a payment that you thought had already gone through?
3) Is paying via Apple Pay your first choice whenever you have the option? If not, what is your first choice?
Apple TV
1) Other than Apple TV, what sources of content are available to you? Netflix, Hulu, Antenna, Cable TV, Satellite TV, Amazon, Roku, Etc?
2) How often do you use your Apple TV?
3) What is your favorite feature of Apple TV?
Apple Watch (If you have ordered one)
1) Do you wear a watch now?
2) Will you be using it for any medical applications?
3) If the price was 20% higher, would you still have ordered it?
If you would like to help to flesh out the investment case for Apple, you can either post a comment to this article, or send me an email.
Asking the right questions of people with firsthand experience was the “special sauce” that made Firsthand Funds so successful in the late 90’s. Let's see if we can make that formula work for us at Forbes. After all the facts have been laid out, it still takes good judgment to interpret what the facts mean and what to do about it. If you make these judgment calls correctly more often than not, it begins to show itself in your track record after about 5 years.
I know the track records of the three Masters who cover Apple and I would not want to see any of them on the other side of a trade from me any more than I would like to see Warren Buffett himself. By sharing our firsthand experiences, we can provide them with an important set of facts that Wall Street does not have access to. That’s how we can all gain a competitive advantage on Wall Street.
Is anyone game to try?
Raymond Meyers, Eugene Groysman, and David Cannan are Marketocracy Masters whose portfolios are available to clients of Marketocracy’s Separately Managed Account program. You can view their top five holdings, learn more about their strategies by clicking on their names. You can also track their progress with monthly Performance Insights emailed directly to you at the end of each month by visiting our website.
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Disclosure: I am the portfolio manager for mutual and hedge funds advised by Marketocracy Capital Management, an SEC registered investment advisor. Before relying on the opinions expressed in this article, you should assume that Marketocracy, its affiliates, clients, and I have material financial interests in these stocks and may hold or trade them contrary to these opinions when, in our view, market conditions change.
