Changes this week saw the world’s biggest company’s share price “plunge” – at least on the surface. In reality, the company had a share split – 7 new shares for every previous one held.
The advantage to this is that it makes Apple’s stock clearly more affordable for investors, particularly those with smaller accounts, providing a broader and increasingly diversified shareholder base, to the World’s largest company.
Apple has been a stellar performer this year – in our Outrageous Predictions we forecast $650 a share (but its not always been such plain sailing for Apple – remember $430 was only a few years back) – Friday’s share split at $645.57 has seen us bang on the money. This is not the first time Apple has split its stock, having done so several times in the past 20 years.
Apple is only one example of higher priced stocks, which have elected to go down this path. Lend Lease (LLC.ax) in Australia is one that spring to mind, going 2:1 from $44 to $22 or thereabouts some years back. Sadly, the current price of AMP is not a result of any share split!
Maverick to Mainstream
Apple’s outcome – lower priced shares in what is a relatively volatile stock – may also pave the way for the once “maverick under-dog” to complete its transition to “mainstream giant”, with a rumoured inclusion in the Dow Jones Index.
When considering Apple’s humble start, 1976 in a garage in Cupertino, California it has been one huge journey. Door to door 2,945 miles from Cupertino to Wall Street to be precise, and each one of them hard fought and not without controversy. At the same time, huge amounts of money have been made by those involved. Staff and shareholders alike, but not the spectators on the sidelines though, reinforcing the view that markets only reward action takers.
But this is no time for nostalgia
Irrespective of Apple and your view on either the stock or the business, the key for you and your overall financial success is to be ready for what comes next. At this morning’s daily strategy meeting, our team are already getting the traps ready for the next opportunity on the right hand side of the trading charts.
From our perspective toward the US, we are focusing on the next round of earnings that are on the horizon and getting closer. The previous season saw us apply the Butterfly strategy, with great results, and this is likely to feature in our trading strategy mix heavily, given the changes to volatility that are expected through the earnings season.
Much has been talked about in regard to the US being overbought and in a bubble – rather than speculate on direction, that shift in volatility – up or down for the market – is what we are looking at, as far as the Butterfly is concerned.
If you have not considered this strategy previously and would like to learn more on the strategy, to be ready for the upcoming earnings season, click here to book a time with one of our advisors.