Inside The Bedokian’s Portfolio is an intermittent series where I will reveal what is actually inside our investment portfolio, one company/bond/REIT/ETF at a time. In each post I will talk a bit about the counter, why I had selected it and what lies ahead in the future.
For this round, I shall talk about one of the most iconic technological lifestyle brands in the shape of a bitten fruit. Yes, you guessed it, Apple (ticker: AAPL).
Tech And Lifestyle Giant
From its garage days when it was first founded back in 1976, Apple is now a tech giant that provides a huge ecosystem comprising of its hardware (MacBooks, iPhones, Apple Watch, etc.), software (Mac OS, iOS, etc.) and content (Apple TV+). Other than being a technological company, Apple had developed into a lifestyle one, too. Owning and using an Apple device is seen as hip and a form of status symbol, and the products’ good design further strengthened those impressions. However, not all Apple users chose it simply because they wanted to be seen with one, but perhaps for other reasons such as better specifications and ease of use.
From my investment strategy research back in 2013/2014, I had identified four counters that a U.S. market newbie can start with, and Apple was one of them (on top of the S&P 500 ETF and Berkshire Hathaway which I shared earlier). I viewed Apple as one of the leading representatives in U.S. technological innovation and being one of the global brands with a huge loyal following.
Apple was seen as revolutionary in their approach to products and services, but it gradually turned to evolutionary as the initial “wow” factor was fizzling out. They are fighting their competitors on multiple fronts; on hardware (against HP, Lenovo, etc. for computers and Samsung, Huawei, etc. for mobile devices), software (versus Microsoft and Android) and services (Spotify for music, Netflix for content, etc.).
Since the first quarter of Apple’s fiscal year 2012, the mobile hardware segment, i.e. iPhones, had dominated its revenue source, ranging from 40-ish to almost 70 percent1. In the past there were countless mobile phones touted as the “iPhone killer” but none had really made its mark. However, serious challengers had risen in recent years, such as the recent Samsung Galaxy S20, and these models could sway swing users of iPhones. Depending on the proportion of the swing on a macro scale, this may cause income fluctuations for Apple.
Still, the user base is substantial; according to an Apple press release in early 2020, there were about 1.5 billion installed base of active Apple devices2. Using a rough assumption, if we equate one device for each user, that translates to about 20% of the current world population.
Nevertheless, we can never doubt the strength of Apple as a brand. A number of brand ranking sites placed the company among the top few, if not first, of their lists. Coupled that with user loyalty (e.g. the Apple fans) and the earlier-mentioned lifestyle icon, it will be around and relevant for at least the next decade.
Bought Apple at:
USD 94.25, June 2014
USD 96.00, August 2014
USD 99.41, September 2014
USD 93.20, April 2016
USD 149.36, January 2019
1 – Share of Apple’s revenue by product category from the 1st quarter of 2012 to the 2nd quarter of 2020. Statista. 3 Jul 2020. https://www.statista.com/statistics/382260/segments-share-revenue-of-apple/ (accessed 18 Jul 2020)
2 – Apple Reports Record First Quarter Results. Apple. 28 Jan 2020. https://www.apple.com/newsroom/2020/01/apple-reports-record-first-quarter-results/ (accessed 18 Jul 2020)