By Peter Mastrantuono
Apple is the world’s most valuable publicly traded company, rising in two short years from a valuation of $1 trillion in 2018 to $2 trillion in 2020, according to CNBC. From 2011, Apple stock has appreciated 764%, outperforming the S&P 500’s 183% return during the same period.
Along the way, Apple has provided three key lessons for stock investors.
- Ignore the Noise
The ascent to the top was not a straight line for Apple. Over the last decade, the company faced many challenges, including the loss of its founder, the legendary Steve Jobs, questions about its ability to match past product successes, like the iPad or iPhone, and challenges with sourcing and distribution, especially in relation to its business in China.
Each of those concerns often had the experts wondering if Apple’s best days were behind it. Certainly, reasons could be found at any time over the last decade for avoiding the stock.
However, as Warren Buffet remarked when he added 75 million shares to his Apple stake in 2018, “the idea that you’re going to spend loads of time trying to guess how many iPhone X… are going to be sold in a three-month period totally misses the point. Nobody buys a farm based on whether they think it’s going to rain next year. They buy it because they think it’s a good investment over 10 or 20 years.”
Moral of the Story: If you like the company, don’t pay attention to the experts obsessing over next quarter results.
2. Management Matters
When Tim Cook took over the helm of Apple, it seemed like a daunting task to live up to the legacy left by Steve Jobs. Nevertheless, Cook was up to the task, pushing Apple forward with successes like streamlining production and inventory management, overseeing the introduction of Apple Watch, Air Pods and Apple Services, which includes the App Store and Apple Pay, among other service lines.
Revenues under Cook have more than doubled, putting to rest the criticism that he was just an operations guy.
Moral of the Story: Senior leadership has an outsize impact on long-term business results, making great leadership a precondition for a successful long-term investment.
3. Look for an Innovative Culture
The pace of economic disruption has never been faster, and it’s only accelerating. Products, services and business models are subject to rapid changes that reward creative and innovative organizations. Gone are the days of the buy-and-forget-about it stock, like Exxon or AT&T. A failure to innovate translates into the failure to survive.
Moral of the Story: Invest in companies with a culture of innovation for they will be the ones that best adapt to and thrive in an ever-changing landscape.
Discovering companies that can sustain success, like Apple, is a difficult undertaking for most investors, but with the help of an experienced financial advisor, investors may be better positioned to find exceptional investments that can help them reach their financial goals.
Peter Mastrantuono is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Peter worked for over 30 years in the wealth management industry, focusing on retirement planning, investing, asset allocation and financial planning.