“I just don’t know how to value them.”
Warren Buffett made this claim about Apple (AAPL) when queried on the tech giant at Berkshire Hathaway’s (BRK-A) annual meeting in May-and it wasn’t the first time he had intimated his AAPL aversion.
More than a year earlier, Buffett said the following: “Even though Apple may have the most wonderful future in the world, I’m not capable of … evaluating that future. I simply look at businesses where I think I have some understanding of what they might look like in five or 10 years.”
In a recent article, I made the claim that AAPL defied traditional valuation techniques. The assertion was criticized by some for its lack of supporting evidence. A primary purpose of this piece is to provide that evidence or, at the very least, proffer a reasoned explanation for AAPL’s “in”-valuable condition. More importantly, based on this condition, the article hopes to convince current and potential AAPL investors to reevaluate (read: SELL) the company as an investment. Buffett has good reasons to stay away, and you do too.
Professional investors generally rely upon two methods to value a company: 1) discounted cash flow (“DCF”) analysis and 2) multiple comparisons. In AAPL’s case, neither is a viable technique.
Full Article: Warren Buffett: Apple Cannot Be Valued