To pick up on John’s idea, there are indeed various degrees of failure…

I used RIMM as an example of swift up and down, but then of course there are examples like Microsoft (a very famous 30-year chart indeed). Given how many here trade options, if what happened to Microsoft, happens to Apple, any bullish calls would be wiped. Common would survive, if 0% growth is the way to go.

IBM… Excellent example! First, I think there is a higher chance Apple will be another 100-plus year corporations. However, as Horace and others point out, very few corporations reached that mark, and the life expectancy seems to be shrinking, not growing. (It’s curious how it compares to our own life expectancy, which is growing due to advances in medicine). For IBM, I don’t have a 100-year chart (anyone?) but even if you just look on Google Finance from about ‘78, there are long spells of stagnation or worse (‘83 to ‘93, 2000 to ‘06). And there we are talking about a corporation with many lines of business, spanning corporate computing, personal computing, and last but not least services.

Apple’s products can all be displayed on the table… Plenty of risks for low-end disruption. Also, legal, regulatory, leadership change, and so on and so forth. In fact, one of my prerequisites for the thesis of continued growth in Apple in the next 5-10-20 years is disrupting new industries (TV, and then some!) I’m counting on Tim & Co to do so.

Edit: clarification

One of the most interesting topics I’ve read for a while here, so thanks to the contributors so far. It’s certainly got me thinking…  When I think of companies who have past their heyday, and those who manage to succeed for the long haul, I’m hit by thoughts of inflection points driven by market or segment dominance. Let me try to talk this through…

IBM was dominant in its field in the 80’s/90’s, but sensed decline coming as its momentum waned. It spotted it, it extended and then reinvented itself, it will run strong for many years to come.

Microsoft wasn’t quite so forward looking. It achieved dominance but arguably spotted it’s pending decline a little too late. Arrogance ruled. It is now running desperately to extend and reinvent, but it may or may not succeed as it seems still not to fully accept its vulnerability.

Google is still in its position of dominance in its main field - search. But it is losing momentum and history suggests loss of momentum creates vulnerability. Upstarts are looking more threatening (Siri, Bing, others) and the number and power of these threats is likely to increase.

RIMM had dominance in its chosen field, and is the best example of failed momentum creating vulnerability. Their day is largely done I believe.

Apple had its dominance in the MP3 space, and has extended itself (not reinvented, but certainly invented new aspects of itself) impeccably to push into phones and tablets. It is nowhere near dominance in either field, nor Mac, and the markets are growing explosively. I don’t see lack of momentum, in fact it seems to be accelerating.  Moreover, everything we know about the heart and soul of Apple tells me that it has absolutely no interest in standing still or slowing down.  All said, Apple in its current form is the least likely company I can think of to face the historical “process of decline” we’ve seen elsewhere.

I agree all good things eventually come to an end. The question is how long is eventually. I’m watching extremely closely as I’m a holder for 10 years with plenty invested, but for the next 2-3 years at least I think I’ll be sleeping just fine at night.

Disney hasn’t come to an end.

Neither has IBM.

Or The Company You Keep(tm).

Or John Deere.

Let’s not get too presumptuous.

Roman, what I think you are describing as the collective sentiment of WS, is what happens when I get on a ladder to clean rain gutters.  The ladder is newer, very secure, but long.  Although I have never fallen, the higher I go, the more shrill the warnings about this and that.

I’m not even going to try to rationalize why Apple is different.  It doesn’t matter when people (investors) are dealing with their money.  They may concoct all kinds of models that show the fair value of AAPL is xxx, but once AAPL gets to the third floor, emotions take over.  It doesn’t matter what your history on the ladder has been, or how secure the foundation, heights scare.

I can buy that as one of several factors holding AAPL back.  It may even be the predominant factor, but I don’t care.  In the next 2 - 3 years I intend to enrich myself, with AAPL, to such a degree that, just like Bill and Melinda Gates, I will never concern myself with where my, or my descendants, next meal comes from.

My only concern about AAPL’s valuation is how I can use it reliably to make intelligent investment decisions.  That has been difficult for the past 3 years.  But long before Apple goes flat, the world economy, and Apple’s performance (relative to guidance) will greatly improve.

In the next five years (I will be 70) it is my goal to accumulate 100,000 shares of AAPL, and a corresponding amount of cash.  Will I accomplish that goal?  I don’t know, but I do know that if you don’t plan for it, it will never happen.  I’m planning for it.

LongAAPLsince02 - 28 January 2012 05:26 PM

One of the most interesting topics I’ve read for a while here, so thanks to the contributors so far. It’s certainly got me thinking…  When I think of companies who have past their heyday, and those who manage to succeed for the long haul, I’m hit by thoughts of inflection points driven by market or segment dominance. Let me try to talk this through…..

Declines of any firm, no matter how large or dominant, always comes down to management.  In the case of IBM the problem was the founder’s son (Watson, Jr) and their practice of promoting from within.  In the case of MSFT, the problem is Ballmer, GM’s problem was just about everyone from 1970 forward.  The list goes on with the railroad industry as a whole, when they failed to see themselves as transportation companies, but instead saw themselves as ‘railroad’ companies.  Xerox never understood that it was more than a copier manufacturer.  With its PARC facility they could have owned the computing/networking industry 30 years ago.  Northern Telecom saw itself as a telephone company central office equipment manufacturer (they were the world’s largest for 100 years), and failed to recognize the significance of TCP/IP.

With no effort you can expand this list 10 fold: Palm, Apple (under Scully), RIMM, Motorola, Nokia, Sony, Singer, Kodak, Packard-Bell, etc.  In every case it was leadership that allowed the competition to catch up, then surpass their previously dominant technology.

In present day Apple’s case, I think Jobs went to great lengths to institutionalize INNOVATION, and a willingness to kill its own, in favor of a superior technology/product.

So while I can understand WS’s fear of heights, in Apple’s case (as long as Cook is CEO anyway) they don’t have much to worry about.

Hey I always thought of you as Patrick.  The smart young sidekick in Bikini Bottom.  Your age and ambitions explain a great deal about your smart insights.

My goal is to get less then 3% of your target and I can live comfortably for the rest of my life.  My kids will need to learn to be financially independed on their own.

omacvi - 28 January 2012 06:56 PM

Hey I always thought of you as Patrick.  The smart young sidekick in Bikini Bottom.  Your age and ambitions explain a great deal about your smart insights.

My goal is to get less then 3% of your target and I can live comfortably for the rest of my life.  My kids will need to learn to be financially independed on their own.

My daughter’s great ambition is to be a museum curator, not the most demanded profession on the planet.  I have been teaching her investing so that she can work at what she wants, not what she has too.

Great comments today from the AFB crew.

Wow Greg, that’s an awesome goal! Hope your ambition/goals can rub off on us. 

    cheers to the longs
        JohnG

Gregg Thurman - 28 January 2012 07:00 PM

omacvi - 28 January 2012 06:56 PM

Hey I always thought of you as Patrick.  The smart young sidekick in Bikini Bottom.  Your age and ambitions explain a great deal about your smart insights.

My goal is to get less then 3% of your target and I can live comfortably for the rest of my life.  My kids will need to learn to be financially independed on their own.

My daughter’s great ambition is to be a museum curator, not the most demanded profession on the planet.  I have been teaching her investing so that she can work at what she wants, not what she has too.

Gregg, as someone who works extensively with museum curators and gallerists here in the US and abroad, I can’t tell you how happy it makes me to read that you’re showing your daughter a way to be finanically independent. Until one gets to the upper echelons of curatorial practice (I’m talking the august institutions or auction houses of NYC or London) it’s very hard to make a good living as a curator given that one actually has to live in a place like NYC or London while making one’s teeth. (Or they have to sacrifice alot, like a stable family life.) Young curators I work with fall into four camps (generalizing here, but it’s close): they’re content to live on the relative pittance they’re paid as junior curators or curatorial assistants; they’re starving Art History grad students; their spouses make a lot of money; or daddy’s a senior partner at Goldman Sachs. (Nothing wrong with that, by the way.) I have taught studio art at the graduate level and one of my spiels that often goes unheeded is that they need to find a way to finance their life as artists/curators. (Learning how to invest and AAPL has done that for me.) It’s fine to be a starving artist at some point in your life, but it can’t last.

Best of luck to your daughter.

johnG - 28 January 2012 10:55 PM

Great comments today from the AFB crew.

Wow Greg, that’s an awesome goal! Hope your ambition/goals can rub off on us. 

    cheers to the longs
        JohnG

I think getting the shares won’t be so hard with my strategy to acquire (and finance acquisition) shares down’ require an ever increasing amount of cash.  In fact, after the first cycle it requires no further cash injection at all.

The cash side will be imminently more difficult.

Given this is an earnings and P/E discussion I just wanted to bring it to everyone’s attention (although I strongly suspect you all already know) that AMZN reports on Tuesday.  I’m wondering how the Kindle Fire will affect their earnings (negatively).  Will a look at their numbers provide another boost to AAPL in comparison…anyone have thoughts on what the ripple effect may be?

PS Love, love, love what you are doing with your daughter Gregg.  I am trying to do the same with mine…and then I have a son that needs to learn this as well once I am done with her. 
I just think this is the only way for these kids to pursue their dreams in other areas and I know it will be personally more fulfilling for them to do so in their lives. Again, love what you’re doing….good luck to you.

Phoebear611 - 29 January 2012 07:29 AM

Given this is an earnings and P/E discussion I just wanted to bring it to everyone’s attention (although I strongly suspect you all already know) that AMZN reports on Tuesday.  I’m wondering how the Kindle Fire will affect their earnings (negatively).  Will a look at their numbers provide another boost to AAPL in comparison…anyone have thoughts on what the ripple effect may be?

PS Love, love, love what you are doing with your daughter Gregg.  I am trying to do the same with mine…and then I have a son that needs to learn this as well once I am done with her. 
I just think this is the only way for these kids to pursue their dreams in other areas and I know it will be personally more fulfilling for them to do so in their lives. Again, love what you’re doing….good luck to you.

Thanks.  My employment career was made up of four year cycles doing jobs I didn’t particularly like, until I discovered investing using options.  I now do what I love (antique cars) and don’t worry about that generating a living for me.  The freedom feels incredibly good.