Episode 4: Apple’s Stock Split, The Lost Episode

This recording was recorded and edited on August of 2020 but due to a $500 emergency, my laptop crashed, the audo file was lost and never posted. Transcripts are automatically generated.

Unknown Speaker 0:18
Welcome to the pocket change investments podcast. I’m your host Basheer And today, I am going to follow up and update give you an update on what’s going on with Apple stock. And it’ll this will serve as the first update to our August 7 blog post where we basically told you what was going on with the Apple stock split and how it was going to happen. And full disclosure. I’m not a financial advisor, I am not a licensed financial practitioner, you know, I just like talking finances, and it’s just something that I enjoy. And to be perfectly honest, you do not need a license to talk about finance. And until they require me to have a license to just talk about finance.

I’m going to continue on this podcast. So I think all that to say that. in that article, I made a slight mistake. And it was just an assumption. And that I made I said on August the 24th, that when the market closed, the Apple stock would split into four parts on that day of August 24, which I was wrong. And I’m not ashamed to say that I’m wrong. I’m not. I don’t have too big of an ego where I would think that it’s a problem to admit that I was wrong. So today is August 25. And I just realized, looking at my account last night and then this morning waiting for the pre market trading to begin that I still had one share my one share of Apple will still hold so I apologize about that.

But I’m not going to update the article, I will add a note to it. That states that I was incorrect On that note, but it was a honest assumption and an innocent assumption because within Apple’s sec filing, I read it wrong and made the assumption that when the stock split began, which was scheduled to begin on August, the 24th. At close of business day, I assumed that they would actually do the split, then however, it appears that the split has be done, the split is on and Apple is actually they are doing the backend work because I obviously don’t see anything with the share of that I purchased.

And that’s part of the reason why I actually bought a share stock because I’ve never actually watched and monitor a stock split before I have own stocks that have done a split. And I have owned stocks that have done reverse splits. But I’ve never actually paid attention to the exact process because I’m not the type of person who checked my stocks every day, I’m more likely to just glance at them, I don’t watch them with that fine tooth comb, where

Unknown Speaker 3:26
I watch every stock within maybe the five portfolios that I have, I don’t or five brokerages that I have. And each has a portfolio. So I don’t watch my stocks that closely to actually know the process. And I just made an assumption in the gap on that one. So more than likely, when Apple opens for trading on the 30th. You can still trade the stock apparently, that you will see that split actually take effect right now they are doing the backend stuff to make sure that that happens. So I apologize for that. But another update for our article. A lot has been going on since the August 7 article in full disclosure, like I said, I’m not going to update the information within the article I will add notes.

But since I started writing the article on July 30, when Apple announced the stock split, and I really finished up the article until August 7 and that’s what it was completely finished proof read and fact checked and then posted to the web page. In between that time as I mentioned before I actually purchased a share of apple and the first update to that article wouldn’t be that. in that article. I constantly quoted a $411 stock price, which was accurate at the time but by the time I looked up On August 5, I seen that the stock had advanced to $437. And just being that knee deep inside of the apple world reading all of their financial statements, and all of the interviews and all of the news about Apple, I finally looked up and decided, you know, let me buy a share of stock.

So I can see how this plays out. And also, I wanted to buy it because I realized how fast the price was moving. So I did buy a share of apple and I bought a share of Apple stock. So you didn’t have to I not the type person that will recommend you buy any stock or tell you not to buy any stock. But within that article, I did tell you that if you were going to buy the stock to buy before the ex dividend date, which was the closer market on August the 10th, if you did that you were like me, you were able to participate in the August 13 dividend issuance. Because as a share owner, you are entitled to a dividend payment.

So I’d like to congratulate everybody who could actually afford to buy the Apple stock and actually did buy the Apple stock or bought a partial share before the ex dividend date and actually got to participate in that. And if you did not Don’t feel bad, you can live vicariously through me. Well, not through me to live vicariously through the pocket change investments and investment account and walk you through it.

Unknown Speaker 6:44
So that dividend that was issued on the 13th, that was a 82 cent dividend, and it was Apple’s third dividend payment of the year, which obviously happened in August. But if you know anything about stocks or dividends, you know that generally dividends are paid quarterly. So apple in this case, paid a dividend and February they paid a dividend and may and then they paid the dividend in August, which was my first Apple dividend since investing, and then they will pay another dividend and November, all these dividends should be 82 cents, however, and if you own Apple since January and hold it till December, you should have a payment of $3.28 per share. 82 cents times four is $3.28. Generally, people buy stocks and $100 blocks.

And I wouldn’t say most people buy Apple shares and $100 blocks. But if you worked for a large investment bank or any type of entity or were super rich or something like that, you would be able to buy apple and 100 share blocks. And generally, that’s the way stocks are brought in. So I wouldn’t suggest it. I wouldn’t do it, I can’t afford to. But an example of if you had 100 chairs, your dividend payment for the year would be $328. of just dividends a year. And that’s why people invest in stock, not only do you get to participate in the price appreciation of the stock, if the stock pays a dividend, you actually can benefit from just holding on to the stock. And a lot of people use that as a retirement strategy. They buy a stock and they live off the dividend.

They don’t ever sell the stock when they take the withdrawal from their account, they just withdraw the dividend income. And you know, depending on how much money you make per year, your dividends could be your dividends could be taxed at a lower rate than your actual income. So that’s why we have a lot of, you know, CEOs who prefer to get paid in stock rather than in cash because with the capital gains tax the way it is right now, you could be receiving a 15% tax on your dividend income versus maybe a 30 to 4050 whatever the top tier income tax rate is that’s what you would be charged on any type of lottery winning or any type of income that you were paid from a job or contracting. If you were to instead get that same amount paid to you in dividends, you would only have to A 15%. But let’s get back to Apple.

Unknown Speaker 10:03
Apple is has just been very excited, and it’s been on a tear. And it feels like every time that I decide to do a podcast, or just the recap of what has happened with the Apple stock, and you know, another article comes out, I mean, first it was Apple, they got into a little controversy with the makers of the fortnight game where they had pulled an actual game from their app store, because the game maker decided not to process his end games payments through apple or allow Apple to process those end game payments and take a percentage of it. And Apple says they’re doing it to help the consumer not get scammed or ripped off by, you know, anybody who just creates an app and wants to charge them money and could steal their credit.

The Game Maker say that Apple is being unfair, because they are adding a surcharge and taking money out of their pockets when they can, you know, literally push the game out to their consumers. And, you know, get all of that ad revenue, all of that, in game purchase money to themselves if they go directly to the customer. So it’s a little dispute right there. And that’s when I first decided to update the article. And then we had a historic moment happened. And the historic moment was Apple’s stock price reached a level of $400.67. And what is so important about that number, is that because Apple has 4.27 5 billion shares outstanding, their market cap became so big that they became technically the largest American company.

And Apple is just really a huge company. And it’s been growing very fast. Seemed, quote where he said that the Apple stock itself is up 70% on the year. And that’s that’s just surprising when you look at the 52 week price. variation between Apple I mean, the 52, week low is $201. And very recently, the stock has been up to about $513. So Apple has just really just been on a tear. And to give you an example of how fast the price is moving, like I said, when I was writing my article, Apple stock price was at $411. And then when I looked up to double check my fingers double check my numbers, I realized that, you know, the price had gone up to $437 by August the fifth.

So that’s July 30 to early August the fifth, you know, that’s a massive jump for stock. But by August the 18th when I went to go do my first update of you know what’s going on, I wanted to tell you about how the dividend played out on the 13th. You know, 13th was on Friday. And you know, when the market open, I wanted to I was happy I was ready to podcast, I was ready to get going. And then I looked at the stock price. And I seen it the stock price was $462.25 was was really, really shocking. It made me happy that I actually pulled the trigger on my stock trading actually brought the share $400 isn’t nothing to scoff at. And I wouldn’t advise anybody to just go out and buy a $400 stock they’re much cheaper stocks, easier ways to get into investing. And I just think that $400 If this is your first investment or if you don’t own

Unknown Speaker 13:56
a couple of stocks already that $400 is a big commitment to throw in one stock just in case you know the market crashes or something you don’t want to lose your all of your money because you have all your eggs in the one basket known as the Apple stock. So I do advise against just run out and buy an apple but if you are a member of any brokerage that allows you to buy partial shares, I see no problem with buying, you know, a couple of dollars worth of apple. I’ve done that several times because this is it. This actually isn’t my first time buying Apple stock. I was lucky enough to buy Apple stock for under $100 and about 2016 maybe 2017 It was during the August flash crash. You can Google that I don’t have my actual account history up here but I bought it for under $100. And at the time I sold it for under $200 which 2020 hindsight and it is 2020 so no pun intended, but 2020 hindsight Looking at, you know, my cell from 2020, my 2018 2017 cell of Apple, it was ill advised.

So it’s important to realize that I don’t regret it. But it’s important to realize that when you buy stock, you don’t actually make a profit, or you don’t actually lose money until you actually sell the stock, because as long as you hold on to the stock, it could still go up more, or it can go down more unfortunately, I was in a situation where, you know, I had some money tied up, and I wanted to make another trade. And I felt really, really good about earning, you know, good $60 off of, you know, Apple stock, which was known to be in the 100 to $200 range, I don’t think it was even at 200 at the time, but I sold it. And then it went up to 200. As I stated before, if you were to buy Apple stocks, 52 weeks from today, you probably could have gotten it at $201 a share. And just this year, if they don’t want to tear I mean, it’s up to 500 right now, and that’s I think that’s insane.

But, you know, like I said, back in 2016 2017, whenever I bought that, I really got to research, when I look that up, I’ll have that information for you on part two of this episode. But back then I didn’t, I thought $500 for Apple stock was outrageous, and insane and impossible. But here we are today in 2020. And the stock is at 513. And not too long ago, it was at 200. So I hate to keep repeating that, but you never know what a stock is going to do. So if you come across your pop your profit, you might just want to take that profit, or you might just want to sit on it, maybe I didn’t really need the money. But I wanted to make another trade and I just thought Apple was getting too expensive and was overvalued. And that’s just a personal opinion, because nobody knows what a stock is worth.

But that was around the time when Apple was at a $1 trillion market cap. And everybody thought that that was high Apple was actually one of the first companies to reach that $1 trillion market capitalization rate. And I’m gonna tell you what market capitalization is, if you don’t know, a market cap is the number of outstanding shares. So Apple has 4.27 5 billion shares of stock on one of those the number of outstanding shares multiplied by the current share price and Apple will remain and the $2 trillion market capitalization rate up until its price goes below $467.77. So as long as Apple and market cap does change with the stock price, so if Apple was to go down to $100, the market cap will go back down to

Unknown Speaker 18:14
the true 1 trillion. It’s funny that I’m saying like 1 trillion like it’s like I can swap it out, it’s 1 trillion is nothing to scoff at. But if Apple price stock price was to go down below $100 per share before to split, then Apple market cap will no longer be $2 trillion, it will probably be within the $1 trillion range are really flirting with that $1 trillion valuation of the whole company. So that’s how we got market capitalization is basically how we value stocks. And if you want to compare a company to another company or anything, you can compare their profits, you can compare them by the amount of employees. But if you are an investor, the market cap is a great way to compare two companies because if you want to compare profits, obviously if you are in the oil trade versus you know, selling computers versus selling food, the profit will vary. I mean, you you’re bringing all this money, but you might not make a whole lot of profit on your profit margin, maybe like 2% if you’re in a grocery store business, but if you are in another business, you may get a 10% profit margin.

So you really can’t can compare companies in different sectors and different types of businesses easily just by how much money they’re making. You can really compare the health of the company but it’s hard to do that and that’s why market cap is so important because you take the total value of the number of shares and the number of shares outstanding and you can literally look at our fruit company and compare it to Apple is a well, Apple’s obviously their company, not because they have more factories not because they have more employees, but because they have more stock and their stock is valued higher their total amount of stock outstanding is by higher than whatever company you compare them to. So, that’s how you do apples to apples. No pun intended comparison to stocks. But back to Apple’s market cap. I wanted to do the article as soon as possible, because today, just today as I was finishing up my recording from the 24th, just to tell you about, you know, everything that had happened.

I seen a news article and the news article stated that Apple has grown so large, that just its price movement alone and the stock split has caused the Dow Jones Industrial Average, the Dow Jones Industrial Average the DGA EIA, to essentially just you know, kick out sales force Amgen, and sorry, kick out Exxon, Pfizer, and Raytheon, which are really large companies. I think all of those are excellent. I’ve actually, I’ve invested in each one of those companies. I don’t think I’ve helped Pfizer in the last five years, but they kicked them out of the index. And the reason why they kicked them out of the Dow Jones Industrial index was because Apple had gotten so big as a company that it was messing up the ratios between the index because the Dow Jones index is only supposed to be 23.1%, technology companies and Apple have become about 12% of the Dow Jones Industrial index.

So they pretty much outgrew the index and was stretching it and, you know, messing up the percentages of the holdings within those, the Dow 30, the 30 stocks within the Dow was messing up the percentages of the holdings within that metric. And that was really important. When you talk about metrics metrics, it’s like market cap, it’s a good way to gauge the health of your investments. And if you don’t know, the Dow is a collection of 30 stocks. Each of the 30 stocks are 30 of the largest stocks traded on the American Stock Exchange. That the NASDAQ the New York Stock Exchange, both of those indexes, if they are the largest companies, they are what’s called a blue chip stocks is made up of 30 blue chip stocks, and

Unknown Speaker 22:55
they call them blue chips. Because if you’re a poker player, you know, Blue Chips are the highest denomination of poker chips. So the ideal is that the Dow Jones Industrial index, they took the 30 biggest companies the most valuable companies that are traded in America and they piled them all together and then they decided, you know, what percentage of each market sector you know, you have industrials, consumers, you have all types of ways you can separate and classify companies and their stock. So, they took those 30 stocks, and then they decided that they want to make sure that those 30 stocks represented the market sec, the total market, and they want to keep that ratio of the different stocks within the Dow Jones Industrial Average.

They want to keep them pretty much the same because you want to be able to take the Dow Jones Industrial Average today and compare it to 30 years from now even if they change out the stocks, one of the stocks gets delisted or gets added and in this case, they kicked out Exxon, they kicked out Raytheon because energy is not a popular stock sector right now. You know, we’re transitioning away from a lot of that dirty fuels, coal and oil. gasoline is still here. heating oil is still big, but you know, we’re transitioning to that we have nuclear power. We have electric cars. Raytheon is uh, they work within the military industrial complex. They create a lot of, you know, industrial equipment and basically kicked out Exxon and Raytheon, and then Pfizer.

Pfizer is a pharmaceutical company, so they kick those out to make room for apples larger size and then they bought in Salesforce, to make up for the space that Apple wasn’t taking up because Apple eschewed the ratio. So they brought it in Salesforce, which is an awesome company. They born in Amgen to better replace the pharmaceutical company Pfizer. And then they brought in Honeywell, which makes heating components. But they also do a lot of things within the military industrial complex, they are an industrial company. So they bought in Honeywell to replace Raytheon. So they just swapped a couple things out. But the metrics that make up the Dow was the same. So Apple just got so big that they like, broke the index.

And because they broke the index, they forced a change to the Dow Jones. And this is very rare that they, you know, kick out three companies or add another three companies, you know, this quick to keep the number at 30. But it’s just Apple stock split forced them to do that, because just they had to keep that same ratio of stocks and types of stocks within the index. And one of the big differences between the Dow Jones and the s&p 500, the s&p 500, or mega cap, blue chip stocks, they’re just really, really large, really, really huge. And the Dow is made up of stocks, you know, you find some crossover in between. But the difference between the Dow and the s&p is that the Dow is weighted by price.

So when Apple cut his stock price, and for that, really throughout the Dow, the Dow out of weight and its waiting was all wacky so they had to, you know, fix it, they have to do some maintenance, but the s&p 500 is weighted by market cap, which we just talked about. So it there. And it’s just no comparison right now to how big of a company Apple is. Apple is just huge. I’ve read yesterday that Apple’s market cap technically makes it bigger than Saudi Aramco and Saudi Aramco is the state owned Saudi Arabian oil company. And I also read that

Unknown Speaker 27:21
Apple, this apple stock, the company, market cap, is larger than all 100 of the largest companies in Europe. And that’s compared as comparison to comparing apples market cap to the market cap of the FTSE 100 as the UK footsie 100, and the footsie 100, at the time of printing was $2.16 trillion. And Apple, at the time was a pre market going for about $513 a share. So that put its market capitalization at 2.2 trillion. So you just got a massive company, Apple’s like the largest company right now. And nobody is really messing with this stock, it’s on a tear, it’s doing really, really good. And I don’t want to sound like I’m going to infomercial for Apple, but this is pocket change investments.

And I like to, you know, do the heavy lifting, so you don’t have to, but a lot of people get confused with the name pocket change investments. And I just want to let you know that I’m not talking about penny stocks here. I only talk about no large index, blue chip stocks. So I’m talking about reputable things. And right now, at this moment, all the buzz, the most reputable stock out there is Apple because all of the things they’re doing, and they just seem to be doing everything right at the moment. But that’s not to say that Apple is a good investment. I want to stress that I don’t like to advertise my investments. I don’t like to advertise or talk about really particular companies, because sometimes people take that as Oh, yeah, this is the stock I heard him talking about or, and I talked about Apple, and I’m just like, Yo Apple is so great.

And everybody’s, you know, hearing this and I can persuade you into I don’t want to persuade you into buying any stock, especially not apple. I’m actually kind of against it. As I said earlier, I thought that it’s overvalued. But there was a learning moment. It was a teaching moment where I decided that, you know, I didn’t know enough about stock splits, not to buy Apple so I had to buy Apple to see what happened and I wanted to share that information with you. And while I was writing the article, I had a great, great fun. Writing the article I learned a lot did a whole lot of research, as you can see from today’s podcast is a lot of information to take in and it’s really well They’ve really taken information if you don’t have anything tangible, or if you’re using all of these abstract terms.

So I actually felt that, you know, this one time, in this particular case, I would buy one share of apple. And then I can actually talk about Apple from this moment in time. And just like that first blog post, I present to you a snapshot of exactly what’s going on with Apple stock. And better inform you about investing in general, but more specifically investing in stock and stock splits. And what’s going on with Apple, we even got a little bit of into the makeup of the Dow Jones and what an index is, so if you enjoyed this tune in again, I will be doing a part two very soon, I am waiting for August the 30th. When Apple does the split, however, I may have to postpone that episode till at least the first I’m not sure and I’m not gonna put my foot in my mouth because I do not know how that stock split is going to shake up.

And I did not want to have to do a revision and apology like I did at the beginning of this episode. So stay tuned, I will let you know what happened with the Apple stock post split we are right now and mid split, which the split was scheduled to happen at 4pm on August the 24th. Today is August the 25th. And your next update will be coming to you on August the 30th when Apple was completely done their split. And I have reviewed my account and made sure that I have something to report. Thank you for listening. Have a great day. If you don’t already follow us, follow us like our page, do what you got to do. Support. I am the budget for this. So right now spending money out of my pocket. I don’t have any sponsors. I’m not trying to push you anything more. You’re not trying to sell anything or you’re not a guru. I just like talking finance, log on to the pocket change Facebook group and join the conversation and like the pocket change investments just follow us all over social media. Thank you Have a great day.

Unknown Speaker 32:22
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