Investment update 6 August 2018

Last week in the markets

Over the past week Australian shares lost 1% with small company shares falling 0.9%. Shares in developed countries were flat while the US market was up 0.8%. Shares in emerging markets fell 1.7%. The Australian dollar rose 0.1% to 74.04 US cents. The Australian 10-year bond yield increased to 2.73%, with the US 10-year bond yield remaining at 2.95%. The oil price fell 0.3% to 68.49 US dollars per barrel.

Apple becomes the first trillion-dollar company

Last week saw Apple become the first company to reach a market capitalisation (the total value of all its listed shares) of one trillion US dollars.

A trillion US dollars is a large amount of money, that is $1,000,000,000,000! To put this in perspective:

  • If Apple was a country, it would be the 27th richest, just behind Pakistan and ahead of Malaysia.
  • Apple is worth approximately two-thirds of the combined market capitalisation of all of Australia’s listed companies.
  • This amount would buy one billion iPhone Xs.

It’s interesting to note that Apple’s valuation doesn’t appear to be extreme. It’s currently trading at a price to earnings ratio* of about 18.8. Apple has achieved much of the growth in its share price through increasing its earnings.

We’ve had significant exposure to Apple for a long time, helping our members benefit from its share price growth. Apple is currently the sixth largest share-holding in our portfolios. Our appointed fund managers closely watch changing corporate strategies, innovations, and market trends to bring the best results for our members.

Signing off

David Bell | Chief Investment Officer

* The price-earnings ratio (or P/E ratio) measures a company’s share price relative to its earnings. It shows the money investors are willing to pay for each dollar of a company’s earnings. For example, a P/E ratio of 10 would mean an investor is willing to pay $10 for a dollar of earnings.

Past performance isn't necessarily an indicator of future performance.

Data sourced from Bloomberg, NBC News, Trading Economics and Yahoo Finance.