 Good day, fellow investors. Welcome to the stock market news with a long-term fundamental twist. Today's topics are, of course, Apple reaching 1 billion. Then, how there is a difference between the SAP 500, what's going on in the United States, China and Europe at the moment in the economy, we'll discuss what's going on with the economy in the US and then we'll discuss what's going on with the economy in Europe. There are a lot of divergences and that's something very interesting to look at from an investing perspective. So, let's start to talk about Apple and what is there that is a long-term fundamental lesson for investors. So, Apple, I wrote an article I think April 2016 saying that Apple is a good long-term buy and I was even long Apple at around 100. So, now Apple has more than doubled from the low 90 that it hit, I think it was somewhere in 2016. What happened there? How come that such a big company goes from 90 to 210 in just two and a half years? So, the key here is that Apple in 2016 was valued as a cash cow as a declining stock because everybody was scared about declining iPhone sales. Today, things haven't changed that much but Apple is valued differently and is valued as a growth stock. Today, earnings are $11.6 per share, 2015 that was the result that was used to calculate 2016 earnings were 9. something. So, there is just a 20% difference in earnings per share. However, then the valuation was 10 and that was a big buy for me because of the Apple cycle, iPhone cycle and now the valuation is already 18. something and earnings have increased and you have a double in the stock price and that's the investing lesson. If you can find those stocks that are misunderstood by the market by far because the downside for the iPhone from the ecosystem that Apple was building then was not that big and it was just a temporary. Always remember Wall Street looks one, two, three quarters max ahead. So, then we had Wall Street very negative about the next subsequent quarters and you have seen Apple stock drop to 90. Now, we have Wall Street very positive, very positive on revenue from services, positive on iPhones, stable outlooks and now everybody's bullish and Apple is raising that valuation going from 10 now to 18 and if Apple gets a normal market valuation then we'll see Apple at 300 maybe even 400 because peers have similar valuations. Google has a price earnings ratio of 53, Microsoft has a price earnings ratio of 50, Procter and Gamble compare that to Apple has a price earnings ratio of 22. So, there is plenty more upside for Apple if it gets valued as a normal market stock but that really shows how market perception has a huge impact on the stock even if the fundamentals are still there. 2016 Apple was a cash producing machine now Apple is a cash producing machine the stock has doubled. So, same things just a little bit a little small shift in perception and the stock explodes. So, you have to buy when Wall Street is negative about something and then hold until the trend if you see that the trend can shift that the sentiment can go from negative to positive especially on such stocks that have stable production stable outlooks they are strong cash producing machines. Will I invest in Apple 18 price earnings ratio if I look at the growth revenue growth over the last few years hasn't been that strong so there will be a slow grower somehow I feel especially if there comes a recession that hits iPhone sales still then it is let's say the risk reward isn't that attractive for me I prefer better risk rewards however I'm saying Apple can go to 300 400 in let's say a crazy environment where things just continue as they are and people start comparing it to Microsoft Google etc. On the SAP 500 index everything well especially Apple gave it the boost this week and the five days change is again very very positive however trade wars Trump announcing more constrictions really those trade wars hit again the Shanghai composite index so in China stocks went down 4.63% it seems like the market doesn't see a connection between China and US stocks in the US things all well everything goes up in China they are everybody scared that those stocks will do badly in the trade war and that's something very interesting what's the difference between China and the United States when it comes to the stock market on one hand everybody is positive in the United States we have good economic data will now check what the Fed has to say and on the other hand in China people are looking at a different way because still the economy is growing everything is going good but stocks go down how come that there is such an imbalance globally everything on the global scale is inter-colar related if something goes bad in China America will suffer too Europe will suffer too that's inevitable in today's world let's see a bit deeper so the Federal Reserve issued its statement and they say that the economy has continued to strengthen the labor market has continued to strengthen everything has been raising at a strong rate job gains have been strong fixed investment has grown strongly so everything is strong strong strong strong this means that probably they will hike rates as always so they have the power to hike rates as the economy is very strong even with slowly raising rates that's their policy so we can expect another hike in September and then perhaps another hike in December the GDP very very good best in almost four years this quarter unemployment extremely good below four percent fixed investment still very positive and fast consumers and consumer spending extremely growing everybody's very very confident however we have seen Shanghai if we switch to Europe things aren't that good in Europe but sentiment in still strong let's see what's going on in Europe this is very interesting look this is the correlation between the European stock market and the US stock market the blue line is the SAP 500 and you can see how stocks were almost perfectly correlated up till 2009 2010 and then they strongly diverged European stocks are up what 25 percent on this chart while the SAP 500 is up more than 120 percent huge divergence and you can see the correlation here it was very high up till 0.8 one is perfect correlation and now we are below 0.4 so extremely uncorrelated so that's another sign how the US market keeps pushing forward while others are not doing that good eurozone GDP also came below expected so declining GDP growth as we can see here over the last two quarters per country the troubled countries are seeing slower growth Spain is growing slower Italy is growing extremely slow again 0.15 so that's very very slow not 1.5 0.15 which means that the troubled countries might lead to more trouble however consumer confidence and consumers always base what they're doing on the past on the availability of credit on cheap money is still very very high and has never been so high in the past decades so the message here is that those balances those correlations that are not will somehow rebalance themselves in the long term similarly to what apple was cheap in the beginning now it's getting more and more expensive the good will become more expensive the bad will become cheap that's how it goes in the market so as an investor you have to just see okay what's undervalued buy it for a nice yield has apple had a great yield two years ago and then wait for the market to recognize that quality and that yield it might take time for you to find such stocks but just give it time and you start building a long term portfolio over time you find here somewhere you find there somewhere and then you have a great portfolio that's what i'm doing that's what i'm doing with my model portfolio and my stock market research platform so check it out in the link in the description below if you're interested for more i want to finish with something very very nice i found this chart that shows the largest company by market capitalization in each year for the past what seven years it has been of course apple that has hit now one billion one trillion sorry and but before that it was for a slow time petro china it did even hit one trillion in 2007 or 2008 i think then axon with higher oil prices was the largest company before that hmm general electric and then they started doing lots of buybacks and now we all know what happened to them microsoft in the bubble was the biggest company general electric before that again and then again axon in the 1990s beginning early 1990s so all those things can change a few years someone is up then someone is down and who knows who will be the next largest company in the world that's one you want to be invested in investing in the biggest it's always a little bit risky thank you for watching looking forward to your comments about this divergence in global markets shanghai down s ep 500 up europe economic weak data as always from europe even if all the money printing so what do you think will go on in the next five 10 years how will this balance out i'll see you in the next video