Tim Ferriss and Seth Godin recently sat down to talk about Godin’s rules, principles, obsessions, and managing life. In their conversation, Godin mentioned that he makes daily predictions and then, a year later, he will revisit those predictions to see how right or wrong he was.
The exercise, he claims, is designed to create more confidence, faith, and trust in your thoughts, decision making ability, and ideas. This ultimately helps the entrepreneurial process for executing on ideas and believing in oneself.
We all make predictions every day. If we take the time to write our predictions down, we can measure our thoughts, and get crucial feedback into our own thought processes.
Also inspired in part by Matt Cutts’ TED Talk about trying something new for 30 days, I’ve decided to combine the two ideas and commit to sharing 30 predictions with you over the next 30 days.
One month after the 30 days ends, I will go back and revisit the outcome of each prediction, and quantify the results if possible. Some of my predictions might not be fully realized, but hopefully I can begin to learn more about my predictive abilities and thought processes in the meantime.
By posting the outcomes (across Linkedin, Medium, and my investment vehicle’s website - AudibleVentures.co), I want to expose myself to feedback and learn more humility. I am also hoping that it will ignite conversations between myself, my colleagues, and peers. Maybe it will help unite the next founder, employee, business partner, investor, client, friend, soul mate.
Here are my rules for my 365 Predictions:
- I must have one prediction a day
- If I miss a day, or two, then I need to make two predictions
- I cannot repeat a prediction (if I do, I am probably losing creativity)
- I cannot adjust predictions (I want to accept what my gut proclaims)
- Each prediction must have a measurable outcome
With that, here’s Prediction #1:
Apple, Inc stock is extremely undervalued and is going to at least see gains of 20% in the next 1-2 years.
Here’s my logic:
The stock is currently trading at $105.67 (since editing this piece it has gone up to $111.12) with a P/E ratio of 11.22. For a company that spits off $50 billion in cash each year, this is crazy low. In comparison, Netflix, trades at about $93/share with a P/E ratio of 350 a share. Simple terms this means that investors are willing to pay $11 for $1 of Apple earnings. Vs. $350 dollars for $1 of Netflix earnings.
High P/E ratios are attributed to high earnings growth and future earning potential. Companies that show slower growth potential and market satiation have an price-earnings ratio between 10-25. 10 P/E is about as low as you can get if you are a company making good profits and earnings (in my opinion).
While Apple is big - sorry, HUGE- you might be questioning, “how much bigger can it get?” Apple is a cultural icon/brand with true loyalists, they create virtuous loops of user engagement, purchasing, and sharing with friends and family - which transcends into new products. It’s the Christopher Nolan film Inception (2010) for consumerism.
Furthermore, If Apple wants to move into a new industry and truly grow, they have $177 Billion in cash reserves to “help” them buy into new industries as they like. Logically, as the stock price goes up, so does the P/E at this point. It’s nearly impossible for Apple to go below 10 P/E, but they could easily go to 20, 30, or even 50 P/E, if and when they tap into new products (like virtual reality, cars, etc.) and industries (automobiles, virtual reality, tv’s, content, etc.).
What do you think Will Apple see the stock growth I’m predicting, or not (note in the the last 3 days of the market being opened the stock has increased by nearly 5%)?
Shoot me an email with your predictions and join me on this 30-day journey.