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☕ Apple: Don’t say I didn’t warn you

Feb 12, 2025

Good morning! 👋

The markets are giving up some ground as I type after a “hotter” than expected inflation reading – meaning it was higher than most economists surveyed to come up with this nonsense predicted.

News flash.

Economists, as the old joke goes, are notoriously so unreliable that they make weather forecasters look good. 🤦‍

You and I don’t need a fancy pants survey to tell us that inflation continues to wreak havoc especially when it comes to things like eggs, many groceries, medicine, insurance, education and so on.

I can’t speak for our wallets, but this is a totally fixable problem from an investing standpoint if you're buying companies that are increasing margins, boosting profits and have higher returns to scale than the rate at which inflation is robbing us blind.

Btw and if you’re interested, my friend and mentor, the super-sharp Dr. Mark Mobius, penned a fascinating book you should read on the subject, The Inflation Myth and the Wonderful World of Deflation. Then, to really drive the point home, he sat down for an exclusive interview with the One Bar Ahead® Family in the March 2021 issue.

Buy the best, ignore the rest!

Here’s my playbook.

1 – CVS pops, should you buy it?

CVS shares are jumping faster than a caffeinated kangaroo this morning on the heels of a double, meaning a top and bottom line beat. (Read)

Strong guidance helps, of course.

Should you buy it?

That depends on how you see the company’s future.

CVS is trying to move on from a downright terrible 2024 that saw management cut forecasts several times, the closure of more than 1,100 stores, a change in CEOs and rising costs related to the company's Medicare Advantage business, a privately run version of the Fed’s Medicaid primarily for those 65+.

I think there’s bigger fish to fry, but that’s just me.

Keith’s Investing Tip: CVS could be a great choice if you’re content with something that will probably just “chug along.” Not so much if you want a choice that’ll really cook, though. Investing isn’t just about picking stuff that’ll get by, you have to constantly weigh the opportunity cost of what you don’t buy against the stuff you do. 😏

2 – Apple: Don’t say I didn’t warn you

Apple has launched its first major long-term research health study in 5 years to determine how devices can monitor and predict user health. (Read)

Mark my words and to a point I have made for more than a decade… the time is coming when Apple devices are routinely classified as medical devices.

Imagine the margins when your doctor prescribes one!

That $629 charge for an emergency room Band-Aid is going to look tame!

Only you – as an investor – are going to get paid for it.

Right now, Apple sells watches and devices at premium consumer prices. But slap a medical device label on ‘em, and suddenly, insurance and hospitals are footing the bill. That means much higher pricing power—just look at how a $50 medical brace costs $500 when sold through the healthcare system.

Once Apple gets FDA approval for its health-tracking features (like atrial fibrillation detection, glucose monitoring, and fall detection), doctors will prescribe Apple Watches instead of just recommending ‘em.

Which, I bet you dimes to dollars, is why they’re doing the study in the first place but something that will be very, very carefully held close to the vest.

Insurance, Medicare, and Medicaid will cover part or all of the cost, meaning Apple gets paid no matter what—just like pharmaceutical companies do.

Apple’s ecosystem already locks people in – something that we’ve talked about many times over - but the healthcare angle introduces a subscription-based model for real-time health monitoring.

Expect AppleCare+ for Health—a monthly service for medical-grade monitoring, AI-driven diagnostics, and direct doctor integration. Plus, hospitals and clinics will license Apple’s health software, just like they do with Epic or Cerner.

Three thoughts…

One… You’d best think about buying Apple or adding to it.

Two… Couple that with a choice like my favorite cyber security company because all that information is gonna attract the hack squad like a cold popsicle attracts kids on a hot summer day.

And three… we are very rapidly approaching a point in time where you’ll eat an extra donut in the morning only to watch your healthcare premiums go up that afternoon. 🤦

3 – Karp Live!

Palantir CEO Alex Karp is holding a live AMA today at 12:00pm EST exclusively on X.

I can’t wait.

Meanwhile, here’s my two cents from last Friday and a conversation with the fabulous Liz Claman. (Watch)

4 – Buffett goes shopping, exactly as I said he would

I told you in no uncertain terms a while back that Unka Warren would be shopping because he – like us, loves a bargain - not running for cover when oil prices and oil stocks dipped.

Guess what?

He did.

Files show that Buffett’s been buying Occidental (after the 30% sell off) and now owns 28.2% of the company, making Berkshire Hathaway its largest shareholder. (Read)

If you still don’t get it, do me a favor… hold your tablet or your phone… whatever you are reading this on... and smack yourself in the forehead once or twice until you do.

I’m joking of course, but not by much.

You make your money on down days, not chasing hot stocks, furus, and clickbait.

My favorite oil stock, btw, has beaten Occidental over the past 1, 3, and 5 year periods… which is exactly why I own it.

Hopefully you’re doing something similar. If not and you’d like a shot at upping your game, I’d love to toss my hat in the ring. I’ll be here if that’s of interest.

5 – Saddle up: NYSE Texas

The NYSE announced Wednesday that one of its electronic exchanges, NYSE Chicago, will reincorporate in Texas and be renamed NYSE Texas, giving companies an option to list their stocks in the Lone Star state. (Read)

I can’t say I am surprised given the number of companies looking for a business-friendly home base.

Ours included.

Politicians the world over still don’t get it but investors like us understand with absolutely clarity… money is like water and will always flow to where it is treated best.

Speaking of which and if you’re an OBAer, please check your email for a Special Alert I sent out earlier today. Or login via the portal. Take action and, of course, break out your victory dance if you like. I am. 🕺💯