Jose Najarro

So then they grab the profits of the iPhone and then they say, okay, I'm going to reinvest those and I'm going to reinvest them in headphones.

That was a highly profitable endeavor with huge returns of reinvested capital.

And then all of those earnings that you're receiving from all these business segments are being reinvested into new projects and new endeavors that have high returns.

As individuals, that's very difficult to do.

So essentially, when you're looking at a business and valuing it, you can't ignore the capital allocation piece, what they want to do with their cash flows, what they can realistically do with their cash flows.

And at the end of the day, that's what determines whether you're going to be compounding returns in the future or not.

So to go back to your question, the motivation was very personal in trying to kind of break that paradigm and shed more light on this understated and underappreciated reality that many value investors know, but even though they know it, they don't necessarily express it in the right way or all the time.

And so I just kind of wanted to put my little grain of salt out there.

And that's kind of a huge motivation for me.

Exactly.

And then eventually they started to return cash flow through buybacks, which so far has been a good decision.

We'll see how it goes in the future.

But that's important, right?

Because if instead of doing the buybacks and the reinvesting in internal projects, they would have gone and done a huge acquisition and buy

inventing here, but they would have bought Dell, for example, or at some point Elon Musk wanted them to buy Tesla, for example.

But they're doing it and acquisitions typically happen at a huge premium relative to the capital that's needed to create that underlying business.

Then your returns on invested capital are going to be low.

And so that's a temptation that many businesses have and that fall through.

And then thankfully, Apple didn't.

And that's why they are where they are in part.