Apple has been on a tear for a decade now. In 2016 you could have bought shares for $23 and today they are worth north of $335. That is a nearly 30% gain per year for ten years. How much of that growth has been organic in the sense of tracking the growth of the business? I'd say about half. Earnings have increase from almost $2.10/sh in 2016 to between $8.70-9.00 this year for an annual growth rate of just under 16%. Most of the remaining difference is explained by PE expansion. While the PE ratio in 2016 was in a trough of around 12-13 times earnings, the current PE of ~37 is near all time highs. I'm glad Buffett trimmed Apple when he did, especially since we hold some in our brokerage account, but I'm wondering if it isn't time for us to trim our holdings? While I don't think Apple will dip to a PE of 12 again unless the bottom falls out of the world economy, it could easily slip to 25 or lower without much more than a dampening of investor enthusiasm. That risks a loss of a third of its value should the war drag on, inflation continue to spike, or consumer spending take a well deserved break. While sales growth has been steady for the last decade, at above 8% per year, a big chunk of the growth in earnings has come from improved margins and stock buybacks, not block buster sales. I would not count on continuing margin growth as the solution for a 33% haircut should it happen.

Is anyone else getting concerned about valuations here?

PP