tzippi: Apostrophes are widely misused. You are correct that the apostrophe should be used for the possessive case. And, by the way, inanimate objects, such as pencils, should rarely be used in the possessive case. “The point of my the pencil is dull”; not “My pencil’s point is dull.”
The apostrophe should also be used in contractions, e.g., don’t vs. dont. The apostrophe signifies that some letters have been omitted, as in “don’t”, which is a contraction of “do not.” I believe the possessive case was indicated in English prior to the 18th century – excuse me, the 55th – only by the possessive pronoun, e.g., “the Rabbi his hat …” which later was contracted to “the Rabbi’s hat ….”