GOOG, Time to buy?

[Straddle]

Originally Posted by npg

OMG LOL

You cannot be serious? Surely, you are taking the piss....

What's wrong with it according to you? From a business valuation point of view you should consider it as if you were buying the business and not the stock, but when you compare stocks of equal quality (ceteris paribus) its best to pick the stocks with the lowest price. I don't see any reason to pay more dollars for the exact same stock.

[Stockowner]

Has the level of this forum declined recently?

[npg]

Originally Posted by Straddle

What's wrong with it according to you? From a business valuation point of view you should consider it as if you were buying the business and not the stock, but when you compare stocks of equal quality (ceteris paribus) its best to pick the stocks with the lowest price. I don't see any reason to pay more dollars for the exact same stock.

I am perplexed because you ignore the fact that the price depends on the number of shares issued for the company. This has a huge impact on it's valuation. This can make it so that company A trading at 450$ a share can be cheaper than company B trading at $50 a share as explained in an earlier posting.

This is quintessential knowledge. Without it I would not go swim with the sharks.

[samhaldeman]

What does this mean?

Originally Posted by npg

ROFLMAO

[Straddle]

Originally Posted by npg

I am perplexed because you ignore the fact that the price depends on the number of shares issued for the company. This has a huge impact on it's valuation. This can make it so that company A trading at 450$ a share can be cheaper than company B trading at $50 a share as explained in an earlier posting.

Of course that makes company A cheaper to buy then company B in total, but I'm no millionaire who's capable of buying complete companies. I'm just capable of buying a few stocks at a certain price and then sell them years later at a higher price. Now tell me, what stock price is then the most cheap for me to buy, stock A or stock B?

This is quintessential knowledge. Without it I would not go swim with the sharks.

I have a master degree in financial management, and I'm well aware of the variables that explain the volatility of a company its stock price. But as a personal investor I'm mostly interested in maximizing my financial rate of return on a stock investment, which won't be an easy job with a stock I bought at $450. In the books I've red on Buffett his stock investments, he bought most stocks under a value of $100. I can't remember he ever bougt stocks trading above $400 (considering the fact he wouldn't even buy a technology stock like google). The examples Phil Town gives in his book are also mostly stocks he bought at a low value (beneath $150).

[samhaldeman]

You're still concerned with the price of the stock and not the value, though.

Originally Posted by Straddle

Of course that makes company A cheaper to buy then company B in total, but I'm no millionaire who's capable of buying complete companies. I'm just capable of buying a few stocks at a certain price and then sell them years later at a higher price. Now tell me, what stock price is then the most cheap for me to buy, stock A or stock B?



I have a master degree in financial management, and I'm well aware of the variables that explain the volatility of a company its stock price. But as a personal investor I'm mostly interested in maximizing my financial rate of return on a stock investment, which won't be an easy job with a stock I bought at $450. In the books I've red on Buffett his stock investments, he bought most stocks under a value of $100. I can't remember he ever bougt stocks trading above $400 (considering the fact he wouldn't even buy a technology stock like google). The examples Phil Town gives in his book are also mostly stocks he bought at a low value (beneath $150).

[Straddle]

My calculations on this stock:

[Stockowner]

In the books I've red on Buffett his stock investments, he bought most stocks under a value of $100. I can't remember he ever bougt stocks trading above $400 (considering the fact he wouldn't even buy a technology stock like google).

It doesn't matter.

Apple, Google, NVR, Berskshire are all excellent companies, and they are all over 100 dollars per share. In fact, a lot of times, a high share price can be a good thing. It could mean that the managers are not a huge fan of stock splits.
The managent that are the most eager of stock splits often do not mean well.


Based on practical experience, I have often taken more time when I find companies with a high stock price, since they often seem to be of higher quality. But you will find quality companies in all kinds of stock prices. American Eagle has a stock price of 14 dollars. Great company. Berkshire has a stock price of 3,800 dollars. Great company.

Stock splits might make you feel richer, but that's about it. Stock splits are like slicing a pizza in more pieces.

[npg]

Wasn't it one of Charlie Mungers fave jokes?

The one where a guy goes to the pizza parlor and asks the cook to slice the pizza in 4 slices because he could not manage to eat 8.

Same scenario.

[Straddle]

Originally Posted by Stockowner

It doesn't matter.

Apple, Google, NVR, Berskshire are all excellent companies, and they are all over 100 dollars per share. In fact, a lot of times, a high share price can be a good thing. It could mean that the managers are not a huge fan of stock splits.
The managent that are the most eager of stock splits often do not mean well.


Based on practical experience, I have often taken more time when I find companies with a high stock price, since they often seem to be of higher quality. But you will find quality companies in all kinds of stock prices. American Eagle has a stock price of 14 dollars. Great company. Berkshire has a stock price of 3,800 dollars. Great company.

Stock splits might make you feel richer, but that's about it. Stock splits are like slicing a pizza in more pieces.

I'm not talking about stock splits, I'm just looking at it from an individual investor point of making money. U buy stocks at a certain price (P0) and U sell the same stocks at a certain price (P1). You're financial rate of return will be the difference in percents:

(P1-P0)/P0

The lower P0, the higher the rate of return you'll realise. If U buy a stock at $450 and it rises with $30 in value, then you realise 6,67%. If U buy a stock at $20 or $30 that makes the same jump you're return will be over 100%. That's the reason why the lower the price you pay for a stock, the higher you're possible rate of return.