GOOG, Time to buy?

[Stockowner]

Wasn't it one of Charlie Mungers fave jokes?

Yes, I think so too.

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.

No, no. It doesn't work like that.

Take for instance NVR. Today it moved 1,67 percent downwards. So the stock price was reduced by 9.50 dollars.

UnitedHealth moved 1,94 percent downwards. So the stock price was reduced by 0.59 dollars.

Berkshire moved up 0,75 percent, which means that 29 dollars was added to the stock price.

Maybe it would be easier to double your money if you bought a 1 dollar stock, but honestly I don't know.

The essence is that the percentage gain or loss dominates over the stock price. The rise and fall in a stock price is adjusted to the percentage.

[tombrown1]

Straddle, I don't mean to pile on here, but you need to read some basic books about investing. If you cannot grasp this concept then your financial future is in dire straits. Be sure to reread all of the posts in this thread. There are some very smart people responding to you, and they are right.

[Straddle]

Originally Posted by tombrown1

Straddle, I don't mean to pile on here, but you need to read some basic books about investing. If you cannot grasp this concept then your financial future is in dire straits. Be sure to reread all of the posts in this thread. There are some very smart people responding to you, and they are right.

I've red the posts in this thread and I don't see any reason to change my vision on buying stocks at low prices (in absolute terms). I'm not saying it's impossible to do great investments on stocks bought at prices over $400, but in the books I've red so far I can't remember any value investors doing that. The stocks Buffett bought were prices much lower, just like the examples in Phil Town's book. If U're sure the google stocks are worth so much, than I'm not going to stop U from buying them but I'll rather go for cheaper stocks.

[Stockowner]

I've red the posts in this thread and I don't see any reason to change my vision on buying stocks at low prices

It's not our problem. It's your money. So go ahead and do what you want.

It's one of those things I love about investing. I will always buy, sell or hold because of my own conviction, and it is my money. I am responsible only to myself.

We are simply pointing out that your assumption is false and that it bears little logic.

[Sparty]

This has to be one of the funniest posts I have ever read.

Please, please, please go back and read the Rule #1 sections about owning a lemonade stand. (Starting in Chapter Six I think).

[tzoom84]

I'd like to revive the original question if everyone doesn't mind. I didn't see a clear answer since it branched from the stock $ discussion (not that digressions aren't bad...)

I'll give it a (pathetic) shot... Going back to the 8/4, 8/5 timeframe, I decided to take a look at some of the fundamental / technical results.

Fundamentals:
Assume the $1200 MOS that sam and straddle both came to. (I also got arond that range). Granted, it may seem a bit bloated given the extremely high growth rates lately. Although, they seem to now be in a downward trend from 5+ yr to 1 yr.

Technicals:
MA: On 8/5, both the price and the 10-day MA was at ~480, with an upward cross to occur. = good
Stochastic (slow, 14-5): Also on 8/5, the stochastic was passing the EMA at the 15th percentile. = good
MACD (8-17-9): The 8-17 MACD teetered around the 9-day EMA until 8/4 when it went upward. = good
Three signs seem to say go on around 8/5.

To be honest, I haven't invested in GOOG, so I don't know much about the management these days. The main thing that concerns me is that the historical (split-adjusted) prices for the last 2 years have been consistently in the same general region, aside from the one bubble from Oct-Dec 2007. In other words, an investment back in ~October 2006 would only have given a ~2% annual ROI to date. (Now of course, I'm sure some indicators in Dec 2007 would have screamed, GET OUT, back then giving a much higher ROI)

To me it if management is solid, it seems to be something worth investing into for a tech stock. But I've only started learning about the market ... 2 weeks ago. So please, tear this apart so I can learn. :)

[tombrown1]

Phil's tools will whipsaw you a lot.

[tzoom84]

I think I notice some of that 'whipsaw' between February and mid-April for google. Assuming the fundamental growth analysis stayed the same, the technical indicators would be what says to buy back into google anytime after Google's drop at the start of 2008.

With that, it looks like between feb and april, the 3 indicators I mentioned above would trigger a buy on 2/8, 3/12 (slightly), and 4/16, with a few times saying to sell as well. Seems like a lot of bouncing around, but could be just the way the tools are set up. I guess thats where the true "yes-brainer" thought process comes into play hard. In any case I bet seeing that many 'indicators' can be nerve-wracking...

[npg]

In most cases that nervousness comes from inexperience. Over time that should settle.

If you hold on to a good company for a reasonably long time frame you will do well and beat the returns you can expect from a fixed savings account. Even if you did not get to purchase at rock bottom prices.

All the people I know that save do well financially. It's blatantly obvious but a lot of people forget how important this is in order to achieve financial independence.

[Gunnski]

If you wait. You will be able to get into GOOG at a much better price. It is going down for awhile.