GOOG, Time to buy?

[samhaldeman]

I'm fairly new to Rule #1 investing, though have understood and liked what little I've seen and used of it.

I was just curious about what people thought of Google? I just ran the numbers in roicommunity's free calculator and came up with an MOS of over $1200. Seems pretty good considering that it is trading near $450.

Even better though are the other fundamentals of Rule #1 investing that Phil preaches: a HUGE moat (they have over 65% of the Internet's searches, and just wait until when China opens the Internet fully), interested and passionate management, and a lot of meaning.

What are everyone else's thoughts?

Also, just to share, I'm looking at Walgreen's and CVS, but they are both still pretty pricey.

Sam H

[Straddle]

I haven't done any calculations myself but no way I'm going to pay $450 for just one stock. 50 dollars is the most I'm willing to pay for one stock.

I'll do some calculating on the google stock, when I've got a MOS price calculated for it, I'll be sure to post it here.

[npg]

Company A produces 1000$ cash and a share costs 50$. Company A has issued 10000 shares.
Company B produces 1000$ cash and a share costs 450$. Company B issued 10 shares.

Which one is cheaper?

[Straddle]

Originally Posted by npg

Company A produces 1000$ cash and a share costs 50$. Company A has issued 10000 shares.
Company B produces 1000$ cash and a share costs 450$. Company B issued 10 shares.

Which one is cheaper?

Depends on what you're willing to buy. If you just want some stocks: company A. If you want the whole company: company B.

I'm not sure but I don't think Buffett ever bought a stock at a price so high as the google stock.

[samhaldeman]

Aren't we trying to buy companies here? Wasn't it Buffet who said he olny buys COMPANIES that he'd want to own forever?

Yes, the stock is a lower price, but it isn't cheaper. I don't think Warren is more concerned with the price of something than he is the value.

My MOS is STILL way above the current ticker price. Any one else's?

[npg]

ROFLMAO

[Straddle]

Originally Posted by samhaldeman

Aren't we trying to buy companies here? Wasn't it Buffet who said he olny buys COMPANIES that he'd want to own forever?

Yes, the stock is a lower price, but it isn't cheaper. I don't think Warren is more concerned with the price of something than he is the value.

Sure, but what do U expect the stock to perform in the next years? That it will rise further to $800 of $900? What I've understood from Buffett is that he buys the valuable companies at a low price, a price before the stock starts to rise significantly (e.g. Coca Cola). When I watch this this chart I'd say you're too late. But then again, that's just my opinion. Sure google is a valuable company that will keep increasing, but the stock price is just too high for me at this moment.

[adampepp]

Each share of a company has an intrinsic value (fair value) that we calculate to determine our MOS. At least for looking at dollar value, the actual price of the stock is largely immaterial (history of share buybacks/offerings does offer some insight into management, however).

If the company A has a fair value of $100, and there are 50 outstanding shares, each share has a fair value of $2. Thus, we would consider our 50% MOS of paying $1 a share.

If a company B has a fair value of $100, and there are 10 outstanding shares, each share has a fair value of $10, and our MOS would be $5.

If A and B were the same companies in different dimensions, I'de be just as happy owning 5 shares ($50) in company B vs
owning 25 shares ($50) of company A.
From a value standpoint though, which is what matters, we are buying a company 50% from its intrinsic value in both situations.

[Straddle]

Originally Posted by adampepp

Each share of a company has an intrinsic value (fair value) that we calculate to determine our MOS. At least for looking at dollar value, the actual price of the stock is largely immaterial (history of share buybacks/offerings does offer some insight into management, however).

If the company A has a fair value of $100, and there are 50 outstanding shares, each share has a fair value of $2. Thus, we would consider our 50% MOS of paying $1 a share.

If a company B has a fair value of $100, and there are 10 outstanding shares, each share has a fair value of $10, and our MOS would be $5.

If A and B were the same companies in different dimensions, I'de be just as happy owning 5 shares ($50) in company B vs
owning 25 shares ($50) of company A.
From a value standpoint though, which is what matters, we are buying a company 50% from its intrinsic value in both situations.

Look at it like this: I've got $2000 to invest in either:

stock A: $5 stocks
stock B: $10 stocks

Given it's the same company, I'd go for A stocks, not for B stocks.

[npg]

Originally Posted by Straddle

Look at it like this: I've got $2000 to invest in either:

stock A: $5 stocks
stock B: $10 stocks

Given it's the same company, I'd go for A stocks, not for B stocks.

OMG LOL

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