Rule #1 Finance Blog
stock market basics
REVALUING GOOGLE AND WHOLE FOODS
Two of Phil Town's favorite businesses have turned in less than expected
growth rates for earnings, which prompted fund managers to dump stock in
both of them. WFMI dropped from $80 to $64 (-20%) and Google dropped
from $460 to $350 (-24%). If you are using tools either on MSN or
Investools (or wherever), you just paid for whatever they cost by
avoiding taking these horrendous losses. We were out of Google at $440
and out of WFMI at $77. Lovely. But now what? These are both
wonderful businesses, but now what are they worth?
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
GETTING OUT OF GOOG: A REMINDER WHY THE ARROWS MATTER
Phil Town just posted this in the comments, in response to someone who wasn’t ready for the GOOG drop. Thought I’d put it here too so everyone can read it.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
Remember the post I made about Shopper's Disease? Here's the followup. I'm posting this reader's letter because I think a lot of you have been doing the same…
RULE #1 WARNING: BEWARE OF SHOPPER’S DISEASE!
I get a lot of questions from people asking how many businesses they should be in compared to how much they have overall to invest. The letter that follows is from someone who came down with a case of what I call "Shopper's Disease" — the desire to be in a bunch of businesses instead of only one.
Hello! It's been a while since I've written but let me tell you what's been going on. I have bought/sold a handful of stocks and I think I've learned some lessons. I've been acting on emotions; therefore, I'm down about $150 (invested $3500 total)! But… it might be the best $150 I've spent because I think I got the hang of how things work when a little patience is involved and hopefully I got a few things out of my system. I'm sure there are a lot of beginners out there that buy and as soon as the stock starts going down, they panic and sell. That's what I've been doing. Not to mention it cost me $7 for every buy and sell I do on Scottrade! As it turns out, if I would have held everything I initally purchased the end of October and the beginnning of November, I would be up! But no… I had to buy/sell, buy/sell, etc… you get the picture.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
SHAREHOLDERS ARE BUSINESS OWNERS
Stephen Bainbridge, a corporate law professor at UCLA, is proposing that state law be amended to reflect his position on corporate management: specifically that we ‘shareholders‘ are not owners of the business at all and certainly do not need to be treated as such.
You can imagine how — as I see myself as a owner of several businesses — it is more than a bit disconcerting to discover that my shares only represent some sort of claim on the equity of the business and are not in any real world sense a claim of ownership.
Actually, what the professor is encouraging is a pretty accurate reflection on how we owners are treated by most CEOs and boards, and his view represents a paradigm that we owners need to overthrow. We need to see ourselves as owners in every sense and then force boards and managers to see us that way, too.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
While I’m cooking up a new post, check out the Festival of Frugality on Free Money Finance. Finding places to save money is a good way to start…
I get asked sometimes, like in this letter below, if my book is going to show you how to do this investing stuff… but only if you buy the tools to make sense out of it.
Come on, I wouldn’t do that to you guys.
My book is going to show you how to invest using free tools. I really want everyone to be able to do this without going for a specific set of tools, ya know.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
WHY RULE #1 INVESTORS DON’T WORRY ABOUT INFLATION
This article about the Federal Reserve Bankers worrying about inflation (submitted by Tom Vandenbosch of Grand Rapids, MI) brings up questions: should we rethink our positions in the market, or ignore the warnings of the bank inflation fighters and keep investing as if nothing is going on?
The answer is this: Buy only wonderful businesses at attractive prices.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
MORE IN INVESTOOLS SEARCH PARAMETERS
Building upon this earlier post about searching for Rule #1 companies on Investools, here’s an email that came in last week from Jon. The parameters he’s using may be helpful to others using the software to research Rule #1 companies.
Phil,
I was reading your recent post on searching using InvesTools. I did a similar type of search this weekend. I used the prosearch and these parameters:
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
MAYBE THIS BUD ISN’T FOR ME AFTER ALL!
Dinesh read my post on BUD and had some questions that deserve a
deeper look on my part. His biggest concern is that debt is rising
faster than sales and EPS, and that the business has been buying back
its own stock for ten years – which raises the issue of whether it’s been
undervalued all that time, or if managment has been playing a game with our
money.
First let’s take at his email, and then I’ll post my response to his research at the end.
Hello Phil,
I am regular reader of your Blog and am thankful and grateful for sharing your knowledge so generously with all.
I have a question. I am trying to understand if BUD is YUMMMMy or MMMM.
You mentioned BUD is good buy. Supposedly Warren Buffet also bought. However I have some doubts. Could you please explain. I checked 10 years summary on MSN.
From tables it is clear that company’s Long Term Debt is growing at higher rate than Sales and Net Income. EPS is growing but at the same time number of shares outstanding is reducing.Why would any company buy back its shares for 10 consecutive years? Was it undervalued for so long? If we say that company was using extra cash wisely then why debt was rising? I am really confused here. Could you throw some light please.
Thanks & Regards,
Dinesh
Excellent questions so let’s dig in and see if we can get to an
answer. I might have to dump this thing if Dinesh’s concerns turn out
to be valid:
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.