How do you value invest in a stock and buy it ?

When I read PHIL TOWNS RULE#1 book it amazed me how simple this whole valuation thing is. Its all about buying a good wonderful business with lots of margin of safety. Phil Town gives you nuts and bolts, how to search online, use his calculators, and arrive at the value of a company irrespective of the stock price.

No other book including Warren Buffets wisecracks and Mohnish Pabrai's self indulgent " Dhando investor" gives the reader anything. These people keep things to themselves, they never give you methods whereby you can fish on your own.


Here are 3 Stocks that are great businesses as per PHIL TOWN'S book and methods of valuation. Good fundamentals + Technical charts.

STLD ( smaller steel co, good fundamentals)
PCU ( Great valuation momemtum stock etc)
AAPL ( over valued, yet with fiery momemtum and great management, deep moat etc)
 
Quote from day7793:

It seems that way, look at BRK.A and BRK.A what have they done for the stockholders in 2007? This is world's greatest stock right? Its largely a white elephant sucking wind.
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actually it reached the highest value for any stock, ever.
 
Quote from Daal:

actually it reached the highest value for any stock, ever.
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BRK.A VALUATION

I did a valuation on BRK.A and its an undervalued stock. There is 32% margin of safety. My valuation was .68 of the stock PRICE closing yesterday. Now that is one good investment you will say. BRK.B is similiar to it minus the voting rights etc trades around $3900. Draw your own conclusions.
 
Quote from wave:

The original version of the Intelligent Investor that has the charts with rolling eps overlayed is what you want to read as well as Wall Street on Sale by Timothy Vick and Greenblatt's Little Blue book.

Buying good values at depressed prices achieves superior returns over time with relatively low risks.
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Is Greenblatt, Joel Greenblatt the Fibonacci Man?
 
Quote from infolode:

Is Greenblatt, Joel Greenblatt the Fibonacci Man?
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Joel Greenblatt is a Jewish NewYorker, forty something, wrote a book which I read " The little book that beats the market". He is delivering 40% returns for his clients at Gotham Capital as I read.

The book doesn't NOT gives you tools to value companies on your own, it leads you to his website, as if that was the whole point of writing it! The book falls short in many ways, it discusses his magic formula, which is buying businesses with good return on capital and low P/E ratios. But you will be left wondering how does this all works? How can I fish on my own?

In other words, you get his fishing rod and gear and fish with him only.
 
Quote from day7793:

His book " RULE #1 " is the real handbook for small time investors who can evaluate a company and its financial conditions under 5 minutes. Once I got used to his methods I can find all those numbers right off the Internet and arrive at the valuations in freaky number of seconds.
Good Luck
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http://www.amazon.com/Rule-Strategy-Successful-Investing-Minutes/dp/0307336131

99 of 121 people found the following review helpful:
Heavy Hype, March 25, 2006
By G. Pratt (Seattle, Wa United States) - See all my reviews
(REAL NAME)
This book does contain some good basic information on finding stocks. The problem I have with these type of books is when the author throws statements about how he use to make only $4,000.00 a year as a river guide,then he was taught how to invest... I borrowed $1,000, and five years later I was a millionaire. He does not tell you how that $1,000 made him a millionaire. I guess he wants you to believe "Rule #1" made him the millionaire, by the way, Rule #1 is - don't lose money.The author strives for at least a 16.0% return on your investment, but on page 18 he shows a bar chart showing what $10,000 invested from 1965-2005 would return if you used Buffett's Rule #1 Average return 23.3% as opposed to the S&P(9%) or DJIA(8%). Theres no back testing or other data to confirm this simple looking chart. On the back flap of the book it states the author addresses half a million people a year at the nation's largest touring success seminars. If only he comes out with a second book telling how that $1000 was turned into a million dollars...
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Pick whats good for you, leave the rest. Don't bitch and moan what you get from it, cause it will empower you where many books and authors have failed or held back real knowledge.
 
http://www.amazon.com/gp/product/cu...=books&customer-reviews.start=1#RFYUD2RI8BMT7
1 of 2 people found the following review helpful:
Clever Nonsense..., August 18, 2007
By John Connors - See all my reviews
(REAL NAME)
The brilliance of this book is that the author offers some good (though unoriginal) information and makes references to Graham and Buffet. But then offers a "method" that is unproven and unrealistic. So he sounds reasonable and legitimate, while offering little that is worthwhile.

Basically, he recommends looking for stocks that have 10 prior years of perfect financial ratios and for which you can predict another 10 years of the same. And then buying when the price is 50% lower than it should be. TA-DA! You're rich. Why didn't I think of this? Hey, maybe I'll write a similar book about real estate investing. Become a millionaire in one day by finding a really nice 2 million dollar property that's selling for 50% off. Buy it for 1 million and then sell it the next day for 2 million!

He also recommends against diversification. He feels that that once you find a great company, why dilute your potential earnings? Well, most people realize that nothing is foolproof. Having all your eggs in one (or even just a few) baskets is a terrible idea.

Another odd thing is that after finding this gem of a stock, he suggests using technical indicators to move in and out of it over the long term. Well, if technical indicators really worked, there would be a lot more wealthy day traders around. And if we could predict the price movement of stocks using these indicators, why bother searching for a perfect stock? Why not just use these indicators to become rich instead of going to all that trouble? And I never quite understood why you would hold the stock and move in and out of it after the price rose to a point where it no longer met the original criteria. Or, if you can trade in this stock when it is no longer at half price, why can't you buy some other stock that's not at half price? Apparently, once you have a relationship with a stock, the original criteria are no longer important.

Despite the attempt to use their names to legitimize his method, I'm sure that neither Buffet or Graham would be in favor of this kind of speculation. And they certainly wouldn't think that anyone, especially a novice investor, could predict the next 10 years of earnings for a company, as the book suggests they can. The "professionals" have an extremely poor track record of predicting earnings for even 1 year. Anything more than that is pure fantasy. And of course, the author offers no evidence that his method works. Or that it has worked for him in the past. I'm betting the way he went from $1,000 to $1,000,000 is from selling this book.
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