By:
On:
In: Commentary, Content for book owners
With: 0 Comments

I have had a few people ask me for a quick tutorial on how to calculate the free shares using the GOPM method (Grow on Other People’s Money). I teach this system in my book, The Confident Investor. I describe the technique in that book but maybe a few more examples are helpful.

Since this tutorial is only interesting to the readers of my book, only those registered readers will see the rest of this article. If you haven’t read my book, The Confident Investor, then you may not understand how you can have free trades based on GOPM. In fact, if you haven’t purchased the book and registered here on this site as a book owner then you won’t be able to see these additional examples. If you have registered and cannot see the balance of this article, make sure you are logged in and refresh your browser.

Which brings me to the big set of questions. Shouldn’t you own this book? Does your investment strategy beat buy-and-hold? Do you even have an investment strategy? If your strategy beats buy-and-hold, does it beat GOPM – Grow on Other People’s Money?

You can purchase my book wherever books are sold such as Amazon, Barnes and Noble, and Books A Million. It is available in ebook formats for Nook,Kindle, and iPad. It may be available at your favorite bookstore as well but you may have to ask.

[s2If current_user_can(s2member_level1)] Profitability Example 1
The basic math is actually quite easy. Let us say that you bought 100 shares of Company XYZ for $30 per share. For this use case, assume that Company XYZ has increased in price to $34. Using the tools in the book, you feel that the stock is about to drop in price. You want your original investment to be pulled out of the stock but want to keep the free shares growing.

You originally invested $3,000 in the stock plus you paid your broker $10 for a total of $3,010. When you sell those shares, you will pay your broker an additional $10 for a total of $3,020. You now need to divide that total investment by the current selling stock price which is $34. $3,020/$34 = 88..82. This means that you need to only sell 88.82 shares to completely get your $3,020 back into your account. Since you cannot sell partial shares of a stock, you will sell 89 shares at $34 giving you a total of $3,026 in your account. You have an additional $26 to invest in your next company along with your original $3,000. The most important thing is that you have 11 shares of XYZ Company that are absolutely free.

Rather than the above word problem that reminds me too much of nightmares of elementary math class, let’s put this into a formula.

(Original investment + commission to buy + commission to sell) / current stock price = number of shares to sell

Profitability Example 2
Another word problem is now appropriate. You bought 140 shares of MNO Company for $52.18 and your broker charges you $8 per trade. MNO is now currently selling at $56.62. Plugging this into the equation above gives us:

((140 x $52.18) + $8 +8) / $56.62 = 129.30 shares. Therefore, you would sell 130 shares and have 10 shares to continue to grow.

Good luck with your investments!

[/s2If]

By:
On:
In: Good company, Stock analysis
Tagged:
With: 0 Comments

Company name Baytex Energy Corp (USA)
Stock ticker BTE
Live stock price [stckqut]BTE[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Poor
EPS growth Good
P/E growth Good
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $59.51
Target stock price (averages with growth) $44.72
Target stock price (averages with no growth) $22.88
Target stock price (manual assumptions) $47.21

The following company description is from Google Finance: http://www.google.com/finance?q=bte

Baytex Energy Corp. (Baytex), through its subsidiaries, are engaged in the business of acquiring, developing, exploiting and holding interests in petroleum and natural gas properties and related assets in Canada (in the provinces of British Columbia, Alberta and Saskatchewan) and in the United States (in the states of North Dakota and Wyoming). On February 3, 2011, the Company acquired heavy oil assets located in the Reno area of northern Alberta and the Lloydminster area of western Saskatchewan. On August 9, 2011, the Company acquired natural gas assets located in the Brewster area of west central Alberta. During the year ended December 31, 2011, it completed two dispositions of undeveloped lands; in the Kaybob South area of west central Alberta, it sold six sections of leasehold, including five sections with Duvernay rights, and in the Dodsland area in southwest Saskatchewan, which it sold 32,600 net acres of leasehold in the halo of the field.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

By:
On:
In: Good company, Stock analysis
Tagged:
With: 0 Comments

Company name Broadcom Corporation
Stock ticker BRCM
Live stock price [stckqut]BRCM[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Good
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $53.64
Target stock price (averages with growth) $80.72
Target stock price (averages with no growth) $70
Target stock price (manual assumptions) $42.56

The following company description is from Google Finance: http://www.google.com/finance?q=brcm

Broadcom Corporation (Broadcom) is a global semiconductor solution for wired and wireless communications. Broadcom products seamlessly deliver voice, video, data and multimedia connectivity in the home, office and mobile environment. The Company provides system-on-a-chip (SoC), and software solutions. The Company’s segment includes Broadband Communications, Mobile and Wireless and Infrastructure and Networking. During the fiscal year ended December 31, 2012, operates its business to serve three markets: Broadband Communications, Mobile and Wireless and Infrastructure and Networking. In February 2012, the Company acquired NetLogic Microsystems, Inc. In April 2012, it acquired BroadLight, Inc.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

By:
On:
In: Commentary
With: 0 Comments

Many people need to focus on not spending money on things that they do not need. This desire to spend, in some cases, has severely affected the ability to develop an Emergency Fund as well as create an investment portfolio. Even if you read my book, The Confident Investor, I cannot help you if you are not setting aside money on a regular basis to invest in your financial well-being.

I recently read an article on The Simple Dollar that helps with this problem. If you find that you (or members of your family) feel like money is burning a hole in your pocket, jump over and read this article. The two points that I thought were most interesting:

  1. Don’t buy anything without coming up with 5 reasons to not buy it!
  2. Wait ten seconds before putting anything into your cart.

The article suggests 4 questions that you should ask yourself before every purchase:

  1. Can I find this exact item at a lower price elsewhere?
  2. Do I have something similar to this that’s unused or underused at home?
  3. Will I actually enjoy this?
  4. What’s wrong with this item?

It is a very good article. Jump over and learn how to control your spending urges.

By:
On:
In: Good company, Stock analysis
Tagged:
With: 0 Comments

Company name BlackRock, Inc.
Stock ticker BLK
Live stock price [stckqut]BLK[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $373.27
Target stock price (averages with growth) $453.98
Target stock price (averages with no growth) $341.53
Target stock price (manual assumptions) $280.29

The following company description is from Google Finance: http://www.google.com/finance?q=blk

BlackRock, Inc. (BlackRock) is an independent investment management firm. The Company provides a range of investment and risk management services. The Company serves its clients as a fiduciary, and derives all of its revenues from client business. It invests in capital markets globally. Its clients include taxable, tax-exempt and official institutions (including pension funds, endowments, insurance companies, corporations, financial institutions, central banks and sovereign wealth funds) as well as retail investors and high net worth individuals. Its product range includes single- and multi-asset class portfolios investing in equities, fixed income, alternatives and/or money market instruments. In March 2012, it acquired Claymore Investments, Inc. from Guggenheim Partners, LLC. On February 14, 2013, BlackRock Inc sold its entire interest in Avocet Mining plc.

 

Confident Investor comments: At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.