Phil Town

THE COST OF INVESTING WITH TOOLS VS. WITHOUT TOOLS

On November 18 I received this email from Marvin (from the Trading vs. Rule #1 Investing post). This is a good analysis of the advantages of using a tool set to help you invest.

Phil,

You had an email from Karla asking if the investools are worth it.  I was curious on the angle that you took and (her husband) took on justifying if it was worth it.  I had the same thoughts that Karla and her husband had.  Upon my decision on to use the tools, I just used the following logic.

YOUR HOMEWORK: STAPLES (SPLS)

Here's an interesting workup.  Notice how Shane is seeing the CEO discuss MOAT.  The things the CEO thinks of as protection against competition - customer service, being the best -  add up to one kind of moat: Brand. 

If they continue to execute on these things, people will continue to buy the brand.  And if they don't, then the moat will be breached and the sales will deteriorate.  So, Shane, if you do this one, you will need to watch to see if the Moat is still good in your business.  Keep an eye on customer service.  Now, on to Shane's letter, and my critique at the end.

Phil,

I am doing an analysis on Staples, spls.  Here is what I have so far.  Let me know what you think.

CALCULATING DELL'S STICKER PRICE

Those of you who are using Investools Valuation Tool need to be aware that a calculator is only as good as the numbers you put in it.  Garbage in, garbage out.  I was curious about Greg's assessment of Dell, so I used the valuation tool and immediately saw what had his attention: Dell is priced at $29 but has a Sticker (or Target) Price of $64.  Very attractive if you believe the numbers, so let's look at what's going into the calculation of value, since it's critical to knowing if we have the all-important Margin of Safety.

WHEN TO BUY & HOLD

Here's a quick Q&A about Roth IRAs, index funds & when to buy and hold.

Dear Mr. Town,

I'm 22 years old and want to start investing. I have $6000 and want to max out my Roth IRA contributions by putting $3000 in a Roth, and investing the other $3000 normally, meaning not in a retirement fund. I was planning on investing $3000 in an index fund (either VFINX) or the Domini Social Equity Fund (DSEFX), and the other $3000 in stocks.

So here's my question...Should I put the index fund in my Roth or invest my stocks there?

Thanks for your help!

Mike

SHIELDING YOUR $$ WITH MOS

Ben is a SWAT officer.  I really like this guy.  He deserves to do what he wants with his life when he's done protecting us.  I'm going to help him make that happen. 

This post is also a great starting place for all beginners.

On 11/3/05, Ben S. wrote:

Mr. Town, Ben S. here from Apollo. I wanted to see about getting started? I know ur very busy any suggestions on were to begin   Thanx Ben

From:  Phil Town
To:  Ben S.
Date: Thu, 3 Nov 2005

Hi Ben!

Great.  Let's get started.  First read my blog.  Find the Archives and click on February this year - start there and just go through the posts to get a feel for what's going on.  If you see the post on Garmin, the guy who found that one is a cop in Kansas and he just rocked it.  About 50% gain in 4 months.  So read through, then let me know when you're done and we'll go through one business together: Harley Davidson.  And see if we want to own it these days.

Phil Town

YOUR HOMEWORK: ASVI

Well folks, Jason Hawkins has just pulled up what might turn out to be a very nice gold nugget.  Read his analysis (from 2 separate emails), then go to the bottom to see what I think.

Email #1:

Phil,

Let me give this stock evaluating thing a try.  I would appreciate your feedback.  I ran a Global Search using the InvestTools website and below was the criteria:

Phase 1 :  Minimum 5 green Arrows
Phase 2:  MG/Zacks min. 3.25
Price Pattern: min. 2.5
Volatility : min. 2.0

I figured a sticker price of $54.01 taking into account the 50% margin of safety.  The current stock price is $22.97.  (Did I do this right???) ASVI... The stock recently got the 3rd green arrow representing a buying signal.