BWLDBuffalo Wild Wingsbecause I like eating their wings so I did a quick and

Bwldbuffalo wild wingsbecause i like eating their

This preview shows page 142 - 145 out of 263 pages.

BWLD—Buffalo Wild Wings—because I like eating their wings, so I did a quick and dirty valuation and now I want a reminder to check out the business sometime. This is a handy tool. Once you’ve done your work and have decided you want to buy, you can enter the price you’ll pay in the High Target or Low Target boxes the way I did with BWLD. INDUSTRY RESEARCH If we haven’t done it already, let’s go get educated on the industries the
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companies on our Watch List are part of. Put yahoo.com in your URL box, get to Yahoo! Finance, and enter the symbol of one of the candidates in the symbol box. Now look at the left menu bar, find Companies, and click on Industry. The industry of the business you are researching will come up. Note the competitors in the industry and jot them down for further research. Read about the industry. Check out the websites of the major players. Read, read, read, and keep digging until you decide yes or no to this industry, and then move on to the next business on the Watch List. By the time you’re done digging, it’s possible you’ll say yes to the industry but no to the stock that started your research. Happens all the time. It’s likely in that case you found another business in the industry you like better, and now that one’s on your Watch List or Buy List. Before you start to be concerned about the amount of time you’re putting into this without a business to buy, remember that Abraham Lincoln said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” The work you do preparing at the beginning will give you the best return in the end. Much of it is reading you only have to do once, because once you’ve learned the business you don’t have to keep reading about it. From that point you’re just keeping tabs on it and watching your favorite business for an opportunity to buy in or stockpile more. STEP TWO: VALUE IT See Chapter 4 . Do the Rule #1 Valuation (find the Sticker Price). Then do the Payback Time evaluation. Be sure you have plenty of Margin of Safety to allow for errors. You want to buy at a price low enough that if you owned the whole thing you’d get your at-risk cash back in a short time (ten years max). Always remember that price is not the same as value. The reason it’s not the same is that we have a partner called Mr. Market who is willing to buy any public stock we own when we want to sell and to sell us any public stock when we want to buy. Our deal with him is that he gets to set the price but we get to say yes or no.
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Embrace Our Partner, Mr. Market, and Reject EMT In October 2008, we witnessed panic and irrationality kick in big-time in the financial world. Highly leveraged derivatives markets melted down as fear tore through credit markets worldwide. The stock market lost 20 percent of its value—about $3.6 trillion—in a matter of days … and then continued to deteriorate.
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  • Spring '20
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