Google stock up

[Beestie]

Originally Posted by xoxoxoBruce

I remember reading in Barrons, a long time ago, there is(or was) an accepted formula for determining the stocks value.

Those principles are as valid today as they were then. The economics of what a company is worth are as fundamental as geometry. The old equations allow one to "plug in" things like asset value and growth potential but before the computer revolution, those two variables could usually be quantified with reasonable precision. Today, however, the variability in how those two things are measured is exponentially greater.

We can both look at all the assets on General Motors balance sheet and decide what we think they are worth and our answers would probably be pretty close. Try it with Google's assets and the answers would probably be very different as will our answers on the future revenue Google can squeeze out of those assets.

[lookout123]

what you are talking about is generally termed "fundamental investing".

fundamental investing - look at the company, you are considering for purchase. look at the books, the products, the management, the competition, catalyst for improvement, etc. make investment decisions based on assessed value of company and expectation of future earnings. usually associated with a measured "buy and hold" investment philosophy. believe in long term capital appreciation combined with a strong dividend focus will outperform other methodologies in the long run.

technical investing - look at a stock. consider the stock's action in relation to the market, to it's peers, to the economic cycle. look for patterns and catalysts to make the stock price move. make investment decisions based on charts, graphs, and trends. usually associated with active traders who believe they can capture capital gains and avoid losses by properly interpreting the charts.

[tw]

Originally Posted by Beestie

We can both look at all the assets on General Motors balance sheet and decide what we think they are worth and our answers would probably be pretty close.

Many previous analysts have concluded that GM was worth more broken up into parts. However GM was structured to make a breakup too impractical - too difficult. Its rather weird to think breaking up a company makes it more profitable. However Carl Icahn tried it and backed off quickly after learning these details. The numbers suggested it would be profitable. Once he got into the details, those numbers no longer made sense.