Investing 102

[WSSix]

I'm having a hard enough time deciding to sell MCD when it's only a couple thousand dollars. I can't imagine selling my entire portfolio only to turn around and by back in. If I didn't step in gradually, I'd be terrified of making a mistake. Hell, I'm terrified of making a mistake now with my pennies.

I do like the comfort of the dividend though. It's helped cushion the falls and sweeten the gains.

[GregWeld]

Just for giggles this morning -- I checked the Year to Date performance of a couple recent IPO's... I've said in the past that I avoid these not because I don't think they're good products or good companies.... but because of the vicious losses they can deliver once they cool off. The HYPE and the market get together and have EVERYBODY wanting to say they are in the name... then the TV cameras go away (they quit talking about them on TV)... and the air goes out.

Sure enough - or true enough - if you're lucky enough to buy at or near the IPO price... and ride them up - and then sell.... oh yeah - you can double your money in a month or two. But.... are you really that good of a trader? My guess is NOT.


GoPro (GPRO) YTD down 19%

Alibaba (BABA) YTD down 25%

Shake Shack YTD up 12% - but it's down 33% this month! OUCH

I'm not saying people shouldn't buy these names... that depends on your stomach - your wallet - your age - your overall financial health - your longer term horizon. I'm just saying WOW.... What a ride.

[Vince@Meanstreets]

IPO's are hit and miss. Perfect for the gamblers.

What about CMG and FIT. Both doing well. CMG open was $37 and FIT was $30.

[ErikLS2]

CMG and FIT are not the same CMG is much cheaper based on P/E and PEG Ratios and the best in class in fast casual dining. FIT is still out there fighting for position with Apple Watch and others, too early to tell who will win. Just my worthless $0.02 but after looking these up think I'm going to buy some CMG, thanks! I eat there all the time and once my food was free because I had to wait 5-10 minutes for more chicken to cook and once it was free because I was a regular and they "just like to take care of their regulars". Plus if it starts going south I will certainly know about it.

[GregWeld]

#1 --- Erik --- Chipotle Mexican Grill (CMG) is "expensive" now - but 10 years from now you'll look back and wish you'd bought more of it. They have lots of room for growth - their stores a PACKED - their prices are higher margin - it's healthy compared to a burger and shake... and it's super tasty! I'm a fan.



#2 --- LOTS going on around the world... 15 years ago I'd have been "reacting" to all of it... I'd certainly have sold or been in and out multiple times in recent days and weeks. Now days I read, and listen to the talking heads on TV, and I shrug my shoulders and yawn... Then I open up my account and see a bunch of dividends have been paid and I go play golf or polish a hot rod.

[GregWeld]

Here's an interesting comparison of what $100 buys PER STATE.... Sucks to live in California!! LOL



https://patch.com/california/walnutc...-go-california

[Vegas69]

Originally Posted by GregWeld

#1 --- Erik --- Chipotle Mexican Grill (CMG) is "expensive" now - but 10 years from now you'll look back and wish you'd bought more of it. They have lots of room for growth - their stores a PACKED - their prices are higher margin - it's healthy compared to a burger and shake... and it's super tasty! I'm a fan.



#2 --- LOTS going on around the world... 15 years ago I'd have been "reacting" to all of it... I'd certainly have sold or been in and out multiple times in recent days and weeks. Now days I read, and listen to the talking heads on TV, and I shrug my shoulders and yawn... Then I open up my account and see a bunch of dividends have been paid and I go play golf or polish a hot rod.

I'm still pretty green at this. How the heck does Chipolte demand $600 a share where say CVS demands $100? Or Starbucks demands $80? Is that an indication that it may split?

[JKnight]

Share price = firm value divided by shares outstanding

So it could simply be a matter of CMG having fewer shares outstanding and isn't necessarily indicative of likelihood of a split. I always say share price is arbitrary. A 10% gain on your investment in a stock is the same amount of $ regardless of share price. That said, firms understand the psychological impact of having a high share price, and they are incentivized to have people buy, so it could be indicative of a higher likelihood of a split.

So to answer your question...maybe

[GregWeld]

Originally Posted by Vegas69

I'm still pretty green at this. How the heck does Chipolte demand $600 a share where say CVS demands $100? Or Starbucks demands $80? Is that an indication that it may split?

Chipotle Mexican Grill (CMG) has a Price to Earnings (P/E) ratio of 41 --- so people are paying 41 dollars for each dollar of earnings (currently) for this stock. A high P/E ratio often reflects the "EXPECTED" growth of the earnings in the FUTURE of the stock.

Spits are more about whether or not the BOARD is prone to splits. Some boards are and some aren't. If the shares split - it doesn't increase (or decrease) value - there's just more shares at less value per share. People get excited about them and sometimes that drives new money to the shares. Netflix (NFLX) is splitting 7 for 1 --- it trades for $700 a share - so if you had 100 shares at $700 each - you'll just have 700 shares worth $100 each. This often "fools" small investors into finally getting into the shares because they're now "affordable" - which is complete nonsense....


CVS Health Group (CVS) has a P/E of 26... which just means (or can mean) that it still has a quite high expected growth rate of it's earnings. The average P/E is "normally" closer to 15..... and the "pros" start talking about the market being overvalued when it starts to hit 17ish. In a Bear market period - you'll see average P/E's in the 12's...


Starbucks (SBUX) P/E is 32.... a still "high" expected earnings growth rate.


Now -- so as not to confuse -- let's see how many SHARES each of these three have 'outstanding'.



SBUX - 1.5 BILLION shares.... Earnings PER SHARE $1.70

CVS - 1.13 BILLION shares.... Earnings PER SHARE $4.10

CMG - 31 MILLION shares.... Earnings PER SHARE $15.38



The key is --- what do you think a company will be earning in the years ahead --- or what their growth rate is etc. Like any "market" - how many people want to OWN something versus SELL something.

Beware high multiple P/E stocks IF they manage to not live up to the expectations.... you get killed overnight!

[Vince@Meanstreets]

Originally Posted by Vegas69

I'm still pretty green at this. How the heck does Chipolte demand $600 a share where say CVS demands $100? Or Starbucks demands $80? Is that an indication that it may split?

thats what im hoping for.