With Wal-Mart the current price is $78.69 a share.

This is the Close Price which is what
the last share of the day sold for. This is the price I use in y e!aples. "ther nu#ers to
#e aware of if possi#le are the $ay %an&e or 'i and (ow for the day. These represent the
hi&hest price a sold for durin& the day and the lowest price that a share sold for the day.
With Wal-Mart stoc) the (ow was $78.** which had #een the openin& #id while the 'i
was $78.8+ a share. This eans that durin& the day, soeone had #ou&ht at least one
share for as low as $78.** and another had purchased a share for as hi&h as $78.8+ while
the a#solute last share sold today was $78.69. Which if you were to loo) at this as one
hu&e picture it sees as if the push for the day was that the price was on the rise since the
last share sold was close to the daily hi&h.
-nother nu#er is the ./ Wee) 'i and (ow0this is one of y fa1orite &uides. It shows
what the stoc) has done o1er the past year. In the Wal-Mart e!aple the ./ Wee) 'i and
(ow were 82.+7 and 72..2 respecti1ely. This a&ain eans that o1er the past year a share
had sold for as low as $72..2 and another had #een purchased for as hi&h as $82.+7.
(oo)in& at the #i& picture, the close today of $78.69 is really close to the $82.+7, ./
Wee) 'i. This to e would tell e to hold or sell. If it was close to the ./ Wee) low
then we would #e #uyin&.
Mc$onald3s closed at $2*2.9. with a day ran&e of 2*2.4+ to 2*/.28 and has a current ./
wee) ran&e of 9/.// to 2*/.6/
5oth of these stoc)s are hi&h ri&ht now #ecause this is the #e&innin& of their ain
seasons for sales. That is o)ay, we can still wor) with this for our e!aple.
I prefer to in1est in unifor increents throu&hout the year #ecause when it coes down
to it, no one has a crystal #all 6or all we )now, in the ne!t year our current prices of
78.69 and 2*2.9. ay #ecoe the new ./ wee) (ow or the 'i0thin& with stoc)s is that
re&ardless of how they are perforin& this oent, they see to a1era&e a 87 increase
each year, unless the copany is really a)in& soe se1ere errors0and chances are if
you choose a well esta#lished copany to in1est in, those errors will 8ust #e short ter
and could #e sweet turnarounds for us.
-nother thin& to ree#er is that when a copany has a a8or pro#le li)e a a8or
recall or lawsuit, yes the stoc) will drop and soeties pluet li)e a roc). There is
another nu#er which is really difficult to find0you actually ha1e to find the copany3s
financial reports such as #alance sheet, cash flow, and operatin& #ud&et to find this
nu#er and ost copanies do ha1e this on their we#sites. The nu#er is called the
5oo) 9alue0ost li)ely, you3ll find this on their #alance sheet. 5oo) 9alue is a 1ery
accurate representation of the true 1alue of the stoc). It represents the 1alue per share if
the copany has a fire or sheriff3s sale today and pays off all of its de#t. If the &oin&
price of the stoc) is less than the current 5oo) 9alue then you need to #uy and #uy li)e
there is no toorrow. If you e1er saw the o1ie Pretty Woan, this is what %ichard :ere
is doin&. 'e is #uyin& up stoc) of copanies3 whose assets are worth ore than their
stoc) and sellin& off the assets0he is #asically a 1ulture.
I ree#er once ;art stoc) was sittin& at a#out $..** a share and its 5oo) 9alue was
at $/..** a share. <oseph -ntonini was the C=" and he was on his way out while another
indi1idual naed 6loyd was on his way in. - friend of ine as)ed e for a tip and I said
;art. 'e as)ed why and I e!plained a#out the nain& of a new C=" who in1estors
li)ed and entioned the 5oo) 9alue. 'e #ou&ht a thousand shares. The C=" was naed
and the stoc) shot up to $2. a share0in other words, he wal)ed away with a profit of
$2*,*** #y the end of +* days. Main reason he ris)ed that aount of oney was the
5oo) 9alue would ha1e #een a $/*,*** profit if the copany had &one under0this was
around 2996.
-s I ha1e entioned, no one really )nows what will happen. >es, the stoc) ay #e
droppin& li)e a roc) #ut no one )nows for sure what the all tie low will #e or if it is
shootin& up, no one )nows what the ultiate hi&h will #e. When you in1est in e!act
increents on a onthly #asis as we will in this e!aple, you are a1era&in& out the cost
to you. This is referred to as -1era&e Cost In1estin&. >ou will ne1er &et the perfect price
#ut this ethod tends to #rin& your o1erall cost as close to perfect as possi#le. >ou can
use indicators such as the ./ Wee) %an&e, 'i and (ow, as a &uide to ?ero in when you
should put ore oney in or ay#e 8ust )eep it with the increents you ha1e.
I31e decided to add another stoc) to the i!0fi&ure as lon& as we are pretendin&, what is
an additional $2**@ I decided to use Wendy3s as well. I thin) that it will illustrate soe
interestin& points.
Currently Wendy3s is sittin& at $8.+* a share with a daily ran&e of $8.*8 to $8.6* and a
./ Wee) 'i and (ow of $...7 to $2*./7.
(et3s &o ahead and a)e a 'undred dollar in1estent in each of the and see what
Walart &i1es us 2./72 Ahares B $78.69 a share
Mc$onald3s &i1es us .982 Ahares B $2*2.9. a share.
Wendy3s &i1es us 2/.*48 Ahares B $8.+* a share.
(et3s say that we ha1e an e!tra hundred to in1est this onth, loo)in& at our three
copanies, Wendy3s sees to #e the #est candidate #ecause the price is the furthest fro
its ./ Wee) 'i Ao another $2** would &i1e us an additional 2/.*48 Ahares for a total of
/4.*96 Ahares B $8.+* a share.
")ay, today is the 8
of May, let3s let e1erythin& ride until the 8
of <une and see what
Ce!t tie we will &o into how to actually in1est.
Aee ya, 9ince.

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