POST OF THE DAY
The BMW Method
Random Musings

Format for Printing

Format for printing

Request Reprints

Reuse/Reprint

By Bakuvdanet
April 11, 2006

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

One thought that runs through my head is how this method places such significance on answering whether or not a company is still the same one that produced its historical CAGR. Well, one could argue that no company is the same. Times change. Companies change. Harley Davidson bought a motor home company in the 80's. MMM is about to jettison its pharmaceutical business (only 3% of MMM's sales, but still a change nonetheless). So we must ask ourselves if the changes a company experiences over its life is just the normal course of business, or if there are changes that are significant enough that it's not the same company as before. Are we talking about a change to the business model? Maybe a significant change is the catalyst that drives the stock back to its Ave CAGR.

Maybe there hasn't been a lot of talk about individual companies because there just aren't that many new candidates appearing on the radar. Can we really stand CAG being the sole topic for three months while we wait for another to hit its low CAGR? On the other hand, Mr. BMW (Jim) has mentioned numerous times that the problem is we have so many companies near low CAGR it's hard to choose the cream of the crop for our hard earned dollars (please correct me if I'm mistaken or have misinterpreted). If that's the case, shouldn't we be talking about those companies? Why can't we take a shot at that list of companies and come up with the top 3 that make the most sense today?

In order to get the most out of the board while identifying equities that can be analyzed from a BMW-Method point of view, we must put some effort into the individual stocks themselves. This method is wonderful at producing a short list of viable investment opportunities. What I like about it is it instantly provides a measure of the degree to which a stock is under, over or fairly valued. Due diligence is still necessary, but for me, it's big picture stuff. Why is the stock at its low CAGR? Is the business still significantly the same? What is it doing to get back to the average CAGR? Is it in decent financial shape?

The knowledge here blows me away. To be honest, it is a little intimidating. However, what it has forced me to do is research a company and understand it, at least on the surface, before posting (infrequently as it may be). That way, I don't just post "what do you all think about XXXX?" and leave it at that. It is now a challenge to myself to post something productive and give the impression that I know what I'm talking about. Mind you, there's still a fair amount of cluelessness going on in the ol' noggin.

On its surface, this is an investing board dedicated to finding and analyzing companies based on a pretty straightforward point of view. I think someone coming here during the past few months might question the purpose of the board. Is it to discuss macro economic and social events, or to delve into BMW candidates? Well, there's definitely an ebb and flow that goes on. And that's ok. Though, I'd like to see more companies taken apart as thoroughly as Intel was a couple weeks ago. Maybe the challenge is to apply the macro stuff to individual companies. What are the implications for company XYZ when talking about population growth, labor laws, health care, etc.? That's what really brings it home. How are our individual investments affected by what's going on in the world?

That's it for now.

Take care everyone,
Bakuv


Become a Complete Fool
Join the best community on the web! Becoming a full member of the Fool Community is easy, takes just a minute, and is very inexpensive.