Random Thoughts:

I have been observing disturbing behavior, I get the impression that people are focusing almost exclusively on stock price when looking at an investment. Thinking of the business behind the stock seems to have become a secondary consideration.

When thinking of a possible investment I think stock price should be a secondary consideration. Why? An investor first should focus on how the business is being run, its changes of profits in the future, what could go wrong, etc. I try to determine what the probability is for success and take this into consideration. I suggest doing a five forces competitive analysis.

So the investor first should understand completely how a business works and try to figure out how it will perform in the future, not try to figure out how its stock price will perform in the future. Mr. Buffett has commented on this point often by saying that if a company is performing well and making the right decisions for the long run its stock price will eventually reflect these facts.

Once you understand the business and decide what its future potential is, then the proper price should be calculated. When determining the price it should be thought of as if you are purchasing the entire business. Would this be a fair price to buy the whole business or not? If the answer is no, no shares should be purchased.

To conclude, stock prices should not be the first investment consideration, the business should be carefully analyzed and understood before any consideration is given to the market value of the company.

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