How do I calculate what price to buy stocks at?

Questions & AnswersCategory: QuestionsHow do I calculate what price to buy stocks at?
Anonymous Staff asked

In regards to using the BTMA Wealth Builders Club, I noticed that you somehow manage to buy your stocks at really good bargain prices. How do you calculate your price to buy?

1 Answers
Grant Staff answered

I use the BTMA Stock Analyzer as a guide for discovering which good companies are at bargain prices to buy.
 
Then I look at the recommended price. The BTMA Stock Analyzer will usually give somewhat fair estimate of the value of a company, but it is an inexact science. Nobody can accurately predict the exact value of a company. So just use the BTMA Stock Analyzer as a guide to find out if the company is undervalued or overpriced. Then I usually do further qualitative analysis on the companies to make sure that I want to buy them. The BTMA Stock Analyzer has a “Qualitative Analysis” section that will ask you specific questions to determine if the stock is good for you to buy.
 
For price, I usually like to buy good companies that are at or near their 52-week low price. To pin-point a more exact price to buy, I look at a two-year chart in Yahoo finance and see what is the baseline of where the stock usually bottoms out over the past two years. Or I’ll choose a price that is very close to the bottom. 
 
The two-year chart will give you a pretty good overall picture of the lowest price that the stock might reach. The stock may not hit this low price again, but if it does, then you will be fairly certain to have bought a good company at a great price.
 
Buying in this way is very conservative and eliminates much of your risk.
I hope this info is helpful for you. 
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