I recently received a question in the MisterValuation forum asking for an article on Google (GOOGL) and Amazon (AMZN). The subscriber indicated they were having a hard time utilizing F.A.S.T. Graphs™, especially with Google, to figure its valuation.
I felt this was a reasonable request because it afforded me the opportunity to provide insights on the utilization and the nuances of the F.A.S.T. Graphs™ subscription that each of you have. Let me start out by clearly stating that F.A.S.T. Graphs™ is an acronym for fundamentals analyzer software tool. The key word in that acronym relating to how to effectively utilize F.A.S.T. Graphs™ is the final word “tool.” In this context, we refer to F.A.S.T. Graphs™ as a research “tool to think with.”
We further state that it provides essential fundamentals at-a-glance that can be evaluated and analyzed in order to make better investment decisions. However, just as it is with any tool, its utility is directly related to the skill of the user. In order to illustrate this more fully, I often offer the following metaphor:
If you and I were sitting in the same room and you had a serious appendix attack, and I had a surgical scalpel in my hand, the situation would look something like this. You would be a fool to suggest that I operate on you, and I in turn will be holding a lethal weapon in my hand. However, if I were a skilled surgeon, who I am not, you would be quite fortunate, and I would be in possession of a life-saving tool.
The point being, that in order to receive the maximum benefit from F.A.S.T. Graphs™, it’s imperative that you learn how to use it effectively, and even more importantly, interpret what it reveals. This is analogous to the biblical metaphor “give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”
Frankly, the analysis of both Google and Amazon via F.A.S.T. Graphs™ provides a perfect backdrop for me to illustrate the utilization of this tool through taking advantage of all the analytical horsepower it offers. When using F.A.S.T. Graphs™ it’s important to keep in the back of your mind that the tool does not per se dictate valuation, it reveals it as a valuation reference under real-world conditions. At the end of the day, it’s up to the user to evaluate that information and make their own decisions based on their own goals, objectives and risk tolerances. Additionally, it’s also important to understand that different users could draw different conclusions from evaluating the very same data that is revealed.
Therefore, I offer the following analyze-out-loud video where I personally analyze Google and Amazon based on my own investment philosophy and preferences. Each of you is free to agree or disagree with my assessment based on your own investment philosophies and preferences. In other words, it’s not my conclusions that are important. Instead, it’s the process I will go through based on what F.A.S.T. Graphs™ is revealing to me about the valuation of these two growth stocks that I would hope you all focus on.
Chuck a.k.a MisterValuation