What do you think of RUTH (Ruth's Chris)?

[AirJordan]

I'm a complete fundaholic and have never owned anything in my portfolio besides, index/ actively managed funds. This has served me very well for the past 7 months, gaining 20%. However, I've come into a little inheritance money and want to gambooool a bit. What's the outlook on Ruth's Chris, besides having excellent steaks? P/E is a bit below the SPX, and the cat might already be out of the bag on this company, but again this is not my expertise area at all. Any equity picker help me here?

 

[saluki9]

I like the creamed spinach but I'm not a huge fan of their bread pudding.

 

[FinanceDude]

There are a LOT of steakhouses popping up around the country.

I think the ethanol subsidies are going to make the price of beef soar, as beef cattle eat a lot of corn, and the price of corn is moving up faster than the price of gas.

I did pretty well in Applebees a few years ago, but the only stock I own in portfolios for clients that could be considered hospitality is SBUX.

Proceed with caution.............

 

[brewer12345]

AJ, if you are serious about picking stocks, I would park the inheritance money in a MM and go start reading finance and valuation textbooks. Then start following a few companies. Try to model a few and maybe even do a paper/fantasy portfolio first. After you have some confidence, then you can start actually buying individual picks.

 

[FinanceDude]

AJ, if you are serious about picking stocks, I would park the inheritance money in a MM and go start reading finance and valuation textbooks. Then start following a few companies. Try to model a few and maybe even do a paper/fantasy portfolio first. After you have some confidence, then you can start actually buying individual picks.

Sound advice, WHERE'S the GAMBLE in that

 

[maddythebeagle]

Brewer's advice sounds good....but I would be tempted to just bet it all on red

 

[brewer12345]

Sound advice, WHERE'S the GAMBLE in that

Believe me, there is still plenty of gamble left even after you do all that work. I do this for a living and there are still plenty of "spectacles, testicles, wallet and watch" moments.

 

[FinanceDude]

Believe me, there is still plenty of gamble left even after you do all that work. I do this for a living and there are still plenty of "spectacles, testicles, wallet and watch" moments.

How about Baron Rothschild's comment" fortunes have been made by selling too soon"................still one of my favorites..............

 

[AirJordan]

AJ, if you are serious about picking stocks, I would park the inheritance money in a MM and go start reading finance and valuation textbooks. Then start following a few companies. Try to model a few and maybe even do a paper/fantasy portfolio first. After you have some confidence, then you can start actually buying individual picks.

Sounds like fair advice, even though I'll skip the MM, since I mean it doesn't take a rocket scientist to put money in Merriman's portfolio, to secure 10% returns a year over the long haul. I was just curious what everyone thought about this particular company, and its prospects. Whenever I go into one business is booming, and they are looking to open up new stores every month. I guess nobody has any thoughts either way.

 

[saluki9]

Sounds like fair advice, even though I'll skip the MM, since I mean it doesn't take a rocket scientist to put money in Merriman's portfolio, to secure 10% returns a year over the long haul.

Secured 10% returns? Wow! sign me up!

 

[brewer12345]

How about Baron Rothschild's comment" fortunes have been made by selling too soon"................still one of my favorites..............

The selling part is easy (relatively). The decision to commit capital to a new position requires the most work, and the decision to keep buying into a slump because (you think/hope/pray) thevalue is there requires the most testicular fortitude.

If you REALLY want to play catch with dynamite, you can trade options.

 

[FinanceDude]

The selling part is easy (relatively). The decision to commit capital to a new position requires the most work, and the decision to keep buying into a slump because (you think/hope/pray) thevalue is there requires the most testicular fortitude.

If you REALLY want to play catch with dynamite, you can trade options.

1)Isn't "averaging down" like trying to catch a very sharp falling knife most of the time?

2)I'd rather sell options than trade them...........

 

[brewer12345]

1)Isn't "averaging down" like trying to catch a very sharp falling knife most of the time?

2)I'd rather sell options than trade them...........

1) Depends. By the time I start buying, the asset of interest has generally already taken a walloping, since I am a value oriented bottom fisher. It is tough to buy at the bottom, since nobody knows exactly when that will be. So when I have done analytical work that tells me that current prices offer very strong value and potential returns, I will start buying, but I rarely ever buy what I regard as a "full" position in the first go. If it keeps dropping, I keep buying. If I get full up on a position and it drops more, I will usually just wait it out. However, sometimes when I am sufficiently convinced that there is real strong value and something has fallen really far and I am "full up", I will buy a wad of longer-dated somewhat out of the money call options. That way I can magnify my exposure if things work out, but limit my losses if they don't.

Example, I started buying WHI around $5.25. I think it is easily worth $10 when they work through their credit issues and I have little fear of them completely imploding. I kept buying down to a bit under $5. When teh stock slumped down to $4.65 or so, I was full up, so I bought the longest dated $5 strike call options I could get. We will see how this works out over time, but the Q1 results they put out suggest that they are already working through their credit issues and the PR bank scene is just waiting for a wave of consolidation.

2) Sometimes good to sell, sometimes good to buy. Anything at a price, right? I have made an awful lot of money in the past year by trading options around core positions in the stocks I already own.

 

[W2R]

OK, I know this thread isn't about food, but as an aside I am astounded that nobody has mentioned their Porterhouse for Two. We love it on a special occasion.

As for the organization, a lot of people are saying that some very poor decisions have been made since Ruth Fertl passed away. I don't know much about it myself. Of course, the decision to move their HQ (to Florida, was it?) wasn't very popular here.

 

[saluki9]

OK, I know this thread isn't about food, but as an aside I am astounded that nobody has mentioned their Porterhouse for Two. We love it on a special occasion.

As for the organization, a lot of people are saying that some very poor decisions have been made since Ruth Fertl passed away. I don't know much about it myself. Of course, the decision to move their HQ (to Florida, was it?) wasn't very popular here.

It may not be about food, but it should be!

I'm not too happy with what they have done to the chain. It's just the nature of my business that I eat at a a lot of steakhouses. I'm not thrilled with what they did to the prices at RC. The salads have gotten smaller too.

I'm a huge fan of the porterhouse and the NY strip, but if I had my choice I would rather hit Morton's

 

[brewer12345]

I don't eat beef, so steakhouses have little appeal. When I used to have togo to a lot of business meals, steakhouses were a common choice. I was always happy if the choice was a Ruth's Chris because they usually have better and more seafood than most steakhouses. But I haven't been there in a couple years, so I don't know what has happened recently.

 

[Nords]

However, I've come into a little inheritance money and want to gambooool a bit. What's the outlook on Ruth's Chris, besides having excellent steaks?

You post at FundAlarm, too, right? So you know David Snowball.

I was in your position five years ago with the same brilliant idea, which I posted to FundAlarm. David said "This is a really bad idea. If you want to gamble, go to Vegas and have fun with your money. If you want to do something useful with that money, donate it to charity." Of course I'm smarter than David so I ignored his advice in favor of my personal tailored experiential approach. Yup.

I've been through the full circle... brokerage advisors, newsletters, Hulbert, CANSLIM, Zurich Axioms, Elliott Wave, chaos/fractals, "Think and Grow Rich", Jesse Livermore, Nicholas Darvas, Sam Weinstein, TA, momentum, "quality management", IPOs, Dogs of the Dow, Unemotional Value, dividends, options, shorting, high-probability trading, and (my personal favorite) deep value. Over the first four years I was slightly lagging money-market returns, although with record-breaking volatility. Over the last nine months I'm up 20%.

I'm too cynical to believe that the last nine months was all me, even boosted by Brewer's patient tutoring, but a lot of it is due to... hard work. The path to success lies in reading the SEC filings, picking apart the financials, building a model of the company's cashflow, and patiently awaiting a buying point. Sometimes the wait is months to years and the analysis file grows an inch thick without even buying a single share. Little of that info is obtained by posting to discussion boards-- unless you count talking to insiders about their companies or starting conversations with guys like Brewer, FD, & Saluki. One of the acknowledged investment strategies is joining a club and having to defend your picks to the derision thoughtful analysis of the rest of the group, which you can do here for free. However you're not pooling money with those people so your analysis (and theirs) is worth what you're paying for it.

Your results will directly correlate to the quantity & quality of your efforts, which should largely be devoted to analysis. You'll lose money at first but you'll get better after a few years.

I've settled on value from cash flow, which also includes shorting an occasional high-flying stock. Everything else seems to be excessive labor/risk for less return or just a bunch of crap. Even Gary Smith's ER from "How I Trade for a Living" has come at a very high personal price.

Swedroe & Bernstein had some poignant comments on M* a couple years ago about investors being inadequately compensated for single-stock risk, especially when it interferes with getting a life. Those critiques hit home, and today our ER portfolio is still with Buffett and ETFs... only 10% individual stocks, and I'm done buying. I may have to contemplate a 12-step program to close out my shorts.

But you don't have to believe me. Go ahead-- take a deep swig of testosterone and pay your own tuition at the school of experience.

As for me, I'm going to eventually close out my positions. I've been to Vegas, so the money will probably go to charity to offset our taxable gains.

 

[FinanceDude]

I've been through the full circle... brokerage advisors, newsletters, Hulbert, CANSLIM, Zurich Axioms, Elliott Wave, chaos/fractals, "Think and Grow Rich", Jesse Livermore, Nicholas Darvas, Sam Weinstein, TA, momentum, "quality management", IPOs, Dogs of the Dow, Unemotional Value, dividends, options, shorting, high-probability trading, and (my personal favorite) deep value. Over the first four years I was slightly lagging money-market returns, although with record-breaking volatility. Over the last nine months I'm up 20%.

Wow, after all that it's amazing you aren't a 50/50 mix of short-term Treasuries and CD's.................

 

[Nords]

Wow, after all that it's amazing you aren't a 50/50 mix of short-term Treasuries and CD's.................

You mean like my parents in law? I'm capable of learning from the examples set by others...

I should point out that none of this experimentation occurred with the ER portfolio. It was only done with the separate inheritance account, and I'd never activate shorting & options with the account holding our ER portfolio.

 

[brewer12345]

I should point out that none of this experimentation occurred with the ER portfolio. It was only done with the separate inheritance account, and I'd never activate shorting & options with the account holding our ER portfolio.

Of course, students of behavioral accounting would point out that all of that separation-type mental accounting is so much marsh gas...

 

[Nords]

Of course, students of behavioral accounting would point out that all of that separation-type mental accounting is so much marsh gas...

Mental accounting, sure, but I viewed it as the firebreak that kept me from inflicting my brilliance on the ER portfolio.

I also didn't have to justify my picks to my spouse!

 

[saluki9]

Mental accounting, sure, but I viewed it as the firebreak that kept me from inflicting my brilliance on the ER portfolio.

I also didn't have to justify my picks to my spouse!

If my wife had any say in our investments we would be 100% in FDIC insured deposits with some gold bars thrown in the mix.

 

[brewer12345]

If my wife had any say in our investments we would be 100% in FDIC insured deposits with some gold bars thrown in the mix.

My wife would be fine as an investor since she would probably gravitate to a low cost balanced fund and ignore it except to chuck in more money. Boring, but it would get her there eventually.

 

[AirJordan]

Nords, thanks for the well thought out reply! I do post on fund alarm a bit, and have started to post here but I found them a bit friendlier. I.e. when I poster my portfolio here it got ripped apart while everyone at Fund Alarm loved it, all I have to say is proof is in the pudding as am handily beating the EFA and SPX to the tune of 20% over the past 7 months, when I started.

But from your post I get the feeling like stocks just aren't worth it, and I should stick to my trust buy and hold funds. To put this in perspective, I've got 100k between Vanguard and Firstrade, and 2k to gamble, either poker, or RUTH, and I was just curious what you thought about this individual stock, since I'm obviously too lazy to do the work myself. I just fired up M star today and saw it as one of their small growth picks, and I thought it might be fun to add a little spice to my portfolio. Indexing/ active management isn't sexy, but it's certainly the way to get rich, what I wanted was a fun way to treat myself, and add some spice.

 

[Nords]

all I have to say is proof is in the pudding as am handily beating the EFA and SPX to the tune of 20% over the past 7 months, when I started.

Well, hey, it's hard to argue with long-term performance like that.

But from your post I get the feeling like stocks just aren't worth it, and I should stick to my trust buy and hold funds.

I didn't say that. I said that successfully picking individual stocks is far more work than it appears to be, and investors may not be compensated for the additional risk. But the results of that investing may also be far more rewarding than index funds.

since I'm obviously too lazy to do the work myself.
what I wanted was a fun way to treat myself, and add some spice.

Then you should go to Vegas or try some other form of entertainment, because you appear to have confused the term "investing" with "gambling".