Quote Originally Posted by agamemnus View Post
McDonald's:
Just look at how far they've grown in profits/stock price, and the expansion potential. Sure they changed their strategy and started offering healthier food, but that can only take you so far. (a 600% increase in stock price over 6 years or so) They have not that much of an advantage over local chains. Furthermore, McDonald's demand peaks when the economy is slow (since it's cheap), and drops off when the economy gets going again.

Google:
They are growing via acquisitions, not innovation, and have been for a while. Just like McDonald's, unless they come up with something totally new, there is nowhere left to grow.

Google, McDonald's, and gold. I don't see anywhere to go but down. Sure, McDonald's is expanding, even in my state in Massachusetts -- because they have cash, not because of sane decision-making. Sure, gold is going up right now because idiot investors think that the US won't raise the debt ceiling and everyone is concerned about inflation, but I think that inflation has already been factored into gold prices several times over. Sure, youtube is popular... but it was popular before.

You all should give me all your money. I'll take good care of it and I'll only take 10% of the profit...
Gotta say I disagree. McDonald's stock price has grown 124% over the past five years, and that's comparable to other players in the space like YUM brands. They have solid margins and have grown in both good and bad economies.

Google's stock has been flat because it seems like they don't care much about the value of the stock. They provide no guidance, no dividends and no breakdown of revenues. This is why I'm not buying stock. But that doesn't mean there is an underlying strength to their business.

I remember two quarters ago they said they were making $1 billion from YouTube, $1 billion from mobile ads and growing their overall display ad business very quickly (EG the ads on top of this site). Those revenues aren't coming from acquisitions per se, they are buying technology that isn't earning anything and turning it into cash.


Quote Originally Posted by wiggin View Post
I never really understood the logic of trying to outsmart the market. I just buy a handful of index funds for my IRA based on my asset allocation. My wife's 401(k) is a little more limited in its choices, so we stick to the best (and cheapest) funds of the lot. If you just want to weight towards blue chips, there are decent indices for that as well that have minimal costs and are far better diversified than any personal weighting.

Just my two cents, though. If I was doing it for fun (rather than building a nest egg) I'd probably look at individual choices as well, but I wouldn't go for something like blue chips.

Okay, I just read the rest of the thread. I guess even though it's in an IRA (I assume a Roth?) you're not considering it your retirement savings. In that case, go ahead. I simply don't have enough extra money to consider investing for fun right now. Most of my investment time horizons are either too short to stomach the volatility of stocks (e.g. for a down payment, that sorta thing) or too long to be able to effective beat an index fund with any reliability.
I'm not trying to outsmart the market as much as I'm making long-term investments that I think will grow at/slightly-better than the overall market while also providing income.

In 1985 my grandmother bought my sister about $200 worth of shares of McDonalds. Between dividend reinvestment, splits and capital appreciation the "gift" is now worth something like $19,000. While I agree index funds are great, they can sometimes dilute the value of making a few smart but conservative long-term picks (via fees, rebalancing, etc).

By no means do I think I'm some sort of stock-picking genius. I believe in index and mutual funds. Most of my money is there. But I like to diversify (or is this reverse-diversify?).