February 3, 2007
Maximize Your Earning Potential in 2007
After reading a great article in Business Week yesterday, I decided to write a quick article on how you can apply it to your personal life. The article was referencing the changes McDonald’s has made to maximize their daily earning potential by staying open 24/7, changing their restaurant image and broadening their menu. McDonald’s is currently in their maturity/stability stage in their corporate life. In this stage, the key issue for the company is no longer survival; rather, it needs steady, profitable growth. Now you might be asking yourself, “How does this story relate to my financial life?” Well, you need to take what you have and maximize your potential.
If your life is stable and you don’t see any huge growth spurts happening anytime soon, you need to find ways to get more for your money. In your stock portfolio, find stocks that have had a constant above-average return. Here are some stocks that I recommend for people that aren’t huge risk takers, but still want to get some good money.GOOG - Google
DPZ - Domino’s Pizza
PWE -Penn West Energy Trust
IACI -IAC/Interactive Corp. Owner’s of Ask.com, Lending Tree, Ticket Master
ADBE -Adobe
BBY - Best Buy
LTD -Limited BrandsThese companies are leaders in their industry and have provided above average returns (Higher than S&P 500). Instead of sticking with your “white bread” mutual fund, upgrade and create your own mutual fund. You can eliminate tons of fees and receive higher returns than most traditional mutual funds. I understand that most writers on other blogs want you to become a conservative investor, but I want you to be a wealthy investor. Another way to maximize your earning potential is to spend less on items that you buy. Don’t let big purchases kill your back account! When you regulate your spending, you will have more income that you can dump into your savings, investment, business or real estate account. So many people think starting your own business or investing in real estate is scary, but there are ways to limit your risk.*eFIPO’s Rule* Vitaliy Katsenelson: It is not the cards you are dealt, but is how you play them. Make the best with what God gave you, and play hard!
I disagree with this post on several points
1)GOOG isn’t for risk takers? It trades at a P/E of around 50, and has swings of 10% in a given week.
2) Why should somebody try to start their personal mutual fund when Vanguard, Fidelity, etc. provide them at low cost and instant diversification. Low fees? What about the transaction costs associated with buying/selling individual shares.
3) In any case, chasing performance is a sure way to lose money.
Poor post and with advice.
I’ve invested in Google since the beginning and its always been good to me. I understand why he choose those stocks (other than maybe DPZ, too new).
Low cost mutual funds???? The ones you listed do still have pretty high fees and the fact that most mutual funds CHASE HISTORY kills your argument! I worked for a financial firm that held a mutual fund and all of our CFA looked at past history(35% weight) and so does morning star… Don’t know where you get your mutual fund facts, but they aren’t right.
Anon, I understand your criticism. You’re a conservative investor that likes diversification and all that great stuff that comes with it. But like the best investor once said “Wide diversification is only required when investors do not understand what they are doing.†I’m not saying that I am Warren Buffett, but I am a follower of his teachings. He thinks that most mutual funds and index funds spread “risk†but also spread “growth†and “returnâ€. My stock performance speaks for itself, and the stocks I listed are even more conservative than the ones that I invest in (the stocks listed are just a smaller portion of the stocks I invest in).
Your historic representation is very flawed. Warren also said “In the business world, the rearview mirror is always clearer than the windshield.†You can tell a lot from a company from just looking five to ten years back. Not every single company, but a lot. Google’s textbook returns have been near 80% growth per year and still kill their planned earnings. They are also the biggest internet search engine and provide services that are years ahead of the competition. You might think they are risky, but you can’t argue figures and true data. The teeter totter in the middle is just illusions. The growth at the end of the year is the number you need to look at (unless you’re a day trader).