McDonald's & Money

Hey everyone, before I begin, I would like to thank everyone for their great comments and support, it really motivates me to step up my game and write articles that will truly benefit you.  I also started a new blog that will explore the "Principles of  Power," a more serious topic but one that is very interesting nonetheless.  If your interested, please check it out!

http://PrinciplesofPower.blogspot.com.  

Alright, now this leads me to my main article of the day, McDonald's and money.  I'm not going in depth about the boring stuff, but will talk about the techniques they have used over and over again to become and stay one of the most powerful corporations in the world.

We all eat McDonald's, and our children will be eating it in the future as well, but even amidst all the concerns for "Healthy" eating and opting for organic food choices, McDonald's is still reaping in huge profits every year, and spreading their influence to basically every corner of the world.

I have worked at McDonald's, written a long 10,000 word report on them for college, and it was the first stock I ever bought in mid 2006 at just over 35$ per share.  Just for your information, McDonald's is currently trading at 76$...|

First of all I will begin with the most crucial aspect of McDonald's success, its brand.  Since the age of two, most children can recognize McDonald's by either it's main logo, the "M" signifying the golden arches, or by their mascot, Ronald McDonald (notice the cheesy rhyme?)

Again, simplicity is key here, consumers do not really want to think about what they want to buy, they want to be told what they want, and whenever we see a McDonald's sign, our subconscious is reminding us of our cravings for their food.

The McDonald's brand is carried out by hundreds of thousands of employees who are given great training and opportunities for advancement.  Even though many regard McDonald's as a poor job, and in some cases it really is, one cannot deny the rigorous training all members receive upon being hired.  This is crucial for monetary success because with so many restaurants around the world, if your employees are lacking, your business will begin to rot and fester from the inside and eat its way straight to the core.

Secondly, McDonald's advertisements are everywhere and they always partner themselves with the most popular celebrities, athletes, Olympic Gold Medalists, you name it.  Honestly, I would not be surprised at all if Justin Bieber became the next brand ambassador for McDonalds, since Justin Timberlake has been out of the spotlight for a while.  In order to balance this commitment of paying millions of dollars for these celebrities to endorse their brand, McDonald's has their own charity which helps children all around the world.

Ronald McDonald's charities raise millions of dollars every year to help less privileged children around the world, and this is extremely important for McDonalds to uphold their image and not seem like they are doing everything just for the money.  Even though millions of people may become fatter because of eating a lot of McDonald's, donating a few hundred million does make you look a lot better, and associating yourself with the leanest and meanest athletes of the time, and being an official sponsor for the Olympics, Fifa, and every major sporting event doesn't hurt either.

So what can you learn from McDonald's?  I'll give you some tips that you can apply in your everyday life.  First of all, don't be afraid to make mistakes, they will teach you how to succeed if you reflect upon them carefully and learn from them.  For example, McDonald's Pizza was a huge failure, as well as the Lobster burger, and many others.

Secondly, if you are considering buying a stock like McDonald's, make sure you understand the company very well before you buy it.  Although penny stocks may give you the opportunity to achieve a huge amount of growth in a short amount of time, there is a much bigger risk that you could lose a tremendous amount of money.  Blue-Chip stocks like McDonald's have a far lesser chance of disappearing off the face of the earth, unlike many penny stocks which disintegrate within months of speculation.

Thirdly, associate yourselves with powerful allies to further your cause, never let your image become ruined by joining forces with those who are foolish, impatient, and greedy.  Make sure you achieve balance by helping out the poor and the needy as well, to retain that "human" essence that attracts us to those who can bring benefits to our lives.

Lastly, and similarly to what I said about Apple, there is no such thing as bad advertising.  If you are not being seen, you might as well have never existed.  McDonald's is successful because everywhere we go we can see with our own two eyes the legacy they have created.  Although we might not like it, feel jealous towards it, or simply do not care about it, it still exists and is growing each and everyday, fuelled by the consumers that have embraced their food and the comfortable lodgings they create.  You must be fluid, and accept change as an opportunity for growth, not something that will bring about your downfall.  That is why McDonald's has survived for so long, being able to change with the times like a chameleon, yet always remaining on top!

The Philosophy of Warren Buffet

I'm confident that many of you have heard of Warren Buffet, the most successful American investor of the century which earned him the nickname: "Sage of Omaha"

I'm not going to bore you with his life story, but instead focus on some of his key philosophies that made him into such a successful man.  He is still well known for his frugality despite of his incredible wealth, and even though many of us will choose to walk paths where we end up splurging from time to time, it is still important to try and be in control of money instead of it taking control of us.

 

Warren Buffet is the chairman and CEO of Berkshire Hathaway which has stock holdings worth around 125,000$ per share currently.  This may seem like an insurmountable amount of money for a single share of a stock, but the point i'm trying to show here is that disciplined investors over time can actually grow their portfolio to a point where they can consider purchasing monstrously expensive (or potentially inexpensive) stocks.

“

I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. And I'm going to give virtually all of those claim checks to charity when my wife and I die. (Lowe 1997:165–166)

”

From a NY Times article: "I don't believe in dynastic wealth", Warren Buffett said, calling those who grow up in wealthy circumstances "members of the lucky sperm club".  Buffett has written several times of his belief that, in a market economy, the rich earn outsized rewards for their talents:

“

A market economy creates some lopsided payoffs to participants. The right endowment of vocal chords, anatomical structure, physical strength, or mental powers can produce enormous piles of claim checks (stocks, bonds, and other forms of capital) on future national output. Proper selection of ancestors similarly can result in lifetime supplies of such tickets upon birth. If zero real investment returns diverted a bit greater portion of the national output from such stockholders to equally worthy and hardworking citizens lacking jackpot-producing talents, it would seem unlikely to pose such an insult to an equitable world as to risk Divine Intervention.

”

This was the first book I read related to investing early on in my high school years which introduced me to the underlying theory of investing.

NEVER LOSE MONEY

General rules

• Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

• It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

• You're neither right nor wrong because other people agree with you. You're right because your facts are right and your reasoning is right—and that's the only thing that makes you right. And if your facts and reasoning are right, you don't have to worry about anybody else.

• Our favourite holding period is forever.
  
  
  • Letter to Berkshire Hathaway shareholders, 1988

• When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.

• Risk comes from not knowing what you're doing.

• If you don't know jewelry, know the jeweler.

• If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes.

• There seems to be some perverse human characteristic that likes to make easy things difficult.

• One's objective should be to get it right, get it quick, get it out, and get it over... your problem won't improve with age.

• A public-opinion poll is no substitute for thought.

• In the insurance business, there is no statute of limitation on stupidity.

• If a business does well, the stock eventually follows.

• The most important quality for an investor is temperament, not intellect... You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.

• The future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.

• We will only do with your money what we would do with our own.

• Occasionally, a man must rise above principles.

• It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.

• Of one thing be certain: if a CEO is enthused about a particularly foolish acquisition, both his internal staff and his outside advisors will come up with whatever projections are needed to justify his stance. Only in fairy tales are emperors told that they are naked.

• When asked how he became so successful in investing, Buffett answered: we read hundreds and hundreds of annual reports every year.

• "I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that. "I'm paying $32 billion today for the Coca Cola Company because..." If you can't answer that question, you shouldn't buy it. If you can answer that question, and you do it a few times, you'll make a lot of money."

• You ought to be able to explain why you're taking the job you're taking, why you're making the investment you're making, or whatever it may be. And if it can't stand applying pencil to paper, you'd better think it through some more. And if you can't write an intelligent answer to those questions, don't do it.

• I really like my life. I've arranged my life so that I can do what I want.

• If you gave me the choice of being CEO of General Electric or IBM or General Motors, you name it, or delivering papers, I would deliver papers. I would. I enjoyed doing that. I can think about what I want to think. I don't have to do anything I don't want to do.

I hope this helped you get an idea of what the nature of my blog will be in the next couple of posts.

Ideally I want to talk about the different tools investors use to achieve success when starting their portfolios, and maintaining them after they have achieved some level of success.

I hate to admit that I myself have not been especially prudent with handling my money, and thus I am writing this blog for myself as well as anyone who is interested to help them keep focused and actively make their money work for them instead of working so hard for it.

Again thanks for all the positive comments and to all new followers, please feel free to post your own opinions and things you would like to see me blog about in the future.

Happy blogging