“We are all amateur food connoisseurs”
Most people don’t realize it, but we are all amateur food connoisseurs. Eating out is a timeless tradition that all college students glorify. You would think since eating out is so popular among college students that some would raise questions about the company. I mean after all, these companies have been playing momma bird since we set foot on campus. How many college students actually stop while eating their burgers or burritos and think to themselves, “I wonder how McDonalds stock is performing?” Sometimes to find great investments, all you have to do is follow your mouth.
What really hits the spot for you? What makes your mouth water? Where’s your favorite restaurant to dine at when you have the drunken munchies? For the longest time, my weapon of choice was and still is the delectable burritos served up by Chipotle Mexican Grill (CMG). I still remember my first Chipotle experience like it was yesterday. The burritos were huge, the taste was great, and the line was long.. real long. From the looks of the restaurant, everything appeared to be relatively low in cost (the tables were a simple stainless steel design; the floors were cement; it did not take an army to run the place). When a restaurant can skimp on interior design and still bring in a monstrous crowd, this equates to a very good sign. This sign was so blatant and powerful; it was time to investigate further.
The moral to this story is to invest in what you’re already familiar with and understand! If you are a regular customer at a restaurant, you probably know the product better than the employees. Some people might tell you to invest in a carbon fiber or fiber optics company, but I know absolutely nothing about these businesses and I am willing to bet money that the average college student knows absolutely nothing about these businesses either. In contrast, what is there to know about the burrito business? I mean, besides the traumatic bathroom appearance that occurs shortly after consumption. The people who tell you to invest in fiber optic companies are probably just trying to sound smart. They refuse to degrade themselves by investing in quaint little burger or burrito joints. I suppose I never got that memo, because my father always used to tell me, “When it comes to making money there is no pride.”
And whatever happened to Chipotle? Quite a fairy tail actually. The IPO (Initial Public Offering) was released in the winter of 2006 at a price of $22 per share. If you were lucky enough to grab onto some shares on its IPO release date and held on for a year and a half, you would have made more than five-fold. Not bad for simply following your mouth, right?
I am trying to reiterate how easy these investments are to find. Just by participating in your daily activities, from when you wake up to when you go to sleep, you can find these beasts.
Another high performing company in recent years has been McDonalds. What normal college student, hell, what normal American isn’t familiar with McDonalds’ products? If someone were to tell me they aren’t familiar with their product mix, I would call erroneous without hesitation. This one has been under our nose since we were born onto this Earth. Since 2004, McDonalds has been giving back an average return of about 23% per year, partly do to international success. Nonetheless, we should have gotten a few hints to investigate since there is a McDonalds on every street corner. The average return of 23% brings us to another question: How do I know if I am making a “good” return for the year? In my opinion, if you get a better return than the S&P 500, which returns about 10% per year on average, you are in good shape, but we’ll discuss this later.
Some of you might be thinking McDonalds is already so established that there is no way you could get great returns. Some might also be unhappy with a 23% return; after all, I was just discussing Chipotle, which gave a 500% return in less than two years. You must remember that 23% is better than any savings account or CD, it is even better than most mutual funds and the S&P 500. That aside, finding the Chipotle’s are quite rare and take a bit of luck, though you being in the college environment will increase your odds of finding these. You must remain humble with your gains. This is a marathon, remember? And besides, you could have lost money instead, either by spending it or by investing in a fiber optics company.
