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Andrew, the margin of safety on McDonalds is very clear. Pull up the one year chart on the stock, I have actually tracked the daily trades on the stock. Look at the price at $44, how often was this price broken to the downside over the last year? When it does break, how long does it take to bounce back? Then look at how much cash MCDs has. Then look at how much money McDonalds spent buying back their own stock and divide this by the number of shares they purchased. The average price of repurchased stock is about $44.65 a share. That is McDonald's buying back its own stock, supporting the stock price. So, between Buffett and McDonalds buying the stock at $44 that is all the safety you need. I have owned this company since 1986. I have seen these cycles repeat every 3 years, it is always something different that analysts complain about. My only regret is that I thought the same way that you are currently thinking when I first started investing, that I wasn't more aggressive because I listened to others, like the news media, instead of trusting my own research and common sense. The McDonald's name itself is worth half the stock price, the most recent promotion is proof of this. Just buy it, if it falls, buy more, if it falls further buy more. Good luck |
