A few years ago, a friend of mine was given a lump sum of cash. The amount was about $7,000.00. Not exactly a pittance, but not enough to allow him to jet around the world either. My friend mulled over his choices of what to do with this money…
Should he put it in the bank and save it for when he needed it? Should he take the money and buy a car since he was without transportation at the time?
Or…
Should he take the whole $7K and buy up shares of McDonalds (MCD) with the entire amount?
Before we reveal what he chose, let’s do the math here. Shares of MCD were trading at around $54 when he got his money, not exactly cheap, but affordable if you have $7K laying around and burning a hole in your pocket. That amount of money would have bought about 129 shares of the world’s number one dealer of hamburgers.
As I’m sure you know the financial crisis hit everybody hard. Not just the middle class, but the poor and rich alike had to cut back on spending and find cheaper ways to get what they need to survive, including food. Many people found that cheaper alternative in McDonald’s – and over the next few years, the stock soared, hitting an all-time high of $103.59 per share.
Now, with 129 shares bought at $54, that $7K would have been worth $13,370 – allowing him to get into the monster penny stock mover LOTE, which at the same time was at about $0.95 per share…
That would have given him 14,073 shares in the penny stock of the year (and maybe even the decade)!!
If he would have sold LOTE at its peak of about $24 a share, my friend would be sitting on a $337,768 windfall!
That’s a lot of cheddar – no matter how rich you are. I mean, it’s not “quit your job and live off the interest” kind of money, but it’s at least a nice condo near the beach. A 2/2 condo with an enough space for a nice leather sectional (with a few scratches on it), a nice entertainment center and tastefully decorated with help from his mom and a store that sells authentic Bali wooden creations. A condo with sliding glass doors that stick a little because of the salt air, but when opened, a beautiful breeze cools the whole house no matter what temperature it is outside. A condo that when a woman is brought to see it, she is immediately impressed with and can see herself spending a lot of time in – drinking wine and talking till the wee hours of the night.
And a car to go along with it…
Nothing too big, a Jeep. All black with all the trimmings. A cool ride, something fitting for a single man that lives so close to the beach. That’s what that money can buy…
Meanwhile, he would no longer have to pay rent or a mortgage for that matter. Just have to worry about taxes. Especially if he decided to forgo the insurance as it was bought and paid for. The money that $337K saves him would be worth dishing out just $7K for a few shares in McDonalds. Not exactly living in the lap of luxury – but enough to live comfortably without having to eat at McDonalds every night.
That’s the life my friend could be living had he NOT bought a 2001 Cadillac El Dorado with that $7K and followed his instincts and bought shares of MCD!!
Remember, success happens when timing and opportunity meet…
My friend learned an expensive lesson – you get to learn it for free.
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By Shawn Ambrosino