So on the last article, I wrote about how Google would be a great stock at $800, but unfortunately the stock is at $1200+. I also wrote about JCPenney ( NYSE: JCP ) and at .90 it is a bad investment. Apologies to those who lost their jobs because JCPenney is not selling well.
I also spoke about how Apple was a good investment because they innovate and innovation is what investing in stocks is all about.
Indeed, Google, Apple and Microsoft are three sweet stocks to get into, right now, let us see:
Do you remember Blockbuster? If not, quick refresher:
Netflix wanted to be bought out by Blockbuster and right now Netflix would be called Blockbuster, but instead, Netflix is one of the leading online streamers in the industry. Blockbuster’s claim to fame now is lending half its name to Dave and Busters.
Point being is that Blockbuster did not innovate. They did not foresee the future and how people would consume their entertainment. Same thing is currently happening to JCPenney. Less than a year ago, Sears went under.
JCPenney has been doing business for a long time, they started out in 1902 and became public in 1927; becoming public meaning they created a stock and started selling it on the NYSE.
The stock was never that great though, in 2006 it was at $81 dollars. but now it’s at .90, why?
They’ve been doing business as usual since they started, just adding different merchandise, unfortunately the brick and mortar business model is dying down, so JC Penney might be the next American staple that tanks. It was sad to see Sears go bankrupt, because I loved Craftsman tools, but that’s the way of Capitalism. JC Penney has been forced to close its doors and this of course hurts the public because now they have to go find work elsewhere.
Old businesses go kaput, new ones overtake them. That’s the law of Capitalism, same as in the jungle.
See, when investing in stocks, I don’t know for sure how to value a company by the numbers. Master Investors Warren Buffett and Charlie Munger have it down to a science, but me, i just go by whether this company will flourish in the long run. If it’s profitable or has a neat product, I’m all in.
It’s best to invest conservatively in companies that are profitable each quarter and have a unique product; a moat if you will, that’s what Buffett uses to describe a company that has a competitive advantage because of its business model.
For example Google’s programming code is different than Yahoo’s code to search stuff online. I remember asking someone ‘what search engine do you like better?’ They’d say Google, it brings up more relevant information.
So in terms of the Internet it’s easy to innovate because you got the advertising revenue, something department stores do not have in their stores, but maybe if they did allow more advertisers, they’d make money.
Google makes a killing off their business model because it’s all advertising. Advertising is great because every month, advertisers pay Google to advertise for them.
Google has become huge in just 20+ years. Why? Easy to innovate online, not so much offline or in the brick and mortar world.
You got Google competing for example with cable companies. The advent of YoutubeTV has made it possible for you to get rid of cable from your life. Oh yeah ditch that TiVo too because YoutubeTV has unlimited recording, so you can watch Seinfeld reruns and skip over the commercials.
By far it’s a great service. Back in the 2000s, I couldn’t watch European soccer, else it woulda cost me like $200 ordering it from cable. But now, you can check out Messi playing on YoutubeTV, because it will allow you to record European league Soccer.
You can watch any NBA game too, not just your own market. You can watch a ton of MLB games also.
Dominate the market
I was listening to Grant Cardone’s 10X rule book, he’s talking about market domination, back in the day, copying a document used to be called Xeroxing, so people at the office would say “Xerox me this document, broskies.”
Fast forward 20+ years and now people routinely say go google that stuff right there, bro.
No one says Bing it, bro.
Alright, Braveheart might have said bing it, and that’s cool too because then Microsoft profits off that and if you invested into Microsoft, then you’re doing alright.
That’s what market domination is, your company name is synonymous with your product. If you notice market domination, pounce on these stocks; these are the companies you should be investing in, because they stand above the crowd.
For example, I invested in some company that was making Toilet Paper out of bamboo. It took like 2 years for the company to go kapupt.
Luckily I only invested a lil bit of money, so my $1k investment is now worth $.20 cents. What did I learn? The company was not profitable and signed on only with very few distributors. Competition for toilet paper is fierce, you got so many competitors, but they’re all using wood to create the pulp to make soft toilet paper. Maybe toilet paper made out of Bamboo is not very soft and people don’t buy it.
Hey good idea, bad execution.
When investing, you gotta go with well known reputable companies and not gamble. The safest thing an investor can do is invest in companies that are making money and meeting their earnings reports.
Google, Apple and Microsoft are all making money and making a profit, these are safe investments for the long run.
Another great investment is that company that makes the Operating system for almost every business computer. Even my computer has that same OS.
Microsoft (NASDAQ: MSFT) is another great investment for the next 10 years.
See back in the day, I was using Windows 3.1. Remember that circa 1996? Exactly, back in my 20s when I was working, I was using a Windows machine, now in my 40s, still using a Windows PC.
That was the only game in town for Microsoft in the early 90s; OS’s and software. That company has evolved into gaming (XBOX) and using the cloud for web site servers and also advertising and Bing.
What is this cloud?
So basically, when you make a website, that information and all the pages for your site are stored in a super computer; a server. These servers are what is known as a cloud, not a real cloud, but a digital one, it’s called Azure. You store your webpages on a Microsoft server that is on 24/7.
With the cloud, Microsoft is competing with Amazon, ’cause Amazon also has their own cloud called AWS and they’re making a killing off of it. You’d think Amazon is an internet store. But it’s much, much more than that. We could write one full article on the Amazon business model.
So hell yeah I’d drop down $5k on Microsoft and let it ride for the next 10 to 20 years and see how much profit you have.
The best part about Google and Microsoft is that they are both repeat business models. You basically don’t go to Google one day and that’s it. You keep coming back to read your email, you keep coming back to do your internet search. Web developers go to Azure everyday to create and edit their web pages.
In terms of searching, it remains to be seen whether Bing will overtake Google on their searching.
But Microsoft is investing in Bing and advertising with humor. On NBC’s The Good Place, Microsoft used fabulous product placement by having Janet keep saying Bing one episode, annoying and hilarious.
Always good to do the fundamentals though, stocks in my mind are just like Baseball players or better yet NBA fantasy players.
For example, when you do a fantasy basketball draft on Yahoo! sports, how do you know who the best guy is? Fantasy Yahoo tells ya. How does Yahoo Fantasy know how to rank the players?
They look at the stats and contribution to team, all past performance and some future performance.
So naturally, Anthony Davis is going to be no. 1, LeBron James no. 2. These are the great players, how do you know they are great players? Stats. That’s all you got. Is a company like Google a solid company to invest in? yup. Check out the stats on Google, it’s profitable.
In fantasy basketball, LeBron is your Google, you’ll pick him no. 1 or 2 on your draft because of past performance and is going to be playing with Anthony Davis and Dwight Howard. You’re not going to pick up Ivica Zubac number 1 because he’s not getting playing time, so Zubac might be a growing stock, overpaying for Zubac by getting him in the first round is downright ludicrous, preposterous, it’s outrageous.
Don’t overpay for stocks and know your stats on your investments.
So we’ve seen Google both GOOG and GOOGL are solid stocks, so is MSFT and lastly, Apple is also a solid investment.