Invest in What You Know

When I was younger and just starting out investing I read a book about investing that really shaped my ideas. I read one of Peter Lynch’s, the famous manager of the Fidelity Magellan fund, books on being an individual investor. His biggest idea is you need to invest in what you know. (BTW – Warren Buffet has stated this himself a number of times.) I totally agree with this idea. If you can’t describe what a company does/makes in a few sentences you have no place investing in it. I understand what each company I invest in does in full. Case in point is my pick of McDonald’s(MCD), everyone knows what they do. Totally believe in them and the products they sell. The company’s long term prospects are excellent IMHO. They invest a ton of money in product development and advertising every year. In other words they re-invest in the company’s long term future every year. (Plus they reward us shareholders by raising up the dividend they pay us almost every year.) Great blue chips companies, hard to find them sometimes, like MCD is where I want my long term money to be. I will post about some other blue chip safe dividend paying stocks I like this week. Thanks for reading. Tony