Friday, June 21, 2013


I recently heard this factoid: 100 shares of McDonald's stock purchased when McDonalds went public in 1965 would have split 12 times and now equal 74,360 shares. The current value at yesterday's closing price would be over 7 million dollars.

Of course, it's never that simple. First at 22.50/share, a 100 share investment in McDonalds stock would have cost $2250. That doesn't seem like that much today, but in 1965 you could almost pay cash for a new Mustang. The median family income was around $7000. Not many people could afford such an investment. And even if you could, putting that many eggs in one hamburger basket would probably have been ill advised.

But let's say you were in a position to invest a couple of grand in a fast food chain. You'd make your first million in 1993. Assuming you didn't sell then, or when you made your 3rd million in 1999, the next challenge would have been having the guts to hang on to your shares as they steadily lost you over 2.6 million dollars between November of 1999 and March of 2003. And finally, it would surely be difficult to keep from cashing out when MCD's price recovered to an all time high in 2007 or anywhere else along the steady climb for the last 10 years.

So could I have held on to an investment long enough to become a millionaire? I don't know. Ask my bitcoin heirs in 30 years. :)

1 comment:

Danny said...

While it would be difficult for a median family to drop over 30% of their annual income into a single investment (especially a family young enough to expect to wait 48 years before accessing any of that money), it would be interesting to try the math out with a different set of parameters.

Assume a monthly purchase using 0.1884% of the family's annual income. Using median family income that would be about $100 per month today and about $13 per month in 1965.

If the family consistently made such a monthly purchase every month without fail regardless of whether the stock was up or down, I wonder what they'd have today?