You make it sound like I wrecked my car into a bank vault!<quoted text>
I didn't have room to address this part of your post.
Lets say that you ran into a good chunk of money.
That seems like a reasonable objective, growth with security.<quoted text>
Lets also say that this money was about $500,000 that we're talking about. So you ask somebody for some help, in this particular instance, you ask me.
You don't want anything too risky. It's a lot of money to take big chances. You want something that will grow and yet be secure.
I'm going to take Option C, which is not to invest in any individual company, but to invest instead in a broadly based mutual fund. An individual company is a risky investment. A total market fund gives you growth and security (along with very low expenses for the account.)<quoted text>
So I narrow it down to two companies for you:
Company A has been in business for a long time. It's a very secure investment that has an average of 3.1% growth.
Company B is also a business that's been around for a long time. It too is very secure with a 5.25% annual growth.
Now which company would you choose to invest in? Before you answer, I want you to consider their gross earnings. Company A has a gross earning of 2 billion dollars a year. Company B has a gross earning of 10 million a year.
You're wrong there. I've tried very hard to make sure I invested my money wisely. The size of the company (as measured by gross sales) is important. But it's just one piece in a big puzzle. Some companies can look very good on paper, and have a solid history, too. Just before they go belly up.<quoted text>
Now as an investor, do you give a rats azz how much they gross, or do you only care about the growth of your money? Of course you don't care what they gross and neither do most other investors.
Yes, this is the voice of painful experience... Here the example of what happened to Bell Labs (aka Lucent.) Bell Labs had an amazing track record and a fistful of patents for some of the fundamental aspects of our modern digital world. They invented the transistor!
Sound like a good investment?
"Lucent had 14 straight quarters where it exceeded analysts' expectations, leading to high expectations for the 15th quarter, ending Dec. 31, 1999. On January 6, 2000, Lucent made the first of a string of announcements that it had missed its quarterly estimates, as CEO Rich McGinn grimly announced that Lucent had run into special problems during that quarter--including disruptions in its optical networking business--and reported flat revenues and a big drop in profits. That caused the stock to plunge by 28%, shaving $64 billion off of the company's market capitalization.... Subsequently, its CFO, Deborah Hopkins, left the company in May 2001 with Lucent's stock at $9.06 whereas at the time she was hired it was at $46.82."
"In 2001 there were merger discussions between Lucent and Alcatel, which would have seen Lucent acquired at its current market price without a premium and the newly combined entity would have been headquartered in Murray Hill....The failure of the merger talks caused Lucent's share price to collapse, and by October 2002 the stock price had bottomed at 55 cents per share."