Here’s the five-year revenue growth for the three above:
So what’s an investor to do?
Don’t get too caught up in trying to beat the market. The best investors have incredibly simple processes, which usually start and end with looking for great businesses that have big advantages, like Amazon.com, Inc. (NASDAQ:AMZN)’s fast-growing distribution footprint and incredibly broad range of product offerings, or McDonald’s Corporation (NYSE:MCD)’s recognized brand power, international expansion opportunity, and powerful pricing control because of its scale. Bank of America Corp (NYSE:BAC)’s management is steadily improving performance through both cost-cutting and customer satisfaction measures.
Foolish bottom line
Is now a good time to buy these companies? I think the answer is, “it depends.” McDonald’s Corporation (NYSE:MCD) PE looks a little on the expensive side compared to its average over the past decade, but not by much. Bank of America Corp (NYSE:BAC)’s Price/Book is rising but it is still significantly lower than its historical average, though it may never return to those levels. Lastly, Amazon.com, Inc. (NASDAQ:AMZN) is very tough to price, even using Price/Sales. See how valuation is so challenging?
My recommendation? Dollar cost average into all of them over time: buy a few shares every month, or several times per year, at different price points. If you’ve learned anything today, it should be how terrible you are at timing the market. Take that out of the equation and just buy shares regularly, keeping your eye on the performance of the company’s business operations. These are solid companies with good management, and if you keep your eye on how they execute their business goals, versus fears of a “rice bubble in Bangladesh,” you’ll do well over time.
Growth Fund of America? Well, no matter how well management performs, it’s up to you when they sell. And you’ve got a pretty terrible score on that mark, Main Street.
The article Admit it: You’re Losing To the Market, and It’s Your Own Fault originally appeared on Fool.com.
Jason Hall owns shares of Bank of America and Amazon.com. The Motley Fool recommends Amazon.com, Bank of America, and McDonald’s. The Motley Fool owns shares of Amazon.com, Bank of America, and McDonald’s. Jason is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.