Information power...

Yesterday, I was reading the New York Times when my eyes caught the title "Hewlett-Packard to Acquire 3Com". The first thing came to my mind was like, "3Com must have something is stock to get the attention of HP, the biggest personal computers and printers manufacturer in the world"; and the next thing is: "OMG, 3Com's stock price must be rising like crazy". I immediately switch to marketwatch.com to see the stock price of 3Com and realized that at the time of the Acquisition of 3Com, its stock price jumped from $5.5 to $7.5 per stock. Boy it was almost 40% increased. Power of information triumphed for someone knew about this.

Buying a franchise for a safety business? Hell no!!!

In the investment world, the first principle is, Risk and Return go hand in hand. The lower the risk, the lower return you will have to expect. For someone who just has a big cash fall on his head from the sky, he has several investing choices, mainly as securities markets, opening a new venture, or buying a franchise. Of those choices, opening a new venture generally have the most risk, but also will return abundantly to him if success. Securities markets option, grant him somewhat good return, and the risk is much less than starting a new venture, if he knows how to flat out his portfolio and reduce their risks. Two choices above, I think is the main investing method for people with spare cash. Buying a franchise, however, is so different. Some franchise requires a significant amount of cash initially, and that amount can climb up to several millions of dollars, if you want to buy a popular franchise such as McDonald or Pizza Hut, others vary with at least around $200,000. Of course, buying a already popular franchise is pretty safe, but it wouldn't win big either. The break even points usually can be achieved after several years, and after that, the in flow of cash is not that great. In short, if I have several hundred thousands dollar, I wouldn't consider buying a franchise at all.