The simple answer is that all had new leaders in the last couple of years. But, here is the problem - they're all old school, old hat, and not so relevant anymore to investors.
Take a look at the latest casualty in the boardroom. Don Thompson was the CEO of McDonald's Corp. (NYSE:MCD) and he held that position for just over two years, during which time McDonald's went nowhere and had zero growth. He is stepping down effective March 1st and Steve Easterbrook, will be taking over the reins of McDonald's. The problem I see with McDonald's is that it's associated with fast, unhealthy food when the entire food industry is turning to healthy eating. You only have to look at places like Baja Fresh, Chipotle and a host of new up-and-comers in the fast, casual, healthy dining service industry to see where McDonald's has completely missed the boat. Like the stock market, perception is everything and the perception is McDonald's just doesn't cut it anymore with most young parents and millennials.
Ray Kroc had a brilliant idea when he first stumbled on the original McDonald's in California back in 1954. Here he discovered Dick and Mac McDonald's fast food restaurant in San Bernardino, California. One year later he incorporated McDonald's Corp. and the rest is history. Now 60 years later, like a lot of corporations, it has lost its relevance in the marketplace and it's going to be extremely hard to play catch-up and change their image. What do you think?
Microsoft Corporation (NASDAQ:MSFT) had a similar start to McDonald's, only this time, a young Bill Gates bought a program from a hacker for $50,000 (remember DOS?) and promptly turned around and licensed it out to IBM for a cool $1,000,000 a year.
How did Microsoft find itself in the same position as IBM and with the same problems as McDonald’s? Under the former leadership of Steve Balmer, who failed to catch the entire online and social media revolution, Microsoft stock has been pretty much dead in the water. It was only after it announced that Steve Balmer was stepping down did Microsoft stock jump to its best levels in years. The new CEO has the same problems as McDonald's, Microsoft is perceived as old hat and just not cool. That is a tremendous problem for this company to have moving forward. Bill Gates founded Microsoft in 1975, some 40 years ago, and in the tech world that's like back in the Stone Age. Bill Gates himself said that he thought tech companies become almost irrelevant after 50 years. He was of course referring to IBM at the time. Microsoft now has a new leader and CEO, Satya Nadella, who will be trying to turn around this massive company and make it more online savvy and cool. After the initial surge of excitement with the change of leadership, Microsoft's stock plunged on earnings and on the realization that there is no quick fix coming down the pike. What do you think of Microsoft?
The next stock under the microscope is Yahoo (NASDAQ:YHOO) which was founded in January of 1994, some 21 years ago.
Yahoo had it all and then somehow missed out on the search engine business, social media, and e-commerce. But like McDonald's and Microsoft, Yahoo had a new leader who came from Google, Marissa Mayer. When Ms. Mayer came on board, she did move the stock higher but her "ace in the hole" was Yahoo's stake in Alibaba, the giant Chinese e-commerce company. Now you may have heard that Yahoo just unloaded this asset at a very advantageous tax scenario for investors. But now that this asset has gone, what's left? Nothing, in my opinion. When was the last time you really went to Yahoo to find something? Let us know in today's poll.
As you can see from all the charts above, none of these stocks are positive at the moment, based on MarketClub's Trade Triangle technology. I doubt very seriously that these companies, as big as they are now, will be that relevant in the next 5 or 10 years.
Every stock has its moment in time and history, I think that each of these three stocks, McDonald's, Microsoft and Yahoo, have all had their day in the sun.
Never fight market trends, they are just too powerful and will lead you to the poor house.
I would love to hear back from you on any of these three stocks that I highlighted today. Please leave your comments below this post.
Another big thank you to the hundreds of members who have asked questions of us and left their comments and thoughts on this blog.
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