To celebrate Halloween, I decided to take my children to the scariest place on earth: Walt Disney World.
Well, scary for the parents at least…
Aside from the creepiness of having grown adults walking around in massive mouse costumes stalking hordes of children, parents are stuck with fidgety kids in hours-long lines for a 10-minute ride. Not to mention the horror of dropping the equivalent of a luxury car payment on tickets, food, and goofy hats.
While we were walking around the park, I witnessed thousands of people literally dumping buckets of money wherever they went.
And I’m not just talking about fanny-packed families wearing identical Mickey Mouse shirts…
I witnessed no less than two dozen couples celebrating their honeymoons. I saw another dozen bachelorette parties. I even spoke to a couple who traveled all the way from Bahrain to stay for two weeks and go to each of the four theme parks every single day.
Why would people travel halfway around the world and part with thousands of dollars for this experience?
Because Disney knows how to straight up entertain. And folks will happily shell out their hard earned cash because, frankly, there are no serious alternatives. If you want to get your daughter’s picture taken with Cinderella, eat breakfast with Donald Duck, or high five Captain Jack Sparrow — there’s only one place to go.
Disney World’s Magic Kingdom — where I went — is the most visited theme park in the world. Almost 20 million people visit there each and every year. That is more than the Great Wall of China and the Taj Mahal combined.
In fact, if you look at Travel and Leisure‘s list of the 50 most-visited tourist attractions in the world, Disney makes up over 20% of them. All told, over 142 million people visited Disney owned theme parks last year.
And based on its stable of new acquisitions like Star Wars and Marvel Entertainment, Disney is only going to get bigger. Long story short, if you’re looking for a solid, retirement-grade stock, Disney has been a no-brainer since it started.
Here’s why it’s still a no-brainer today.
Disney stock (NYSE: DIS) has been one of the most consistent blue chips for the last couple of decades. It was actually the first stock I ever analyzed — mostly out of jealously.
You see, when I was a kid, my little brother saved up all of his allowance and bought as much Disney stock as he could afford. He based it solely on that fact that he knew Disney movies were very popular. It was the essence of the KISS or “keep it simple stupid” rule of investing. While it was simple, it was anything but stupid…
By the time he turned 16, he had enough money to buy his first car — in cash.
Just look at the stock from when he bought it in 1990, to when he sold it in 2000:
That’s a return of 336%, without the dividends. A teenager tripled his money without even knowing what he was doing, or more importantly without ever having to worry about losing it.
Now, if he had hung onto the stock until today, he would have been up an incredible 1017%!
That’s the kind of stock I love. Set it, forget it, and cash in whenever you like.
And while Disney had a hell of a run in the 90s, it now has the potential to repeat those gains over the next 10 years….
As I mentioned above, Disney isn’t just riding on the success of Mickey Mouse. It has made a series of shrewd acquisitions to ensure its dominance in the entertainment space for decades to come.
Disney has been on an acquisitions tear over the last couple of years. I could immediately smell its success by the broad cross-section of people walking around the park. Alongside the typical Disney freaks, I also saw an impressive cross-section of Star Wars geeks and Superhero dweebs (I use these terms endearingly, since I enjoy all three).
It has embarked on a strategy of buying up “mini-Disneys” or franchises that can be plugged into Disney’s massive entertainment cash machine — and it’s working.
Let’s start with Star Wars…
In 2012, Disney bought Lucasfilm — the company started by famed Star Wars creator George Lucas — for $4 billion.
In doing so, it acquired a goldmine of intellectual property for the entire Star Wars series. In buying Lucasfilm, Disney was given ownership of “the Holocron” — in layman’s term, the Star Wars universe that is home to over 17,000 characters and thousands of planets.
In other words, plenty to draw on for everything Disney does best: blockbuster movies, theme parks, and merchandising. It knows how to squeeze every last dollar out of a franchise. I wouldn’t be surprised to see a Star Wars Ice Capades coming to an arena near you.
The first movie, Star Wars: The Force Awakens is already the most anticipated movie of the year. The first teaser trailer has been viewed over 72 million times on YouTube. The second, which debuted on ESPN’s (*cough, Disney owned, cough*) Monday Night Football last night has already been watched over 11 million times.
These will be huge, whether they are good or not. If you remember, the last three Stars Wars films were ripped to shreds by fans and critics, yet managed to gross $2.5 billion.
Star Wars will be a cash cow for Disney for many, many years to come…
It is taking the same approach with the Marvel superhero franchise.
Disney surprised Hollywood in 2009 by dropping another $4 billion on Marvel Entertainment — home to Spider-Man, Iron Man, the Hulk, the X-Men, the Fantastic Four, and the superhero collective known as the Avengers. Again, they were able to secure the rights to over 5,000 characters that they can plug right into their global marketing machine.
For those keeping score, the 2012 Avengers movie is the fourth highest grossing film of all time, pulling in $1.5 billion at the box office. This year’s Avenger’s: Age of Ultron ranks sixth with a $1.4 billion payday.
Add those acquisitions to Disney’s incredible stable of Frozen, Pirates of the Caribbean, and of course Mickey Mouse, and you have yourself a lifetime of rock-solid profits for decades to come.
I’ll close with a neat fact that some Disney devotees confided to me on my trip. Underneath Disney World itself is a series of secret tunnels and pathways. Here’s the history…
Legend has it that after Mr. Walt Disney himself spotted a cowboy from Frontierland wandering around the futuristic Tomorrowland, he experienced some serious cognitive dissonance and basically freaked out. He made a promise to himself to ensure that never happened to anyone visiting the park.
So, when he was plotting out the Epcot Center (aka Experimental Prototype Community of Tomorrow), he planned to build a city underground where he could house all of the characters, electrical systems, and security so that park guests could have an experience where they never had to “break the reality” of Disney World.
Now — buried under 7 million yards of dirt — are 392,042 square feet of underground tunnels that span almost the entire park.
You can read the whole story at Theme Park Tourist.
