I think the Scenario 1 would beat Scenario 2, but it might take some patience. With the stock at $338 Scenario 1 is already ahead :)

I think I have mentally gone around in this circle many times. On the one hand, stock price looks like it might be 40% above trend, so if it "breaks" within the next two years, you might get a better entry point and be 20 to 40% richer on the deal, depending on how soon it breaks.

On the other hand, how many times have we heard about missing an investment because it only came within 20% of your buy price, and never got that low again?

For myself I approximately split the difference. I went into Google at 350 (adding to a position I had already purchased at lower prices), but not with all the money I would ever want to spend on Google. So if it does, relatively speaking, go down in the next year or two, I'll be able to add more at a nicer price. But if it only ever finds its trend line by going up a bit slowly from here, I will have a size of position of google that is worthy of what I think is its promise.

If I hadn't heard Warren telling so many stories about how foolish he was to risk loosing good companies because of a few dollars in stock price, I would probably have held firm. Or if I could find a company I liked as much as Google that was trading at a lower PE, that would have kept me out of Google at this price too.

Its a conundrum, but I do feel good having bought a real cash spigot that seems to gusher 20% more real each year, even if it may take a few years to grow into a great entry price.

Happy hunting,
R: