UPDATE: I just invested in a lot of these guys!
UPDATE #2: See how it panned out 1 year later :)
I’ve been thinking long and hard about this idea lately, and I REALLY think there’s something to it. And I’m pretty sure I’ve heard a famous investor, or financial guru, or somebody well-respected once say it’s a great theory to adhere to also. I mean, it makes sense, right? Investing in companies you already support as a consumer? Like, say, Coke or Starbucks or any of those other awesome places like TJ Maxx? I’m already giving them all my money anyways, might as well get a return on them too! Haha…
I know some of you are already doing this – don’t be shy;) I’m totally tempted to try it out myself with this year’s SEP IRA investments. I think I’ll have around $23,000 to invest (to avoid paying more 2011 taxes!), and I’d LOVE it if all the stocks I threw in there where simply companies I rave about all the time. Especially since the bulk of my investments are already in smarter and more boring funds anyways, haha… so it wouldn’t be TOO much of a risk to try, right? ;) Keeping most your stuff safe and sound, and playing more loosely with a separate smaller account? I don’t know if it would perform better or worse in the long run, but I could certainly justify finding out.
While this route is definitely more emotional than it is rational, and good companies DO die out all the time or get slammed when they do something stupid (*ahem* Netflix), I think there’s something to be said about putting your money where you’re already actually putting it. Be proud of the stocks you own, ya know?
Here – let’s make a list of a whole bunch of brands that I love and see if they’re even investable (word?). If they are, I’ll add ’em to my consideration list for when it’s time to place the bets. Errrr… investments.
- USAA — NO :( Though, it’s probably best cuz if it were I’m sure we woudn’t get as many awesome benefits as we do now. But still sucks I can’t invest in it like I would.
- Diet Coke — Yup! Well, with its parent company: Coca-Cola. Symbol: KO – And I actually already own some of these thanks to Warren Buffett inspiring me to do so years ago ;)
- Target — Yup! And I’m pretty sure I visited them at *least* 4 times last week… you’ll know why, in a bit. Symbol: TGT
- TJ Maxx — YES!! Again, with its parent company (who also own rock stars like Marshalls and HomeGoods) Stock ticker: TJX
- Go Daddy — Nope. Though I can make money off their affiliate program when I pimp them out ;) I have no shame in getting paid if others happen to use them because of me – I love their products!
- Starbucks — Yup! Symbol: SBUX
- Google — Of course ;) Symbol: GOOG – though WOW is it expensive at over $580!
- Twitter — Nope. Though not really sure how they’re making money anyways…
- Panera Bread — Bingo! Symbol: PNRA
- Amazon — You know it! But do you have $180 to spare? Symbol: AMZN
I could go on and on, but I think you get the point. It’s very easy to invest in places you believe in and/or use a lot. And chances are if YOU love ’em so much, so do thousands and millions of others – regardless of the company’s management or financial balance sheets (though very VERY important, of course – remember what happened to Borders? *tear*). So there’s def. some huge risks involved going this route than sticking w/ those companies with solid business experience over dozens and dozens of years. Though, in many cases, some of the companies you like ALSO fall under these investments people trust a lot too! Those biggies like Coke and Apple and AT&T even – they’re always staple stocks in many people’s portfolios. So perhaps the middle ground here is finding these companies that you adore AND have awesome track records, over some of the newer or less-proven ones yet?
I dunno… but either way we’re gonna find out soon ;) I’m hoping to get some more thought on this from you all though first, to see if anyone’s tested a lot of this out already. If you have, will you do me a favor and share your experiences with us so far? Did you do better than the average market with this strategy? I’d love to see how it compares with the other kinds of investing out there – and even more so *what* the companies or brands you believe in are too;) I’m voyeuristic like that!
I’ll let you know once the trades are in progress, and what I end up picking up. It’s exciting to think about, that’s for sure! I love the idea of loving all my stocks, and not just getting them because they’re solid investments… who knows how many companies I own parts of that do something dirty or immoral or just totally something I have no idea about, ya know? I mean, that sounds bad to say – that I don’t *know* all my companies or funds I invest in – but that’s why I use advisers like my friends at USAA, or I copy masters like Warren Buffett ;) I may not know what the hell I’m doing, but you better believe they do! Haha… and in this given point of my life, I’m okay with that. I trust them to do a better job than myself who (obviously) goes on emotion with this type of stuff. It may not work for everyone, but so far I really can’t complain w/ my results ;)
So yeah – stay tuned! I should be poking my hands into my favorite companies soon enough… another fun experiment to try!
———–
PS: Legal tells me to say this: Just like all my theories or trial runs, I don’t advise others doing the same unless they know what they’re getting into. I like to take risks and have more fun w/ my stuff than the average person, so please don’t take all this as advice! It’s just me talking out loud and putting other perspectives out there :)
PPS: Speaking of all my trial runs, remember the Ultimate IRA Test? So far the non-actively traded account is still in the lead!
UPDATE: See how it panned out 1 year later :)
(Photo by lydiashiningbrightly)
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I understand what you’re saying about investing in companies that you love, but I think that’s a flawed approach. I’d much rather invest in companies that I do business with, but hate. Think about it; these companies must have a pretty good competitive advantage if their customers hate them but still remain as customers.
I’m talking banks, telecoms, utility companies. Nobody like these companies, especially when they raise your monthly fees. But these fee increases usually result in a dividend increase for shareholders.
This is my buddy The Hoff’s strategy, and his stock picks this year are already up 8% (while the S&P is only up 4%).
Seems like as good a strategy as any.
Not quite what you are asking, but when I opened my IRA, I spent $25 to buy some shares of the only publicly traded company I’ve ever worked for. That $25 is now worth a bit under four bucks!
Along the same lines I did this a few years ago. After the recession and retail stocks were hammered, I went to the mall. Upon walking around, I saw that there were so many women walking around with Victoria’s Secret bags (you can’t miss the bag). The store itself was packed. I did a little research and decided to invest. I would go to the mall occasionally, just to see if people were still shopping there. And they were. I have made a decent amount of money on the stock too. Granted, it’s just one stock but I’m pretty happy about it.
Also, it sounds like you are talking about Peter Lynch. He said to only invest in companies you know.
@Echo – Haha, now THAT is pretty smart thinking ;) In that case I should invest a butt ton in Comcast!!
@Kevin @ Thousandaire.com – Nice! And are you talking about your real friend, or the actual Hoffmaster himself? (Or are they both one in the same? Cuz in that case, I’m totally hanging out w/ y’all. I’ll bring the burgers!)
@Edward Antrobus – Oh boy, haha… I hope you really loved that company! ;)
@MoneySmartGuides – Nice call! If you invested in them a while ago too, I’m sure you’re as happy as those men who get to enjoy those shopping trips too! Haha… and you may be right about Peter Lynch, I’ll have to go and research him a bit. (Though I do know a lot of companies that I don’t like very much, so maybe it’s a bit different here? *only* investing in those you love?)
Interesting post…it for sure makes investing sound a little more interesting. You would probably say a little more “sexy”! :)
Another approach is to buy a fund that have specific stocks and then some that you are interested in. For example, there’s a fund that has Microsoft Apple and some other companies in their portfolio. It’s a matter of doing research. Look forward to reading about your latest adventures in investing.
kristin
While I think this would be a good way to personally invest in stock (especially when you are just getting started and want to understand how it works) if truly EVERYONE did this then Apple would rule the entire world, and things like toilet brushes and traffic lights would never get made. ;)
Here’s a question… What about owning Facebook when that happens?
Great post…. not only should we invest intones we like, but ones we think are ethnical. I like making money (well, I hope to make money) so i may like to invest in a gas company. I’m not sure, however, that they are ethical. But like they say, invest in what you know!
Hey J. This isn’t a bad idea, as long as you couple it with clear-eyed financial analysis. For instance, I’d love to buy Amazon or Costco, but when I work through the numbers, I realize that they’re too loved to feel comfortable that their stock prices will continue to appreciate as well (or, ideally, better) than the market from here. Here’s a link to the first PI column, in case you’re interested: http://www.kiplinger.com/columns/picks/archive/how-investing-is-like-cooking.html
I’ve thought about this. There are certain companies that I will not invest in (tobacco)
The only thing/company I cant agree with is GoDaddy. I understand that you make some cash off their affiliate program, but there are honestly lots others. The CEO was documented killing elephants, they supported SOPA and PIPA, and they are notorious for violating ICANN conventions. Additionally, I had a personal run-in with a documented case of fraud and they refused to remove the website. I had a court ordering a penalty against the website for $50k, and forbidding them from operating. I also had documentation from other companies. A legal rep from an insurance company (who they were pretending to be, to sell insurance), and a legal letter from the Disney corporation validating the fraud. The only reason the domain was closed is because the owner who was fined in court and forbidden from operating closed it. He only closed it when the state investigators started looking for him since he refused to pay the fine.
All documented in legal documents, all presented to various levels of godaddy fraud and customer support, all ignored.
My legal action, however, got me the money back. That still wasnt enough for them to close the domain.
I’ve heard this before as well. Like you, I can’t seem to remember exactly where it comes from. I’ve also heard something along the lines of “only invest in companies that you use.” I’ve done ok on that front, but certainly have had a few downs. But, I’m not much of an investor in the first place. I managed to buy into MSFT at the height of the dotcom boom, only to have the price drop by 50% during the bust and never recover…
This sounds like a fun idea, but yeah, probably not the best investment approach as it’s severely limiting. I’d love for it to work, but it just doesn’t seem possible.
I also wanted to report some success, despite my godaddy rant. When the market dropped I immediately bought stock in the various companies that plummeted. AIG, Ford, Sirius Satellite radio, etc. I did VERY well. Holding on to Ford and Sirius. As the economy improves, auto sales will go up. So ford will likely rise. Most new cars come with Sirius satellite radio, which results in an initial jump, plus some increases from those who subscribe.
So… use compounding stocks. By stocks so that when one goes up, so does the other. It’d be like buying stock in a company who makes tires, waiting on auto sales to increase. Not a bad idea either.
I think you would have the same chance as the people who buy all the ‘recommended’ stocks. You never really know what’s going to happen; at least you’ll be more excited along the way. :-)
@Brad Moore – Indeed I would, my good sir :)
@kristin – That’s def. true too. Not *as* fun, but probably smarter ;) I’ll let you know what I end up doing later!
@Rachel211 – Hahahhahaa.. good point, indeed. Haha… that is too funny.
@Bob – A great question for sure. I probably wouldn’t just cuz I don’t really care one way or the other about Facebook (I do budgetsaresexy stuff on it, but don’t like my “real” facebook page cuz I find it freaky how much you can know and find out about people on it) but odds are they’re in it for the long haul. So if you like them and believe in them, then sure – I’d prob. do it :) Though I don’t think they make nearly as much money as people think. Even though they’re “worth” a crazy amount. Crazy valuation stuff…
@EconomicallyHumble.com – Yup, all good things to consider for sure.
@kathykristof – Hi friend!! Thanks so much for stopping by and sharing your opinion withs – means alot coming from a professional in the field :) Def. good things to watch for and think about – even though it pains me to think Amazon isn’t worth it! Haha… you rock, thank you so much.
@Michelle @ Making Sense of Cents – Yeah, and others usually stay away from alcohol or porn/etc too. The “vice” stocks. Actually, I think there’s a fund that ONLY has those too! Haha… cuz they never go away, esp when the economy goes bad ;)
@Chris – Man, you’re like the 3rd person this week to tell me how much they’re against Go Daddy, and it’s starting to sink in a little :( It just really sucks cuz I genuinely LOVE their product and customer service, but when it comes to the “other” stuff behind the scenes it seems they just keep getting slammed left and right. Very tough position to be in as a consumer. But all valid points, thanks man – appreciate it.
@Beating Broke – Oh jeez, yeah – I mean the risk is already high for ANY stock really, over mutual funds and other investments. I guess if you can take the volatility though, you’re already prime for different strategies like this? I definitely keep my stocks as a smaller portion of my overall portfolio – that way when I get burned (which is always bound to happen) it can never take down the whole house. I can’t EARN a lot either going that route, but enough to satisfy my cravings ;) Thanks for stopping by, my man. (Look at that! I didn’t call you a girl! ;))
@Jeffrey – I’ll let you know how well it works (or doesn’t) in a bit, haha…
@Chris – I own Sirius too ;) One of my first stocks I ever bought actually, way back in the day. But really cuz someone told me they were good – I didn’t really know what I was doing, haha… I agree w/ car sales too, I’d be interested to see how it all plays out over the next 3-5 years.
@Jen @ Master the Art of Saving – Right? At least they’ll be “recommended” by ME in this case! Haha… I think they have a decent chance of doing well too ;) But we’ll find out soon enough…
Back in the day when I used to work for the SBUX (Back in 2008) I talked about how the stock would never go up from the 8-10bucks a share. Now it’s at 47 bones! I really wish I would have had faith in my ex-employer and invested a lot more. Granted – back then I didn’t really have the funds to do any sort of smart investing. Thanks for the post update!
– FYI. I would look into cloud computing and cyber security companies right now. It’s a booming business and might be something you want to get your hands into!
– Craig (Daddysbroke)
Uh, you should do some research on those companies. Look at the fundamentals. Are they overpriced or fairly valued? What is their P/E ratio? Are they facing any macro or secular headwinds (i.e. read the WSJ today on Target. Also, I bought TGT at $47 and sold it at $70. I don’t think it’s ever hit $70 again. In fact, it’s only trading at like $50 today and it’s been years since I’ve held it.) So I would say if you are going to play individual stocks, you really can’t just buy and hold. You need to trade them actively.
Gotta agree with the other posters about GoDaddy. I love their services as they are the best at what they do (in my opinion). But the founder, his colonial attitude in regards to the elephant shooting, their principles, SOPA support (and wishy washy reversal of their stance), and choice of advertising makes me question if I’m doing the right thing by being a customer. Too bad there aren’t more viable competitors.
Oy, I did this with Netflix and Pandora. Netflix was doing so well (sob!) before it tanked. We’re holding on in hopes that they get their butts back in shape. Pandora, on the other hand…We didn’t buy at the peak ($26) but we did buy the first day ($17) and have lost quite a bit too.
When I get money to invest again, I want to hit up Vanguard’s Dividend stock. I realized I liked banking on individual stocks less, and just making stable money more.
The person who originally (or at least where I found it) came up with this idea of investing in companies you love or use is Peter Lynch, the ex-fund manager. He’s written several very readable books on investing.
I like the concept of investing only in companies that you use, know and trust… but just because I love a company doesn’t mean I trust them to use my money wisely.
I love Google and its products… ditto Pandora, Netflix, Facebook and a myriad of other companies… but I wouldn’t TRUST them as far as I can throw them.
I was all set to get MCD. I love the Big Mac and fries, but I just don’t eat them very often. :)
The stock went up quite a bit last year though so I think I’ll wait for a pull back.
This year, I’ll invest in energy stocks. We all love driving, right? Gas is going to go through the roof this summer.
Great theory and you might do ok with it, but do you really know about all the good companies that exist? I’m sure there a good few on the S&P 500 many have never heard of. Russell 2000…lots of research to do on that one. I’m interested, but glad it’s your money involved in the experiment and not mine. I wouldn’t be able to sleep at night.
@Craig – I hate when that happens! :) But you’re right – we don’t always have money to invest or play with when we need it. Which is all the reason more to be financially SMART w/ it when you can, and wait for these opportunities to come up so you can jump on them. I hate missing out ;)
@brooklyn money – I know you’re right in that, but I don’t know I can follow it all the way ;) It just bores the piss out of me. But I also don’t like losing lots of money either, so we’ll have to see. Maybe I can do a scan of info for each stock so it’s not totally investing in the dark, but also not spend hours on it. I’d be happy with an OK return than say, a killer one if it means spending less time on it.
@Vu – I know, it’s $hitty for sure. I wish no one told me about that stuff ;) Thanks for stopping by btw, appreciate it!
@Kris @ SimpleIslandLiving – Yeah, I think ultimately that’s really the way to go – esp. if we’re talking about big money here and/or your future earnings :) I’d never go “all stocks” with my old 401k money, but I am feeling riskier w/ more of my “play” investments… just gotta make sure I don’t go overboard and turn ALL of future investments into that risk category. But I’m usually prety good…
@Harry – Awesome, thx! You’re the second person to say that today I think, it must be him :)
@Edu @ DollarMusings – Haha… and actualy, you COULD throw them if ou brought it up on your computer screen ;)
@retirebyforty – For a second there I thought you wrote “MGD” and was gonna ask you about your beer taste ;)
@Brent Pittman – Haha, well I’ll be glad it’s my money too if I strike the jackpot with it :) But either way, it’s all filed under the “have fun with this investment money” category – I’ll still leave the bulk of my money in more stable and smart funds. It just bores me to play nice with ALL of it.
I love this post. I invested in Chiptole when it was $44 a share. My reasoning? Everytime I went in the line was super long and people didn’t seem to pay $6+ for a burrito. The investment has definitely payed off.
I saw an eBook or some other course online that stated you could make mint by just watching the crowds in the stores you frequent. Can’t remember who wrote it or where to find it, but I do remember seeing it somewhere. Definitely some sort of ebook type thing, though. Anyways, here’s what I would do if I was following that method:
WHM – Whole Foods Market is my favorite grocery store. It’s so expensive, but the ability to purchase healthy and organic overrides sometimes. Stores are always packed, too. It’s high in the $70’s, but it looks like it may keep going to 100 and above.
MCD – On the inverse, poor people gotta eat, and there’s not much cheaper than McD’s. Where else can you get breakfast, lunch, and dinner for 3 dollars (mcmuffin, cheeseburger, chicken sandwich). Nope, not healthy, and will make you fat if you do it every day. But it’s going to keep growing. (Had some of this earlier this week, but sold it when it fell below $100).
AMZN – It’s high, but Amazon is killing Best Buy, Barnes & Noble, and pretty much any other brick and mortar business. Target is asking that manufacturers create special bar codes just for them so that people will stop price checking on their phones with Amazon’s app. That shows strength like no other.
SBUX – I think this one may have topped out, but it’s a favorite and the crowds are huge!
I think it’s important to invest in companies you know and understand, but I do agree that being too emotionally involved in your stock portfolio could be dangerous. I don’t own very many stocks so as of right now I’m not particularly attached to any. I feel like I trust what’s well-established and familiar (ie. Proctor & Gamble, Coca-Cola, McDonald’s) even though I don’t necessarily buy their products or services. When I buy stocks, it’s usually for the long-term so I ask myself, “do I think this company will still be around and successful 5 years from now? what about 10?” etc.
Investing in companies you know, has always sounded like a great idea to me, even back in 9th grade we got to trade and sell stocks for fun. I made “fake” money, but it taught me to go with my instincts and go with businesses I know would do well. Like Coke for instance. Anyway, I only trade for fun, because investing in anything other than retirement and school is not my to do list, but I like the idea of making this a game and maybe playing along while not actually purchasing stocks. Maybe I need to put investing in stocks on my goal list since I need new goals and am already playing it safe with other investments like mutual funds, cd’s, etc. Or not, I mean I already have two jobs, school and am trying to start up a couple of clubs :)
My father is the biggest Apple fan in the world, I am pretty sure, so he decided to invest right before the first iPhone came out. He rode the stocks for a while and things were a little disappointing at times when Apple would release something new and it would do well, but not quite as well as predicted so the stocks would fall (this drives me crazy!). But he stuck with it and ended up getting double what he invested when he purchased the stock! Pretty awesome!
I’ve always thought of this strategy to be more appealing to me and also easier to commit to. Stock picking is already risky enough and that uncertainty stays with you until you sell said investment, why not pick companies you love and soften the blow a bit. Emotional decisions sometimes are good for us. As for my personal experience I had good luck with GE back in early-mid 2000s and a little bit of bad luck with Sirius Radio. Good Post.
“PPS: Speaking of all my trial runs, remember the Ultimate IRA Test? So far the non-actively traded account is still in the lead!”
You’re passive account will, 90+% of the time, beat actively managed accounts. I’m a firm believer in low cost mutual funds, not because of their performance (they’re average, but because I have *some* control over it – the fees) but because they’re not weighed down by the fund managers ‘picking your pockets’ each day.
@Ronx – Holy! That ish is up to $360 now! Wowwww, good call on that for real! :)
@Brian – Haha yeah! That seems to be a smart strategy too from the comments some of y’all are leaving – I like it :)
@Bridget – I think that’s smart – asking if you think it’ll be a good company in a handful of years. Ultimately I’d love to buy and then just forget, so picking the hottest trends or latest “it” companies may hit me on my ass later if I forget to sell ;) I wish there was just one solid stock that just always goes up for years and years w/ no worries, haha…
@LB – HAH! Yeah, might not be the best time for that yet ;) Unless you wanted to just play with, say, $1,000 and see what happens. Maybe once you hit $1500 or $2000 you sell and apply to one of your clubs? So you have a definite “out” – which most of us don’t. And what will hurt us sometimes ;)
@SmartAssetTeam – Yeah! That was a smart one to invest in for sure! Maybe still is too, who knows?
@Rich Uncle EL – Thanks man, appreciate you reading and taking the time to comment :) I oddly enough got into GE as well, but only last year. I think it was $10 at the time and now it’s hovering around $19 so not too shabby! Though only if I sell ;)
@me – Yeah, that’s not the first time I’ve heard that either. I think there’s def. some validity to it, so I’m kinda hoping that one wins at the end of this run :) Though of course it would be much better to have someone kicking ass where I woulnd’t mind at all paying them to do more of it! Haha…
I saw last month that fashion house Michael Kors went public. I was considering buying some, but haven’t done any research. I love Michael Kors and his products. But I don’t know how stable fashion companies are as far as investing goes.
That’s the question of the day, isn’t it ;) If I liked Kors I’d try it out and then let you know, but not sure how helpful that would be for you, haha… Start watching it though and see what happens!
This is a fantastic idea. If you stop and think about the fact that people will put their money into stocks of various companies, but they wouldn’t even walk through their door to pick up something small. How many people do you think own stock in Apple but refuse to use an Apple computer or iPhone? Or who refuse to drink soda, but stock up on Coca Cola stock because their dividends are steady. That’s not to say I’m not guilty of the same — I don’t eat fast food or drink soda, but you better believe I have Coca Cola and McDonald’s in my portfolio — but you would think that if you won’t support a company with your business, you wouldn’t want to support them by purchasing their stock.
This is such a beautiful concept and I agree that the U.S, would regain much of its former glory and charm if this happened, but greed and convenience will always reign supreme. An example close to my heart is the death of blockbuster and other movie rental stores that used to be so widespread. Although these stores played a special part in my childhood- my cure for teenage angst was always renting a few movies- I fell into the same trap of convenience and cheapness that everyone else did and defected to redbox and netflix. In much the same way, people will make financial investments in what they see as benefitting their wallet, whether or not they respect, or can even tolerate, the company values. Morality is a distant cousin to money.
@Kelsey @ Zero to One Million Challenge – Yup! Or you block that from your brain cuz you know the money is good, haha.. like w/ vice stocks out there ;)
@jeffrey@healthyfinance – Oooooh great quote – “Morality is a distant cousin to money.” – I like that! And sadly, very much true at times :(
I have one word for the concept of investing in companies you love and use all the time:
Webvan
(Ok, a few more words: I dropped $1000 into them because I and everyone else I knew used them at least once a week. We see where that went. :) )
Webvan? Never heard of but I’ll go Google now! Glad you found something you believe in! :)
Woahhh!!! haha… just saw they busted in 2001! Haha.. wow. Okay, great point ;)