You’re Their Loyal Customer, Do You Invest in The Company?
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For my family, there seems to be an obsession with Sony when it comes to certain types of electronics. Ever since I was a kid, I can’t remember a day when the TV didn’t carry the Sony brand. From what I can recall, there were televisions, a VHS player, a DVD player, a home theater system, a digital camera, the PSP, the PS3 and probably more….
Does this mean that Sony would have been a good investment? People often want to know how to begin investing with little money and are confused with how to pick a stock. Why not look into the companies that you often shop at?
The “Typical Trader”
When we think of investing, the simple logic that is often involved is: “I buy this stock at this price and I hope the price goes up”. It seldom occurs to us that we are actually becoming partial owners of a business and that we want this business to grow and become more and more profitable. The ability to take this perspective in their investments is what separates an investor from a trader.
The best way to obtain a firsthand glimpse of a business (aside from a quick Google search) is to become a customer of that business. With a short trip to the store, you can evaluate many core aspects of a business simply through the experience of making a purchase.
A Way of Getting Something Back
Simply put, if you buy from a company of which you are an investor, some of the money that you spent actually goes towards growing that company – which would result in a higher share price and higher return on investment.
Let’s say I’ve owned some version of an iPod ever since it became a hit with the consumers. Now, I’m using their iPhone and I own a Macbook with the prospects of purchasing the upcoming iPad. Apple has gotten thousands of dollars worth of business from me – it makes sense to invest in them to get a piece of that action. The craze for Apple products is grown drastically and being a loyal customer may have led to a profitable investment.
Not only would I remain loyal to the Apple brand, I’d probably try my best to convert every PC to a Mac. Did your MP3 player just crap out on you? Go get the iPod touch! Also, I’m advocating that every doctor carry the new iPad instead of lugging around multiple files and folders! Thinking of it as your own business, you’d find yourself doing plenty of marketing and advertising without any compensation from Steve Jobs.
But if I owned shares in McDonald’s, I’m unsure about how I’d feel about persuading friends and family that a Big Mac is actually healthy for them…
Disclosure: I do not own individual stock investments in the companies that appear in this article. Mutual funds and ETFs that I own may have a percentage of assets invested in these companies.
(Photo credit: Cambridge Cat)
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Lulu said:
Actually I do this myself. I shop almost exclusively at Walmart so I own their stock. I figure they get my money anyway so I might as well own the company.
March 22nd, 2010 at 10:15 am
