Harness Money

When I began stock investing, I started by looking around my area and thinking about all the companies behind the businesses in my local area. Walmart, Dollar General, Toyota, AT&T, etc. Some companies like Chipotle I love their products and then some I did not like their products.

Should you invest in a stock because you like the products?

As I have matured as an investor my answer has increasingly become No.

Sometimes it is a yes. I love Costco and think it is a great investment.

But honestly, that stock is the exception. Most of the time the stock of a business is completely separate from the products they sell. A business can sell a great product and then have a mountain of debt on the balance sheet. Also a business can have an ok or slightly bad product and put up massive earnings.

Apple is another example of a company that has great products and is a great balance sheet.

Always look at the numbers before making an individual investment. Even if that investment is an ETF. What is that ETF invested into? Unless you do your research you really do not know.

The majority of my winning stocks are in products that I will never use.

There are plenty of products that I will never have an interaction with. One of my best performing stocks is Lockheed Martin. $LMT.

They make jets for the U.S. military. I will never have an interaction with this company. The same is true for the vast majority of government contractors. But this stock has been an incredible winner for a variety of reasons. The US military budget continues to increase. $LMT technology keeps getting better. They keep selling to more to US allies.

This is also true of many software stocks. I have never used Salesforce $CRM, but it has been a great stock.

The opposite is also true.

AT&T is the dominate telephone company in my area. I have always used their services. But $T has been a horrible stock that I would never touch.

Energy, Utilities, Materials, Biotech.

There are so many industries that I will never come into contact with. But there are plenty of great stocks that can be great long-term investments.

It is good to use the products around as a jumping off point to look into investments, but then you should start branching out into the universe of investments that are available to you.

Decide your investment style first:

Growth, value, income, safety.

Then your goals

Do your research and pick the investments that match these criteria and stick with it for a while to make sure it working. Investing definitely takes time.