Invest In What You Consume (Part 2)

Investments
By JingCheng Woo,

A common problem for newbie investors is that they might be taken aback by the thousands of companies on the stock exchange and perceive that investing is a daunting task. Previously in Part 1, we depicted that in our daily routine, the potential companies we might want to invest in are all around us.

One way to take baby steps in investing is to be observant of what you consume. 


If you are observant, chances are, the companies that you purchase products or services from are listed on the stock exchange. One way to take baby steps in investing is to be observant of what you consume. After doing your homework and research on the companies you use in your everyday life, you can start investing in these companies — investing in what you consume.

The Oracle of Omaha, Warren Buffett, is also known to have a diet of a six-year-old. He drinks five Cokes a day. But what we want to talk about is that his interest led him to buying shares of Coca-cola. He is also heavily invested into other consumer goods companies such as Kraft, Dairy Queen and even Apple. He is known to draw a parallel between stock market investing and the game of baseball.

“The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!’ ignore them.” This translates into his investment strategy and philosophy. He acknowledges that he is not an expert in every company and only invests in companies in his circle of competence (which we would be writing on soon, be on a lookout!) Invest in only what you know and understand.

We spoke to our guru, Qiuyan, and asked her what she considers for herself when she wants to invest in a certain company. If she has the luxury of time, she’d prefer to go deep into details like the valuation of the company. But when time is a challenge, this a list of what she thinks about:

  • She does fundamental research on the company and if the management team is competent
  • She reads up and becomes familiar with what they do and the industry they’re in
  • She does her homework to understand their product
  • She takes note of trends and how consumers behave
  • She isn’t hasty to go after short-term gains
  • She already has a plan and understands her risk appetite Click here to read about what risk profiling does
  • She decides how much fluctuation she will be able to stomach and not lose sleep over

What do you think of her considerations? Do you have any different thoughts? We want to hear from you!

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