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Since I am a loyal customer, why am I not a shareholder?

Updated: Jun 1, 2020

Since I am a loyal customer, why am I not a shareholder?

This is the question I have often asked myself, and it’s the source of my greatest investment frustration: if am loyally buying products from certain companies, why am I not also buying their stock? All I had to do was look at my family’s spending patterns, and I would have found so many more investable ideas! As it turns out, my wife has a great filter for new and interesting products, but we need to work closer together in order to connect the dots.

I know the brands, but why don’t I own the stocks? I bought the first, and every other iPhone. I love my Lululemon shorts. We use Quick Books at work. I’ve driven the Tesla. I order via Amazon Prime. I like Chipotle. I drink a lot of Starbucks! The list goes on and on of companies I have known about but failed to take action on purchasing their stock.

Since I have had enough missed opportunities, I started making a list by going straight to my family credit card statement, checkbook, and most importantly, my monthly subscriptions. This is how I developed my new investment thesis: follow the money!

After identifying the public companies where my family spends, I created categories to help me organize my thoughts. Here are my key categories and companies that came out of my family’s spending habits.

Retail - Amazon, Lululemon, Nike, Restoration Hardware

Restaurant - Starbucks, Shake Shack, Chipotle

Technology - Apple, Google, GoDaddy, Dropbox, Wix

Payments - Visa, PayPal, Square

Business Services - SS&C, Intuit, Etsy, AT&T, Comcast

Banking/Investing - JP Morgan, Schwab, Interactive Brokers

Healthcare - United Health, Aetna

Entertainment - Disney, Spotify, Sonos, Dish, Facebook

Now as you can quickly notice, there are some great performing and poor performing stocks on this list. As a customer of all of these companies, I have my own experience with their products or services. This helps me think about if, and how much, they should be weighted in my portfolio. On the surface it’s easy to know we spend big on Amazon and Starbucks, but Visa, and now Square, are also in the middle of a lot of these transactions, and they need to be weighted accordingly. When I think of my healthcare plan, I have spent heavily on both United Health and Aetna, so they are also worthy of consideration.

In summary, I have forced myself to be more aware of the public companies where we spend our money, and I’ve started beginner positions despite their often expensive (price to earnings) valuations. This way, when the stocks go on sale, I’m more familiar as a shareholder, having done more research while monitoring my holdings.

The market has given us plenty of opportunities to add to our favorite positions during periods of volatility, but getting started has always been the hard part. If you are diligent about this analysis for a month of spending, I’m sure you will find your own ideas just hiding inside your budget.

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