Issue #116: My Coke Zero addiction just changed my stock strategy

October 20, 2021 • Issue #116

Hi y’all —

Did you know there’s a hamster who trades cryptocurrency?

His name is Mr. Goxx, and he has an “office” that’s connected to his cage. In the office, Mr. Goxx runs on a hamster wheel that helps him select assets. He then walks through “buy” and “sell” decision tunnels, which trigger orders that get sent over to a trading platform. And — here’s the kicker — Mr. Goxx’s investments often perform better than the S&P 500.

Getting market insights from a literal animal may seem odd, but it’s not the only weird place people are seeking financial advice. There’s a whole TikTok trend right now where traders are copying House Speaker Nancy Pelosi, whom one user called “the stock market's biggest whale.” Some even use psychics.

Not being judgy! Personally, I don’t really have an investment strategy. Most of my interaction with big companies is through the products I use — I’m a Coke Zero fiend, so I guess that means I support Coca-Cola, and I am never more than two feet away from my iPhone, so I suppose that makes me an Apple fan. But I’m not sure whether that means I should put money behind them.

Is it a good idea to invest in companies that make products I like?

Kelly Lannan, vice president of young investors at Fidelity Investments, agreed to help me figure it out.

She said that before I go wild picking stocks, I should ask myself a series of questions: How long do I plan to stay invested? What are my financial needs? What am I investing for, and how much risk can I potentially tolerate? The answers will help me balance my overall portfolio.

From there, she said it makes sense to invest in what I know. Companies that I’m familiar with are a solid place to start because I understand what they have to offer.

“You’re investing in these companies by buying their products each and every day, or every year,” Lannan says. “If you’re confident enough to do that, that’s saying something.”

How much I like something can’t be the only factor I consider, though, said Jully-Alma Taveras, founder of the financial education platform Investing Latina. There has to be actual data that justifies my decision.

To find that data, I need to dig a little.

Taveras said that whenever I’m looking at a company, I should locate the investor relations page on its website to read up on how the company is operating and what its revenue numbers look like. I should Google to see whether there are any headlines that could affect its earnings, research who leads it and check out what its debts are.

Reading financial statements can be hard for new investors, but Taveras said I’ll get the hang of it quickly. If I devote a few hours to researching one company a month, by the end of the year I’ll be an expert — and know what’s happening behind the scenes at 12 companies.

“Any time that you're going to make an investment you want to do that sort of research,” she adds. “The more [you do], the stronger your portfolio is going to be because not only are you investing into companies that you like, but you're investing into them because they are going to be profitable and going in the upward direction.”

Lannan said I’ll also want to scrutinize a stock’s history. How has it performed in the past? Is it booming because of a short-lived trend — cough, GameStop, cough — or does it have long-term staying power?

“Let’s say you like a certain fast food company. If the five-year trend isn’t looking so hot, you might not want to go with them just because they make your stomach happy,” she adds.

Fidelity has a web tool where I can enter a ticker symbol and see the 52-week high, 52-week low, when those occurred, and more. I can also look up analysts’ estimates and such.

After I’ve finished my homework and feel confident in what I want to do, I’ll want to start small. This allows me to become more comfortable with the process and minimize my risk.

Lannan suggested looking into fractional shares — and, once I purchase, holding onto them.

“Starting out, you don’t want to be buying on Monday morning and trading by end of day,” she adds. “It’s longer-term. It’s a means to achieve your goals.”

Taveras reminded me that if picking individual stocks still makes me nervous, I can invest in companies I like while still diversifying by choosing an index fund that simply includes my choice alongside others.

THE BOTTOM LINE

(but please don't tell me you scrolled past all of my hard work)

I can invest in companies with products I like, but I should only do so after I’ve come up with a portfolio strategy, identified my goals and educated myself about their operations.

Limiting myself to small-dollar investments to begin with is smart. Once I have a bit more experience, I can adjust my approach.

“Use the brands that you love as your way to get your research going,” Taveras adds.

VIA GIPHY

RECEIPT OF THE WEEK

check out this wild celebrity purchase

VIA INSTAGRAM

William Shatner became the oldest person to go to space last week when he took a quick trip 66.5 miles upwards in a Blue Origin rocket. Because founder Jeff Bezos is a fan of Shatner’s Captain Kirk, the Star Trek actor traveled for free — but astronaut wannabes will have to pay a LOT to follow. In fact, Blue Origin isn’t even releasing its prices right now. If you have to ask…

INTERNET GOLD

five things I'm loving online right now

1	This web tool shows what happens when you take out all the words from a piece of prose and are left with just the punctuation. If you put last week’s Dollar Scholar into it, here’s what it looks like. (I’d argue it’s even better than the opening passage from Moby Dick.)
2	The internet’s new favorite Twitter account is also mine: SNL Hosts Introducing the Musical Guest, which shares clips of SNL hosts introducing the musical guest. Standouts include Al Gore presenting Phish, Steve Buscemi throwing to Third Eye Blind, and Jamie Lee Curtis fangirling over James Brown. But even so, none of them are Daniel Craig announcing The Weeknd.
3	Obsessed with this weird deep dive into the death of Ronald McDonald, who has all but disappeared in recent years. What’s going on? Well, as Vice reports, “the plot is thicker than a vanilla milkshake making its way up a paper straw...”
4	I could watch zoo animals eating pumpkins for hours on end.
5	Sure, Adele is back, but so is Stromae, a French electropop singer whose music I adore. Check out “Santé,” then go watch the unsettling masterpiece that is “Papaoutai.”

401(K)9 CONTRIBUTION

send me cute pictures of your pets, please

VIA LAUREN TIERNEY

Meet Obie, a D.C. pup who has an extremely laid-back approach to investing.

Gotta go train my roommate’s cat to pick stocks.

See you next week.
 

 
P.S. Do YOU invest in companies whose stuff you like? What’s your favorite Saturday Night Live sketch? How much would you pay to go to space? Send tips to julia.glum@money.com or tweet @SuperJulia on Twitter.

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