Friday, February 21, 2014

My Investing Methodology.

What is one of the reasons why I am so passionate about investing?

Well here is the secret: I approach investing as if I were buying a part of a company, which is exactly what everyone does when they invest but many don’t look at it the same way. How cool is it to say you are a “part owner” of Google, apple, Starbucks, McDonalds, Coca Cola, etc. etc. There is nothing more exciting for us investors (when it comes to stocks) than doing our research, finding undervalued yet high quality companies, putting some money on there and seeing it grow.

The idea for this post came from my experience this week at McDonalds (ticker: MCD). I may not share this much on the blog but I am a very healthy conscious person. About 80% of the time I try to make a conscious effort to eat nutritious foods and to work out whenever possible (or as consistently as possible). However, I am only human and from time to time I do get cravings for particular foods and this past Monday MCD was one of them.

 
 As I entered the newly renovated location by my school I could not help but smile at the modern set up. Despite the controversy about the lack of nutrition in their foods, which I can’t really disagree with; as an MBA student I have a tendency to look beyond the fa├žade of businesses and at what companies actually do in order to maintain sustainable competitive advantage in a world of never-ending competition.

I have to say that with about 73 years in operation (established in the 1940s) MCD sure knows the definition of that term inside and out. They may have had their ups and downs through the years but they are working hard to expand menu choices and provide more variety for a growing health-conscious population. They do this while maintaining their famous staples that have made them the company they are today and which people can never get enough of.

We can’t ignore the fact that they are facing competition from ‘up and coming’ health-focused fast food companies. However, the important thing is that MCD seems to be well aware of this and are making strides towards keeping up with changing times. There is no denying that a company like Mickey-D's is not going anywhere. At least not time soon; and probably not in our lifetime. It may not be healthy but it has a market and a big one.

I have owned shares of MCD on and off for the past 5 years and it has been quite a ride! There was a time about a year ago or so where they had a poor quarter and the stock price decreased significantly but my trust in the company as well as my trust in their sustainable business model made me hold on. Shortly thereafter the stock came back up and that’s just how its been on and off for as long as I have been investing in it. As the major stock geek I can be at times, I felt very excited to be a customer in a business where I’ve owned shares. I may not always own shares in this company but this is where I stand at this point in time.

 …And there’s more
 
 

 

As I made my way to the soda fountain I got even more excited (am a geek or what?!) when I noticed the flashing Coca Cola Logo. I was reminded that MCD’s top vendor for drinks is Coca Cola (ticker: KO)-- which is a company where I have also been a  happy shareholder since 2008, and then I smiled some more.

So there you have it! This is one of the reasons why I love stocks so much—I get to own small pieces of huge corporations. How amazing is that?! I also love this country for giving me the opportunity to build wealth via the wonderful world of investing!

If you are just starting out with investing but aren’t sure where to begin or where to buy first, think about those companies where you do business. Are you a happy customer? Would you invest there? Then, do your homework and make your decision! If you are a seasoned investor, think about your personal reasons for investing in companies. What drives you? What keeps you motivated in this sometimes unpredictable world of investing?

Have a great Weekend everyone!


If you already invest, what is your favorite thing about it (besides making money)?Disclaimer: I currently own shares of MCD and KO. Don’t invest or cease to invest solely on the information provided on this blog post.