Where Would We Be Without Supply Chains

Where Would We Be Without Supply Chains?

If you just started your investing journey

You may be tempted to think that just because you are a customer of a company, you know its true value. However, stop and think for a moment. Just because you’ve experienced stellar service or have experienced bad customer service, doesn’t mean that your individual experience is indicative of what has happened with other customers.

 

Every customer’s individual experience is subject to variation, this is because a company’s supply chain naturally creates output variation.

 

The best way to know if a company you like is a worthy investment is to combine your general experiences you had interacting with them and with their numbers. Look at their fanatical statements.

 

Try to gauge how much future revenue and profit they will gain. How are they fairing the public eye? Who is their competition and are they losing market share? Also, try to get information on their supply chain. Who in their ecosystem are they dependent on? What can you learn about these other companies? Can you invest in them as well?

 

If at the very least all you do is consider the possibility that it is unwise to gauge the value of a company based on your individual experiences, you’ll be in a better position as an investor. Also think about how their supply chain works and how it affects all of the customers involved, not just you.

 

If you then begin to do the homework, the real gritty research, you’ll be surprised by what you learn (not only about the company but, also about business overall).

 


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investing-in-the-culture

Investing In The Culture

A company’s value can also be derived from how cemented it is within our daily routines

“A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.”

— Benjamin Graham, The Intelligent Investor, Revised Edition.

 

Some of us are looking for opportunities within this chaos. During times of great pessimism, there are hidden opportunities. However, just because something looks like an unpopular opportunity you should still be wary.

 

If you’re new to investing, there are many resources you should use before investing your first dollar into a brokerage account. Of the hundreds of timeless principles that experts have provided to the commercial investor, two pieces of advice that I regrettably didn’t listen to when I started investing is this:

  • Don’t invest in anything that is posted as a hot tip, because if you’re reading it on a publication the value will be inflated by the time you make your purchase;
  • Know what the company is about before you invest your money.

 

One of the best ways to choose an individual company to invest in is to have a deep understanding of it. A good place to start developing this understanding is by considering how the company fits into your daily routine and more importantly, how it fits into your culture.

 

How often is the company discussed in the news? How long has it been operational? Do you know anyone who works at the company? What have they said about their experience working there? Is that company the only one that you use or do you also interact with its competition? All of these questions can lead to even more questions about the company, which is what you want. The value of a stock can be derived not only from its earnings report, reading “between the lines” in the financial statements.

 

Is this a company that will be a part of the conversation in the next 20 years or will it fall by the wayside as another innovator takes its place?

 


Image credit: Unsplash

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