SHREVEPORT, La., Feb. 1, 2005 (PRIMEZONE) -- The following is an investment opinion issued by StockPickReport:
StockPickReport.Com (http://www.stockpickreport.com -- the web's only non-mainstream stock rating service), rates EMC Corporation, Broadcom Corporation, Ford Motor Company and Starbucks Corporation.
STOCKPICKREPORT RATINGS:
EMC Corporation (NYSE:EMC) -- BUY http://www.stockpickreport.com/abrating.php?sym=EMC Broadcom Corporation (Nasdaq:BRCM) -- BUY http://www.stockpickreport.com/abrating.php?sym=BRCM Ford Motor Company (NYSE:F) -- STRONG BUY http://www.stockpickreport.com/abrating.php?sym=F Starbucks Corporation (Nasdaq:SBUX) -- BUY http://www.stockpickreport.com/abrating.php?sym=SBUX Tuesday, February 1, 2005 StockPickReport Commentary By Don Harrold, Senior Analyst
The Philosophy of Investing
Tonight I'm not going to pull up any charts. There will be no discussion of the market, indexes, or individual stocks. I want to focus on the whole philosophy of the concept of investing.
Let me start with a few statements of fact:
1. People make money to spend money.
2. People spend money to gain something from the exchange
of money into goods and services. This exchange is called,
"investing".
3. The finite amount of money earned guarantees a finite amount
of goods or services procured through the processes described
in points number 1 and number 2.
There is no other reason to earn money than to spend money. That money will be spent eventually by you, your family, your heirs, or well, whoever gets their hands on it. But, at some point your money will be spent.
The exchange of money is always an investment. If you spend $15 on a pizza from Domino's, you've invested in the taste and convenience of a Domino's pizza.
If you spend $250,000 on a new home, you've invested in safety, status, future revenue from the sale of your home, and other, more intangible things like, "I just love the view."
It don't matter what you blow your cash on -- it's always an investment.
(And, yes, I know I used "don't" when I should have used "doesn't". But, I'm a Cajun guy from Louisiana -- I can make grammar up if I feel like it.)
Look around you. Look at your life. Look at all the stuff you have. Everything you own was paid for.
Paid for with money. Money earned from work. Work trained for through school. School paid for by taxes or your parents. Taxes paid for by people who worked. Parents working to put you through school. Parents training for their jobs. Parents attending schools. Paid for by...
Okay, you get my point.
But, seriously, look around you. Look at your life. Look at all the stuff you've collected. Look at how much time you've traded for "stuff".
Look at the way you've invested your time and money.
You need to know that I make no value judgments here about your life. Only you can figure out whether your investments are worthwhile. But, just look around.
Here are just two ways I think people make terrible investments:
1. Buying more than one vehicle in a five-year span. Talk about
trading "good money" for bad! If you buy a car and walk off
the lot for $35,000, you're going to pay $4,629 in interest
(5% at 5 years). That's a 13% loss you'll take to do what?
Drive around. When you sell your vehicle after five years
(if you even wait that long), you'll be LUCKY to get
$18,000 back. So, that's $39,629 you lay out (that's
called "risk capital") and you return $18,000. Or, in
other words, a loss of $21,629.
2. Buying "fast food". $5.00 can either buy you lunch, or feed
a family of four for an entire meal. Spend $5.00 a day for
a year more than you needed to (on food that's bad for you
any way), and you've spent $1,825 too much. Five years into
that process and you've spent $9,125 on FAST FOOD.
These are just two examples of how people make poor investment choices. And, the ramifications are stunning. Not just for individuals, but for society.
If you could spend $18,000 on a used car (not the nearly $40,000 on a new one), and eat real food (not the junk served up at "fast food" chains), you'd keep an additional $30,000 in your pocket over the next five years.
What could you do with that money? You could put "good money" to "good use":
1. Pay off a house early.
2. Pay off a credit card. (or, have no credit card debt)
3. Give to a favorite charity.
4. Take off almost a year from work. (The average yearly
income is only about $35,000 a year). Or, at least take a
REALLY nice vacation.
5. Start a business.
6. Close a business you were a slave to.
7. Work less hours a week.
...or...
Invest in the stock market.
Whoops. I did it. I got back to the market. Sorry.
If you use the simple examples I give above -- which are VERY common -- you will find a way to get out of a financial problems, or enter into a new realm of financial freedom.
No kidding.
And, all of this from driving an $18,000 car and taking your lunch with you to work every day.
Imagine what you could do if you looked at how you invest, and how much time you spend paying off bad debts and paying for bad investments.
"It's only money."
Yeah, right. Next time you take a loss on a stock, realize that you could have been "playing with house money" as you wash down your "Quarter Pounder" with the large Coke you bought from the window of the McDonald's you pulled up to in your new Buick.
Hey, McDonald's and Buicks may not be your thing, but you get the point.
People don't have "money" problems, they have "spending" problems. Spend too much money and you'll spend too much time having to make it in the first place. However, cut back in just a few SMALL ways, and breathe easier as your debts decrease and your available time increases.
If you have questions or comments, please email don@stockpickreport.com.
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If the links to our ratings above do not work, please use these:
EMC Corporation (NYSE:EMC) -- BUY http://www.bigtimenews.com/russell1000/EMC-Stock-Quotes-News-and- Research.php Broadcom Corporation (Nasdaq:BRCM) -- BUY http://www.bigtimenews.com/russell1000/BRCM-Stock-Quotes-News-and- Research.php Ford Motor Company (NYSE:F) -- STRONG BUY http://www.bigtimenews.com/russell1000/F-Stock-Quotes-News-and- Research.php Starbucks Corporation (Nasdaq:SBUX) -- BUY http://www.bigtimenews.com/russell1000/SBUX-Stock-Quotes-News-and- Research.php
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