Vail Valley investors should buy companies, not ‘Wall Street’
If youre an investor in the Vail Valley, you might be shaking your head in dismay after looking at your recent brokerage statements. In fact, you might even be thinking about giving up on Wall Street altogether. But before you do, consider the following story.Two typical American children, Mary and Michael, begin their day with a hearty breakfast of oatmeal produced by Quaker Oats, a subsidiary of PepsiCo, based in Purchase, New York. At school, they work on a computer using a Windows operating system produced by Microsoft, based in Redmond, Wash. Returning home, they do their homework under a lamp containing light bulbs produce by General Electric, headquartered in Fairfield, Conn. That night, their parents, pressed for time, take them to McDonalds, whose corporate office is in Oak Brook, Ill., and the children eat Big Macs and drink Cokes, produced by Coca-Cola, based in Atlanta, Ga. Before going to bed, Michael and Mary wash up with Ivory Soap, produced by Proctor & Gamble, based in Cincinnati, and are thrilled to learn their parents are going to take them to Walt Disney World, owned by The Walt Disney Company, which operates out of Burbank, Calif.You get the picture. None of these businesses are on Wall Street and when you invest in them, youre not investing in Wall Street, which is really just a shorthand term for our system of trading stocks. Unfortunately, many people seem to think they are actually investing in the system itself, rather than in individual businesses, so when they repeatedly hear that its been a wild day on Wall Street, they start believing that the very act of investing has become too risky for them.But thats not the case. As you can tell by their products, the companies mentioned above are likely to be around for a long time or at least until people stop using computers, washing their hands and eating hamburgers.Does that mean that the stock prices of these types of companies will just keep climbing? Of course not. These businesses, like all businesses, will go through good and bad periods, and their stock prices will reflect these ups and downs. But heres the key point: Barring an unforeseen calamity of epic proportions, there will be always be businesses in which you can invest. And if you buy quality companies, and hold them for the long term, youre going to increase your chances for success.So when youre considering your investment strategy, dont worry about todays turbulence on Wall Street. Instead, look at tomorrows prospects for the companies in which youre interested.Are their products competitive? Do they belong to an industry that is on the ascent or the decline? Do they have good management teams? Have they been consistently profitable over the years? By answering these and other key questions, you should be able to get a good sense of whether a stock is a good investment candidate.By thinking more about the individual businesses in which you might invest, and less about Wall Street, you can become a more focused investor. And, over the long term, that focus can pay off for you.Charlie Wick, Tina DeWitt, and Todd DeJong are financial advisers with Edward Jones Investments. They can be reached in Eagle at 970-328-4959, in Edwards at 970-926-1728 and in Avon at 970-845-1025.