Investing is about making money, starting with a small amount, and making it grow over time. Whether you are an experienced investor or a novice, the basic principles of profit, loss, growth, and depreciation never change. When a company is doing well, its value will increase. If it isn’t, it will either stay the same or decrease.
As a result, smart business decisions are often less about strategy, market analysis, and graphs and more about foresight and common sense. A pharmaceutical company developing a vaccine during a pandemic is a clear example of an organization whose stock is more than likely going to appreciate. Investing in real estate in a time of economic crisis is probably not the wisest decision to make.
Of course, markets are unpredictable, and things can change very quickly. What is popular today might not be popular tomorrow. What was great yesterday might not even be good today. Yet, there are certain smart investment choices you can make at any time. These include seasonal investments, growth from the core, and long-term growth industries.
Have you ever worn a winter jacket in the middle of a summer heatwave? Have you ever seen anybody else doing it? There is no need for a thick coat in hot weather. Instead, mineral water would be much more useful. So would an air conditioning system or a pair of sunglasses.
Seasonal investment is about identifying businesses that will likely thrive in a particular season. Once you do that, the focus shifts to high-growth companies in short periods of time. A great example of a winter investment would be a ski resort, a winter apparel manufacturer, or an organization providing snow removal services. In summer, you could look into beachwear, holiday destinations, and marine sports equipment. Aside from the company itself, the key lies in investing a few weeks before the season starts and pulling out right before the end of it.
Growing from the Core
In the past, companies like Apple, Microsoft, and IBM were surefire ways to make money long-term. These and a few others monopolized the entire industry. As a result, their year-on-year growth was pretty much guaranteed.
Things have changed. Even though they are still giants, many smaller businesses have risen, sometimes with better technology, more innovation, and cheaper products.
So, how do you choose between company A and company B? One way to do it is by focusing on businesses close to the core. Apple, for example, makes phones, tablets, computers, etc. Instead of focusing on other phone companies, explore related businesses, including headphones, smartphone apps, transparent screen films, and portable chargers. If you’re looking at pharmaceutical companies, possible related industries would be medical devices, retail, personal care products like electric toothbrushes and shavers, and alternative medicine services like acupuncture and cupping.
The Power of Stability
Stable companies are organizations with a long history, consistent growth, and regular innovation. One industry meeting all three requirements is education. People, both young and old, have been using educational materials since the beginning of time. Hence, the industry continues to grow. As for innovation, textbooks and classroom materials have given way to multimedia tools and videoconferencing.
Another example of a stable industry is healthcare. Human beings will always need medicines and medical services. It’s an innovative industry with high growth potential. If you’re planning to invest, look at these and other stable industries, specifically at companies developing new, alternative ways to provide similar services.
For people unfamiliar with the industry, investing can be a daunting proposition. There is too much information, too many factors to consider. But, you can ease the process, make it more accessible. Three ideas worth looking at are seasonal investments, related businesses, and stable, innovative high-growth industries. By doing so, you will gain valuable financial knowledge and make sound decisions regarding your money.