Why You Should Invest in Companies You Hate

Does your cable company make your blood boil? Turn the tables, and let the company make you some money for a change.

The electric company, your cable provider and your mortgage lender: All are collecting your hard-earned money month after month. And they may be making your life miserable, too, between increasing rates and nearly nonexistent customer service.

Rather than resign yourself to simply sending money to companies you don’t particularly like, turn the tables and let your least-favorite corporations make you some cash.

Here’s a real-life example: When gas prices were historically low in February 2016, Money Talks News founder Stacy Johnson invested $20,000 in an oil mutual fund — a pool of investments that includes shares of stock in corporations in the oil industry.

Photo by quietbits / Shutterstock.com

Stacy explained after buying the mutual fund:

“Now, when gas prices start rising, I might be paying more at the pump, but I’m going to be making more in my oil mutual fund.”

As of Jan. 25, Stacy’s investment was worth $31,948.43 — an increase of about 60 percent.

Interestingly, even the companies we seem to universally hate keep on making money.

Check out the five-year gains on pay-TV and internet providers, which all tend to rank near the bottom of the American Customer Satisfaction Index. For example, one share of:

-Comcast Corp. was worth $19.79 on Jan. 24, 2013, and $42.99 on Jan. 24, 2018 — a gain of about 117 percent.

-Dish Network Corp. was worth $36.63 on Jan. 24, 2013, and $47.73 on Jan. 24, 2018 — a gain of about 30 percent.
(Always keep in mind, past performance is no guarantee of future gains.)

The fact is that we may not like these companies, but the internet and cable companies are not going anywhere any time soon. The same goes for electricity, gas-fueled cars and personal banking.

Sure, even a big company can go under, but businesses operating in industries such as these are likely to keep making money because they provide services and products needed by the vast majority of the population.

If you decide you want to get in on these companies’ profits, you need to be smart about it. Here are three tips to help you out:

1. Do your research

Don’t buy a stock because I said it had a great five-year return. Don’t buy a stock because Stacy Johnson has it in his portfolio. Don’t buy a stock because you got a hot tip from a co-worker.

Instead, do your own research. Check out the quotes for stocks that interest you. Consider their historical performance, and then do an online search about the company to see if there is any sign of troubled waters. For example, is the company being sued or was its latest product release a bust?

Even better, skip buying stock shares of individual companies and go the mutual fund route.

Even Stacy generally advises against individual stock purchases. Instead, he tends to recommend a subtype of mutual funds known as index funds. For more on that, check out “Ask Stacy — How Do I Invest in a Mutual Fund?” or the video below.

2. Decide the best way to buy

Now, you need to decide how to buy into your hated company of choice.

If you have a lot of money to invest, you probably want to connect with an investment professional. If you’re planning to start small, read “How to Get Started Investing When You Don’t Have Much Money.”

If you’re determined to buy individual stocks, buying directly from the company you want to invest in may be the cheapest way to go. Otherwise, a number of online brokerages make it easy to buy and sell stocks.

3. Stick it out for the long term

When you buy and sell stocks, you almost always pay a fee. The online brokerage company might charge only $4.95 or $9.95, but that can add up quickly and cut into your gains.

More importantly, the value of stocks goes up and down on a daily, and even hourly, basis. Trying to time the market is a surefire way to lose your sanity, as well as potentially your money.

Make your picks and then resist the urge to move your money around unless you think the company is starting a long nosedive or is on its way to going under.

If buying and holding on to a stock for the long run makes you nervous, you may have too much money in one particular stock. You may want to spread out your money across multiple stocks or, better yet, mutual funds. Diversifying is the best way to reduce your risk of a catastrophic loss.