Do You Invest With Your Mind or Your Moral Compass?

Warren Buffet has always invested in businesses he believes in, companies he values and thinks others undervalue.

I’ve always interpreted that as invest in companies you would use and that sell products that you buy, but recently I was reading this article by Budget Snob about unconventional investments that paid off, and I realized that Buffet wasn’t particularly telling us to invest in companies we use, but in companies that sell a product we believe is profitable.

As a pretty frugal family man, there are products that I never ever buy, because I do my research and the product is not worth the cost for me. However, even if I am not buying those products, some of them are of great worth to other people who continue to pay for them, which makes the product worth a great deal of value.

Let me give you a few examples of products that are shunned by those in the personal finance community, but ones that are profit makers and should be considered for investment in my opinion.

Self storage

Personally, I see no reason whatsoever to pay for storage in the long term. I can see value in the facilities for a short move in between residents, or in other rare circumstances in which you would need a storage unit for a few months at most. I can see the value in having the ability to rent just the amount of space you need, to store your belongings for a short amount of time.

What I don’t get is when people store their belongings in self storage for years on end. If there is something I am willing to put in storage, and not see, for over a year, that thing adds nothing to my life, and I would simply get rid of it.

Nevertheless, thousands of people a year put things into self storage, and continue to keep them in storage for ages. Self storage facilities are a great investment much like a rental home, without the tenant. Without the tenant, your risk goes way down and maintenance on self storage facilities are very minimal. There is a huge demand for self storage across the country and revenue for 2009 was around 22 Billion dollars. I wouldn’t mind having a chunk of that revenue , my personal bias against self storage units aside.

Credit Card Companies

These companies do business for the money and personally I feel like their policies and business practices are scandalous. They send out credit card offers, pre-approved, to people that have no responsibility using a credit card; those with bad credit that are sure to get a very high, but very profitable interest rate and will probably default on their payments thus skyrocketing their interest rate for even more profits.

Up until the last couple years, credit card companies had very few regulations and were very sneaky about some of the things they could do to milk more profit out of their customers. Now that regulators have stepped in, credit card companies have to be more transparent, but they have found other ways to turn a profit with all sorts of new fees.

All of this aside, people continue to use credit cards…I still use a credit card and even though I pay my balance in full each month, the credit card company is still making money in transaction fees charged to businesses. Credit cards are good business and make money, thus credit card companies in general can be good investments.

You may be thinking, “yea, sure, they are good business but you should never invest in a company that goes against your moral fiber..”

That’s a very tricky statement and there are certainly businesses out there that are big money that I would never in a lifetime put any money towards such as the adult film industry, or telemarketing firms, but there is a line each of us have to draw between innocently making a profit from a harmless business that we don’t particularly care for and investing in a company we know is just plain wrong. That is a decision each of us have to make for ourselves.

Have you ever invested in a company you didn’t believe in and come out ahead? Did it feel wrong?

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15 People have left comments on this post



» Miranda MarquitNo Gravatar said: { Sep 17, 2010 - 07:09:00 }
» Jesse MichelsenNo Gravatar said: { Sep 17, 2010 - 09:09:00 }

Interesting… 🙂 I guess that title really construes the wrong message doesn&#039

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» Miranda MarquitNo Gravatar said: { Sep 17, 2010 - 09:09:00 }

Hahaha. The post was really good. A look at the disconnect that we sometimes have between what we believe morally and what makes us

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» Jesse MichelsenNo Gravatar said: { Sep 17, 2010 - 10:09:00 }

Interesting… 🙂 I guess that title really construes the wrong message doesn't it?

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» Miranda MarquitNo Gravatar said: { Sep 17, 2010 - 09:09:21 }

Both?

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» Miranda MarquitNo Gravatar said: { Sep 17, 2010 - 11:09:03 }

Hahaha. The post was really good. A look at the disconnect that we sometimes have between what we believe morally and what makes us money.

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» Jesse MichelsenNo Gravatar said: { Sep 19, 2010 - 11:09:00 }

Thank you Mira

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» Jesse MichelsenNo Gravatar said: { Sep 19, 2010 - 02:09:19 }

Thank you Miranda 🙂

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» Car CoachNo Gravatar said: { Sep 20, 2010 - 12:09:02 }

I invest in a few sin stocks that do fairly well and yeah, I occassionally do get a guilty feeling….but I drink my share of alcohol, so I don't feel too bad.
My recent post 5 Steps- How to safely buy a car on Craigslist

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Jesse MichelsenNo Gravatar Reply:

Someone has to profit from those industries, right 🙂 haha

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» Jesse MichelsenNo Gravatar said: { Sep 21, 2010 - 07:09:43 }

Very cool, I've been interested in REIT's since I learned about them last year. I actually own a standard rental and my own home, so I believe in the real estate market and think it will rise again.

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» @bfinance said: { Sep 22, 2010 - 03:09:59 }

Hi Jesse, I have invested over the years in a bit of everything, focusing more on the valuation, and growth prospects than product. After many years in the investing field, and hours spent performing research every week, I am moving towards an indexing (fund & etf) approach for both the money I manage and our family portfolio.
My recent post The Secret to Amazing Life Success

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Jesse MichelsenNo Gravatar Reply:

I love the index fund and have invested in a couple. The idea itself though, a fund that matches a group and is not managed thus reducing fees, is genius 🙂

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» Stephen BrownNo Gravatar said: { Sep 28, 2010 - 05:09:27 }

A really interesting read, there are so many different ways to go in the business world today even private equity and property investments are looking good options, a big part of business success is research

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Jesse MichelsenNo Gravatar Reply:

Thank you Stephen, I agree, research is key and never ends. Even after investing, you need to continue researching the direction your choice is heading toward and any changes on the horizon.

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