How to Invest in What You Love

Wednesday, February 10, 2021 4:00 PM | Nick Dey

As the Super Bowl snacks quickly get replaced with chocolates for Valentine’s Day at your local grocery store, love is filling the cold February air.

And while evolutionary scientists may try to bum us out by defining the emotion as nature’s newest and strongest tool to ensure survival rather than as a magical and totally unique feeling created and shared between two people, we can rest easy knowing that either way, day-to-day life is made infinitely better by the many love connections that we make throughout our lives, romantic and otherwise.

Just about every aspect of our lives is driven by the emotion. We schedule our days around it to maximize the amount of time that we can spend with our loved ones, we make decisions on a daily basis with their best interests in mind, and so much more.

Despite the many aspects of our lives where we let our hearts make the call, investing in the stock market is an area of our lives where we are typically reluctant to let love rule. Investors tend to diversify themselves across the market with little to no regard for their personal values.

But with all the drive and passion that comes with making decisions from the standpoint of love, is loveless investing really the best way to go, especially for new investors?

Investors can invest with the emotion by choosing to invest their money in what they love. By doing so, investors narrow their search process by cutting out parts of the market that they find boring and/or unethical. Investing in this way forces you to dive deep into the industries that comprise your favorite companies, while quickly putting similar companies in front of you.

In addition to helping simplify the search process, this approach also helps investors create a portfolio that they have much stronger feelings towards, which turns out to be pretty useful for new investors. Caring not only about today’s swing, but also the well-being of the business, can help motivate you to check back on your portfolio more frequently. In addition, a properly cared-about portfolio can also help you keep a rigid investing schedule because the investing routine becomes a much more personal one.

Lastly, investing in what you love may also provide investors a moderate amount of protection from suffering from having "paper hands" and from making costly FOMO investments. Having paper hands is when an investor sells out of an investment based on fears that are brought on by a sudden swing in prices, typically a downward one. Meanwhile, a FOMO investment is one that an investor makes because they see a stock rise and then invest because they don’t want to miss out on the--for example--GameStop frenzy, even though they are more likely buying in at the top. By having stronger feelings towards the companies they are invested in, investors are less likely to fall for these fear traps.

What You Love

So how do you invest in what you love? Well, it is easier than it sounds. Investors wanting to spice up their portfolios will want to start off by asking themselves: What am I skilled at? What are my passions? And what are my consumption patterns?

Skills

Oftentimes the things that we enjoy most are the things that we are the best at. This opens the door for investors to invest in the parts of the market that align with their skill set. Whether your skills are athletic, culinary, or anything else, there are ample investment opportunities in your skill and its supply chain. If, for example, I am a great golfer, I may choose to invest in the likes of Dicks Sporting Goods (DKS), Nike (NKE), Calloway Golf (ELY), or even a metal producer.

Passion

Another way to identify stocks in areas that you love is to think based on your passions, both professional and personal. From a professional standpoint, this could be investing in the companies that make your work life easier or more valuable, including analytics and software companies, as well as producers of the physical tools that you may use from day to day.

Meanwhile, personal and social passions include the companies that are investing in the social issues and other things that you care most about. This can include investing in companies that donate to a cause that is important to you, support your political party, and even those that are seeking to profit off important issues to you - such as Biotech companies that are working to create a cure for cancer.

Consumption

Lastly, investors will want to put their money where their mouth is and invest with the companies whose products they regularly buy. This could be investing in the brands that you love to eat and wear, the video games you love to play and much more. Does this restaurant hold a special place in your heart? What about the candy bar that got you through your childhood? Who owns your favorite sports team? What streaming service has your favorite shows? By asking these and many more questions, investors can quickly identify their consumption habits and focus in on some of their favorite companies for day-to-day life.

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