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You are here: Home / Articles & Videos / Buying stocks is like buying shoes

Buying stocks is like buying shoes

~ About Kevin Ellman, CFP ®

Buying stocks is like buying shoes

Illustration by Janet Atkinson

My daughter Kayla is a wonderful blogger and an expert shopper.  She recently blogged about her online shoe buying experience.  She found a pair of Steve Madden shoes that she really liked on one of the sites she visits periodically.  Unfortunately, the price was over $100, a little out of her range. She set an alert to notify her of any price reductions.  A short while later, she received an alert of a 50% drop in price.  The price was still too high.  A few days later, the price dropped again.  Nope, she still wasn’t feeling it.  Finally, the site announced that any purchase that was made within the next five minutes could be gotten for $10.  Bang, she bought them!!

After she told me this story, I remarked that she could be a really good investor.  In fact, if she approached the purchase of stocks, bonds and mutual funds the way she buys shoes, she could make a lot of money.

Many of the women I work with initially feel that they are not good at investing.  What they fail to recognize is that they have a lifetime of experience learning how to be smart shoppers.  Often, their mothers and grandmothers have passed along generations of practical knowledge gained in the trenches, in the role of chief purchasing officer for the family.  The trick is to take these purchasing skills for family products and services and apply them to the financial markets.

In many ways, women have the potential to be better investors or “investing clients” than men.  Why?  Imagine, for a moment, going into a food store and discovering that due to severe weather, a particular food item has doubled in price.  Would you still buy the same amount you always do?  Would you buy a smaller quantity?  Or, would you buy a similar product that was selling for a normal price or perhaps was even on sale?  Experience says that most women would forego the purchase of that product that day and/or do all they could to “work around” the problem. Few would say, “Oh well, I will just pay double.”  Yet, this is exactly what many men do every day in the stock market.  All I need to do is say “Apple,” for example, and many would say “buy it” regardless of price.

Why is this example of critical importance?  Because the most basic rule of investing is to “Buy low, sell high.”  The problem is that people often do the exact opposite and suffer the consequences!  Everybody wants Apple at $700, nobody wants it at $400. They want to get into a “hot stock” while it is hot and has often reached its peak, and nobody wants to buy stocks or bonds when they are low, because they are afraid they will just go lower.

So, what is the point?  The stock market is a lot like a supermarket.  Said another way, approach buying financial products the way you’d shop for shoes.  Just because Steve Madden shoes are on sale doesn’t mean that they are inferior. They may not be the absolute latest version, but they are still a Steve Madden, quality product. Use your shopping skills and instincts to look for bargains in the financial markets and to be alert for opportunities to buy high quality investments when they are “on sale.”

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Wealth Preservation Solutions is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS are not affiliated with any other entity listed herein.

Investor Disclosures: https://bit.ly/KF-Disclosures

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or as a determination that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situations, and individual needs. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances.

Exit Planning content © copyright Pinnacle Solutions. All rights reserved. Beri™ and ODI™ are trademarks of Pinnacle Solutions.

About Kevin Ellman, CFP ®

As a financial advisor for over 25 years, Kevin Ellman provides the full array of financial, estate, and retirement planning services to high net-worth business owners, families, executives, and individuals. He has appeared as a financial commentator on CNBC (Morning Call, Portfolio Make-Over, Make Your Money Work, Power Lunch), and on ABC, and has been quoted in Business Week, CBS Market Watch, Fortune Magazine and The Wall Street Journal. Learn more about Kevin Ellman...

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Kevin Ellman, Certified Financial Planner, shares the stories of his life as the foundation for his outlook on the economy, market, and current events. Please see website for additional disclosures at https://wealthpreservationsolutions.com/kevin-ellman-cfp-podcast/

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Episode #8: Kevin Ellman Certified Financial Planner: Markets don’t like uncertainty… Looking ahead to 2021 and beyond…
by Kevin Ellman, Certified Financial Planner

What do we do? How do we plan? Should we wait? We all have a lot of questions as it relates to our current plan and the effect the upcoming election may have. Listen in to hear Kevin’s perspective on what to expect, how to prepare now and most importantly, how to be ready to move in the best direction for your plan…

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Episode #8: Kevin Ellman Certified Financial Planner: Markets don’t like uncertainty… Looking ahead to 2021 and beyond…
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Bonus Episode #6: Stress Test: How will your Wealth Plan actually work if and when it’s triggered?
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Episode #3: Kevin Ellman Certified Financial Planner: From rowboat to speedboat; Thinking outside the box
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