On the yahoo homepage there was a link that said "New Fall Handbags" under an article about fashion... thinking, "Great! Some new eye candy to look at." I clicked on it... turns into a financial article. Interesting to read nonetheless....http://shine.yahoo.com/channel/mone...-the-better-buy-the-purse-or-the-stock-246716 (article below also)
Work + Money
Tuesday, September 2, 2008
New Fall Handbags: Which is the Better Buy, the Purse or the Stock
I noticed recently that a Shine blogger was asking about what her fellow Shine shoppers thought of the new fall line of Coach handbags. She particularly liked the new Bleecker Leather Patchwork Tote, which retails for $499, and she was thinking of buying one.
So let me play the Devil's advocate, for a minute. (Or should I say Devil-Wears-Prada advocate?) Let's say that she buys the new Coach bag for $499, instead of saving the money or investing it. It may cheer her up as she carries it to the office. But the thrill of new stuff does seem to wear off fairly soon, at least for me, and I start taking it for granted. Just another handbag.
But what if she had decided to invest the money instead, and spend $499 on Coach company stock? The shares of Coach closed at around $29 today (August 28 th ), so she'd be able to buy about 17 shares of Coach for the same price as the handbag.
Let's look ahead a year from now. The Coach bag is getting a little worn from use (that is, unless it winds up in the back of the closet). But what's happening to the stock? Let's say that it rises about 8%, which would be an average gain for a decent Blue Chip stock. So next year, instead of a fairly worn handbag, she'd have $540 worth of stock. And let's take it ahead to three years in the future, when the stock would be worth $630 if it continued that average 8% gain. And in five years, instead of the Coach bag, she'd have around $734, assuming again that average 8% gain.
Which would you rather own, a 5-year-old handbag, which you might be able to sell on ebay at a fraction of its value, or more than $700 worth of stock that you can sell?
Of course, stocks are never a sure thing. And when you look at a stock, you want to be sure you're getting a bargain, just the way you would when you're looking for handbags. So try taking a look at Coach stock by going to the Yahoo Finance site and typing in the stock ticker symbol, which is COH. You'll see all sorts of information, including what stock analysts think of the stock. Scroll down the left side of the screen and click on Analysts Opinions. Take a look at the numbers, and you'll see a target price for the stock, which is the price that analysts think the stock will reach within a certain period of time.
You'll see that the average target price for Coach is $35, with some target prices even higher. That would make it a 20% markdown at its current price of $29. So you might be looking at a bargain, if you think that Coach is going to continue to grow. And here's where your eye for trend-spotting comes in. Are your friends buying Coach handbags? How crowded is your local Coach store? My sister tells me that women in her town are knocking each other over to get to the counter when Coach bags go on sale.
So now you can see how easy it is to start stock-watching when you go shopping. And why you might enjoy looking for stock bargains for your portfolio as much as you do finding a fabulous purse that will accent an outfit.
Happy shopping! And remember, this is not a recommendation to buy or sell any stock, but rather a sample of trend-watching to get my fellow Shine members to think about investing.
Work + Money
Tuesday, September 2, 2008
New Fall Handbags: Which is the Better Buy, the Purse or the Stock
- by C. F. Chapman, womanwithportfolio.com, on Thu Aug 28, 2008 2:34pm PDT
I noticed recently that a Shine blogger was asking about what her fellow Shine shoppers thought of the new fall line of Coach handbags. She particularly liked the new Bleecker Leather Patchwork Tote, which retails for $499, and she was thinking of buying one.
So let me play the Devil's advocate, for a minute. (Or should I say Devil-Wears-Prada advocate?) Let's say that she buys the new Coach bag for $499, instead of saving the money or investing it. It may cheer her up as she carries it to the office. But the thrill of new stuff does seem to wear off fairly soon, at least for me, and I start taking it for granted. Just another handbag.
But what if she had decided to invest the money instead, and spend $499 on Coach company stock? The shares of Coach closed at around $29 today (August 28 th ), so she'd be able to buy about 17 shares of Coach for the same price as the handbag.
Let's look ahead a year from now. The Coach bag is getting a little worn from use (that is, unless it winds up in the back of the closet). But what's happening to the stock? Let's say that it rises about 8%, which would be an average gain for a decent Blue Chip stock. So next year, instead of a fairly worn handbag, she'd have $540 worth of stock. And let's take it ahead to three years in the future, when the stock would be worth $630 if it continued that average 8% gain. And in five years, instead of the Coach bag, she'd have around $734, assuming again that average 8% gain.
Which would you rather own, a 5-year-old handbag, which you might be able to sell on ebay at a fraction of its value, or more than $700 worth of stock that you can sell?
Of course, stocks are never a sure thing. And when you look at a stock, you want to be sure you're getting a bargain, just the way you would when you're looking for handbags. So try taking a look at Coach stock by going to the Yahoo Finance site and typing in the stock ticker symbol, which is COH. You'll see all sorts of information, including what stock analysts think of the stock. Scroll down the left side of the screen and click on Analysts Opinions. Take a look at the numbers, and you'll see a target price for the stock, which is the price that analysts think the stock will reach within a certain period of time.
You'll see that the average target price for Coach is $35, with some target prices even higher. That would make it a 20% markdown at its current price of $29. So you might be looking at a bargain, if you think that Coach is going to continue to grow. And here's where your eye for trend-spotting comes in. Are your friends buying Coach handbags? How crowded is your local Coach store? My sister tells me that women in her town are knocking each other over to get to the counter when Coach bags go on sale.
So now you can see how easy it is to start stock-watching when you go shopping. And why you might enjoy looking for stock bargains for your portfolio as much as you do finding a fabulous purse that will accent an outfit.
Happy shopping! And remember, this is not a recommendation to buy or sell any stock, but rather a sample of trend-watching to get my fellow Shine members to think about investing.
