Money Rehab with Nicole Lapin - Check These 3 Things Before You Invest in a Company

Episode Date: August 8, 2022

You won’t find data on these areas in any stock chart, but it’s vital to a company’s success. Nicole explains.

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money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. Hey guys, are you ready for some money rehab? Wall Street has been completely upended by an unlikely player, GameStop. And should I have a 401k? You don't do it? No, I never do it. You think the whole world revolves around you and your money.

Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. I am very, very proud, and you should be too, of how we're dabbling into more advanced topics

on investing here on Money Rehab. We've dipped our toe into the technical analysis pool by talking about P-E ratios, and in future episodes, I'll be decoding more metrics that you'll see on stock tables or SEC filings. But there are some variables that are very important to a company's value that you won't actually find projected on any trading computers at the stock exchange. Here are three things that I check out before making any new investment. Number one, what's new at work? Has the company announced any big plans that could lead to big earnings down the line?

Look out for news of product launches, acquisitions, expansion into new markets. Don't forget to check markets domestic and abroad. And don't be fooled by savvy marketing and overused buzzwords like innovation. If a company actually has an innovative product, they probably don't need to tell you that it's innovative. Just like if someone's rich, they don't need to tell you that they're rich. Same goes if they're classy or powerful. I digress. Number two, let's get political. When you're trying to project how a company might grow, it's very important to consider how the industry at large is going to change within the window of time you're

planning on investing. Let's say, for example, that the year is 1960 and you think that a Cuban-based cigar company is about to take off. You pour all of your money into that investment and then a little thing called the Cuban Missile Crisis happens and all of a sudden, the U.S. bans products from Cuba. To try and prevent a sticky situation like this from happening to you, look at the trends in the company's industry at large. Is legislation going to change that affects how the company can operate? Does the company sell a technology that is at risk of becoming obsolete? Here's a biggie. Will this industry be affected by which political party is in power? If you're not looking ahead,

you are going to fall behind. Number three, who's in the boardroom? This is another important thing I always look up. Leadership. Has the company recently replaced a CEO? Is the company's C-suite clued into the customer's demographic? For example, for a long time, the cosmetics industry was run by men who were targeting their products to women. Later, of course, these executives realized that it made a whole hell of a lot of sense to have a woman, someone who could speak to the perspective of the actual customer, in the room when key decisions were made.

We all have cultural and social blind spots, myself included. And if the company you're looking at's executives are all basically a demographic clone of one another, then they probably have some big blind spots. It's important to have a diverse team, one that includes the perspective of the key customer demographics, to make sure that they have their finger on the pulse of important trends within their customer base. Plus, obviously, we want to support companies that are taking diversity and inclusion very seriously. Don't forget that with investing, just like any other financial exchange, a dollar is a vote. For today's tip, you can take straight to the bank. Here's some

good news. These are three areas of intel that are extremely easy to find. Most companies have a page on their website that's dedicated to investor relations where you can find answers to all of these questions about corporate leadership and upcoming projects. And in a pinch, of course, a quick Google News search will also do the trick. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our

mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.