Six months since we started the experiment to encourage our children to become investors, both business owners in training are excited about owning companies they know, and business is often a topic of conversation in our family.
One of the most exciting days as junior business owners came during a recent trip to Yorkdale Mall when we stopped to explore the Tesla (NASDAQ: TSLA) showroom. Both children had fun climbing through the Model X, and the automatic front doors captivated my attention for more time than I would like to admit. We love Tesla for three reasons:
- our family’s portfolio maintains a small position (0.71%);
- we use the company to discuss the energy revolution towards more sustainable sources;
- Though Tesla has yet to be voted a component of each child’s portfolio, discussing the company is teaches them about the role a promising company can play in a well-diversified portfolio.
This month, the kids chose to buy shares of a more mature business, and Tesla shares will have to wait for a subsequent investment period to be selected by our Baby Buffetts. Instead, our children chose their favorite restaurant for hot chocolate and sweet treats, Starbucks (NASDAQ: SBUX). We like Starbucks because:
- its business is well diversified through its restaurants and consumer products divisions;
- management has been progressive regarding the incorporation of mobile ordering and their effort to attract and retain quality employees;
- demand for Starbucks’ products should not vary much across the business cycle because its cost is relatively low compared to a customer’s overall budget and the customer experience is repetitive if not habit-forming;
- opportunities to expand through international markets are significant.
If you are keeping score at home, the kids own Disney (NYSE: DIS), Carters (NYSE: CRI), and, now, Starbucks in addition to their Vanguard ETF that tracks the S&P 500 Index (VOO). To learn where our children will invest their next $200, follow my social network profiles, linked below. Binge-watched episodes of Star Wars Clone Wars has been a summer indulgence, so my little astromech is likely to vote for Netflix, but his sister has made a couple strong (yet, ultimately, unsuccessful) arguments for Hasbro (NASDAQ: HAS) so it is anyone’s game.