Just Because You Love A Product Doesn't Mean You Buy The Stock

People used to misquote Peter Lynch, the legendary former-manager of Fidelity's Magellan Fund. He said (I'm paraphrasing) that you and I as ordinary individuals can have excellent insights into companies -- through our knowledge of which products we buy and use regularly.

Some took that to mean that if you love Product A, you should buy Product A's stock.

But Lynch only meant that our knowledge of good products -- that we buy Product A but not Product B -- was a starting point from which we do further due diligence.

Ideally, we'll find that Product A's stock is undervalued. And could enjoy the company's products and ultimately see its stock benefit our brokerage statements.

But that's often not the case -- especially with some hot names.

One of those names over the years has been Starbucks. And I reflected on Starbucks and Peter Lynch when reading Michael Sesit's new Bloomberg column mentioning the company (scroll down to the bottom).

I drink Starbucks coffee regularly. I rarely stop by their stores, much less hang out in them. But I buy this Starbucks blend in my local grocery store every week.

So I'm a loyal customer. Yet I've never been temped to own the stock. It's always been a growth story and I'm a value guy. Now that Starbucks is, from what I read, having less-than-superb results maybe it will eventually become a "value stock." Some say Wal-Mart has achieved (or sunk to) value status, though I've passed on it as well.

Anything is possible. In the meantime I'll continue enjoying the coffee.