I am a supporter of the idea to invest in companies that are present in your local neighborhood. This is idea is not very new. For instance the Beardstown Ladies was a group of sixteen ladies of age who started investing with a mere amount of 1,600 USD. They gained a lot of attention in the 1990s with their investment approach based on a very down-to-earth philosophy. According to Buffy Tillitt-Pratt, one of the ladies: “We like to invest in things that we know, and things that we understand, but we also have to look at the numbers too”. They bought for instance stocks of firms that made products they owned themselves (rubber boots, cars) and in shops they new.
While the returns of the Beardstown Ladies were rather overstated, in the end their return wasn’t that bad at all and in 2016 their portfolio was reported to be 450,000 USD. Critics claimed that an investment in an index fund would have yielded a higher value. Perhaps this is true, but by investing in what you know, your remain more motivated to remain loyal to your investment strategy. Most likely, the ladies would never have started investing if they would have to be invested in an index fund.
Apart from buying stocks based on familiarity, you could also chose to invest in stocks that are active in your proximity. Suppose that you are a citizen of Drenthe, Friesland, and Groningen and you want to invest in stocks in the neighborhood, how would you start? My idea would be to invest in stocks of firms that employ people in the region. So a good start would be to collect some of the larger listed employers in the region, as presented in the table below:
|Name of stock||Drente||Friesland||Groningen|
This list presents firms with more than 800 employees working in one of the three Northern provinces. Many firms represent consumer brands (MacDonald, Philips, Vodafone), were others are very visible as many consumers profit from their services such as Ahold Delhaize (Albert Heijn), NL Post, ING, KPN, Vodafone (Ziggo). A few are less visible: Aegon runs a large office in Leeuwarden and one in Groningen (TKP Pensioen), Teijin is active in Chemicals and Melrose (former activities of Fokker). Based on the list, any investor could create his or her own portfolio of regionally active stocks.