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This commentary appears in Forbes

December 12, 2017

Volume 200 Issue 6 Page 66

I was inspired, by a profile of Guittard Chocolate in the Dec. 12&nbsp;Forbes&nbsp;magazine, to reflect on the dangers of investing in cool companies with cool products. Guittard does not have shares you can buy, but plenty of glamorous food processors do.

Gary GuittardTimothy Archibald for Forbes

Two hazards lurk for foodies who venture into investing. At the blue-chip end of the spectrum the fad for low-volatility stocks has made companies like&nbsp;Kellogg (K)&nbsp;and&nbsp;McCormick (MKC)&nbsp;overpriced. At the speculative end, investors fall in love with chic products and get burned. Among the clunkers: Artisanal Brands (gourmet cheeses), Crumbs Bake Shop (cupcakes) and Innovative Food Holdings (estate-bottled olive oil).

If you must speculate, find something unchic.&nbsp;Seneca Foods (SENEA)&nbsp;is a stale vegetable firm trading below book value. It might freshen up when its chairman, in office for 68 (!) years, passes the torch.

Read the Guittard story. Buy the candy (the 10-pound bar of bittersweet chocolate, $90 on Amazon, looks like a deal). But don’t buy&nbsp;shares of companies just because you admire their products.

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This commentary appears in Forbes

December 12, 2017

Volume 200 Issue 6 Page 66

I was inspired, by a profile of Guittard Chocolate in the Dec. 12 Forbes magazine, to reflect on the dangers of investing in cool companies with cool products. Guittard does not have shares you can buy, but plenty of glamorous food processors do.

Gary GuittardTimothy Archibald for Forbes

Two hazards lurk for foodies who venture into investing. At the blue-chip end of the spectrum the fad for low-volatility stocks has made companies like Kellogg (K) and McCormick (MKC) overpriced. At the speculative end, investors fall in love with chic products and get burned. Among the clunkers: Artisanal Brands (gourmet cheeses), Crumbs Bake Shop (cupcakes) and Innovative Food Holdings (estate-bottled olive oil).

If you must speculate, find something unchic. Seneca Foods (SENEA) is a stale vegetable firm trading below book value. It might freshen up when its chairman, in office for 68 (!) years, passes the torch.

Read the Guittard story. Buy the candy (the 10-pound bar of bittersweet chocolate, $90 on Amazon, looks like a deal). But don’t buy shares of companies just because you admire their products.

 

Originally published at Forbes

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