Investment at Pixar!

Pixar's area of expertise is in the production and distribution of animated motion picture films.By putting a value on a stock requires so many steps, few of which relate to the actual technology or industry. Familiarity with an industry can be helpful in this process, but that's usually a minor factor really. What's more important is how they're going to generate earnings over the long haul, at a rate greater than that of the overall market, relative to the equity or capital invested - that's what generates value and justifies buying a stock. Knowing that requires intimate knowledge of their customers, competitors, pricing, and ability to maintain advantages in all of these areas, as well as - very important - their finances. If anything, I believe that industry familiarity can be a bad thing, because it leads to investments driven by interests and product preferences rather than by analyses about "what's likely to make me the most money, at reasonable risk, over the long haul?" At the end of the day, that's the reason to buy a stock.

 You may know about growth plans that will strengthen Pixar's earnings over the long term, and be able to trade on that information because it's not "insider info." And as such you might have knowledge that not every analyst or investor has. There's a big difference between liking a company and its products, and liking its stock. "Great" companies don't always make great investments.

If you have $1000, and if you would like to invest, I will STOP you from doing that. It's simply one of those Investing 101 kinds of rules. There are thousands of companies in dozens of industries and by buying just one you really increase your risks of failure. So that raises the bigger question...even if you decide Pixar is a good long-term investment, how much of your net investable money should you put into it? I generally shoot for at least 15 if not 25 or more individual stocks, when buying individual stocks, simply to diversify away these company-specific risks. Alternatively, there's the approach of buying an individual stock alongside a portfolio of diversified mutual funds that hold the bulk of your money.