I like to maintain an active lifestyle. So in 2014 I invited the popular online streaming service, Netflix, into my home because I wanted to do a marathon. After all, watching TV burns 70 calories per hour.
Then earlier this week I welcomed Netflix (NFLX) into my stock portfolio. 😀
The price of oil is falling, the global economy is slowing, many countries are in recession, and company earnings aren’t growing. But none of the gloomy financial and economic news in the world today have a negative impact on the the business of Netflix. 😀
However, this is somewhat of a contrarian play. NFLX has a price to earnings ratio of over 300 so it’s not a value stock. It also doesn’t pay a dividend so everything depends on the future appreciation of the stock price. Am I bullish on Netflix? Nope. ? But I decided to buy some shares anyway as an insurance against global cord-cutting.
Cover all the bases
I believe that media and entertainment will always be a strong industry. It’s hard to figure out which media conglomerates will expand their market share in the long run so my investment strategy is to diversify and own all of the big companies. This way, I don’t have to choose potential winners and losers because I’ll profit from the entire sector. 😉 A few years ago I blogged about doing the same thing for the coffee industry where I invest in large franchises such as Starbucks and McDonald’s. As it turns out all my coffee stocks have gained over 100% in value since I bought them! I’m using the same reasoning again now. Some people watch HBO while others prefer Netflix. I don’t know which service will have more viewers 10 years from now, but if I invest in the entire sector then I should be covered. 🙂 With the addition of NFLX, my basket of media and entertainment stocks now feels complete.