Not having any kind of schooling or credentials in investing or in any other aspect of the financial markets or financial planning, I’ve relied on my own observations of it all, as well as the musings of Berkshire Hathaway’s Warren Buffet and the late Charlie Munger. In addition, since they often tout their wisdom gained on the subject as being gleaned from what they refer to as the “Bible of Investing”, I read from cover to cover The Intelligent Investor, written by Benjamin Graham.
Much of what I learned was integral in determining that I don’t have the time (or the bandwidth) to analyze all of the companies that have shares on the market to invest in, to determine which company’s shares are solid value buys. Further to this, I also don’t have the time ahead of me to allow for the inevitable – and sometimes inexplicable – 50% or more drops in the value of those stocks purchased for their fortunes to turn around.
As such, I’ve taken the advice of Buffett, Munger and Graham, and combined it with what I’ve personally learned and experienced. In doing so, I have spread my investments over various – but not directly all – sectors of the market, using ETFs as my method of “dipping my toes into the water” of those I deem too violative to risk significant amounts of my hard-earned and scarce resources, as follows:
Communications – This sector, I understand, makes up ~10% of the market and features companies that provide voice, data and internet service along with an array of media and entertainment companies that not only facilitate communication, but also have their own content. It’s influenced by consumer behavior, technological advancements, creative advertising and competition, and is subject to government regulations.
Formerly known as “Telecom”, it was redefined in 2018. Decades of mergers and acquisitions had made the sector concentrated and practically irrelevant in terms of market cap. At that time, efficient data transmission became crucially important and still is to this day, as popular new content demands smooth and reliable distribution to an ever-growing base of consumers.
Today, the Telecommunications Services segment refers to companies that offered those original voice, data and internet services. Due to its capital intensive infrastructure, those providing wired and wireless networks and services, benefit from the high barrier for entry into this market by would-be competitors. As such, I own generous dividend paying shares in this sector’s companies on both sides of the border, namely, AT&T, Verizon, BCE and Telus.
The Media and Entertainment segment includes companies involved in the production, distribution and broadcasting of content and includes TV networks, cable companies, streaming platforms, movie studios and content creators such as Disney and Netflix.
The Internet Content and Information segment comprises those companies that provide search engines and social media such as Alphabet and Meta, which seem to generate revenue primarily through digital advertising.
The Electronic Gaming and Multimedia segment features companies involved in the development and distribution of interactive entertainment found in video games and gaming platforms. It encompasses both traditional gaming companies and virtual/augmented reality tech players such as Electronic Arts and Activision Blizzard, which was purchased by Microsoft in late 2023..
In part four, I’ll cover the Discretionaries and Energies sectors, and how I have invested in them both directly and through the use of ETFs.
Disclaimer: The information contained herein should not be construed or considered professional advice. Nonetheless, thanks for reading! If it resonates, there’s “plenty more where that came from” on Facebook, Instagram, YouTube ‘n’ Twitter.