Make Money on Companies That Gouge You
When you open your cellphone bill, do you find yourself astonished at how low it is? When you pull up to a gas pump, are you overcome with warm feelings about oil cartels?
In case your emotions run in the other direction, I have some investment advice. Buy into companies you do business with, even if—no, especially if—you are getting ripped off. Then price hikes won’t bother you so much. Follow my advice and you will find peace, learn to admire your enemies and do some asset/liability matching.
I was inspired to this kind of Zen portfolio management after reading the online spluttering about Lexmark. It seems that users of its printers are urged to update their software and, after clicking “yes,” get a message from the company along these lines: For your convenience we have just touched up a few loose ends in your printer’s firmware, and also disabled competitors’ ink cartridges.
Scoundrels! But wait. Isn’t it a classic business model to sell razors at bargain prices and then make money on the blades? Lexmark (LXK, 26) has simply enhanced this strategy a bit. Sell the razors and then coerce people to buy the blades.
If you own a Lexmark printer, don’t let your blood pressure go up. Instead, get on the other side of the table. With a modest 200-share position your piece of the profits should just about cover your ink costs.