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It’s easy to get swept up in celebrity-backed investments. Whether it’s a headline about a star buying into a company or a flashy endorsement of the latest cryptocurrency, the message seems clear: If they’re doing it, maybe I should too.   But here’s the truth: what works for celebrities often doesn’t work for everyday investors. […]

Business, Investing, Wealth

April 2, 2023

Just Because Oprah Invested In Certain Companies Does Not Mean You Should

I’ve seen many people invest in companies because celebrities have. In recent years, you may have read articles about a celebrity who purchased shares in a company. You might have also seen celebrities endorse, through paid partnerships, a variety of investing opportunities such as crypto currency. Just because a celebrity invests in a company or is a spokesperson for it does not mean that you should. The Oprah Example Like many other billionaires Oprah Winfrey’s investments are closely monitored and reported on. She invested in Weight Watchers, where she purchased shares for around $6.00 in 2015. The stock reached around $102.00 per share in 2018. However, the stock did not stay at that level and now trades at around $4 per share and has seen a high level of volatility over the years. Could you have purchased the stock at the same time as Oprah did and sold it when it reached its high a few years later? Of course you could. However, if you are the kind of investor who is more long term focused and who does not want to invest in a highly volatile stock as Weight Watchers is, it’s probably not the right stock for you. Be Cautious About Paid Partnerships There’s a large difference between news that a celebrity invested in a company, such as Oprah Winfrey, and paid partnerships where a celebrity is paid to endorse an investment such as Tom Brady and others who promoted FTX and its cryptocurrency. As many of you are well aware, FTX collapsed and Tom Brady, Shaquille O’Neil and a number of other celebrities have been named in complaints about the company and are being sued. Remember, celebrities often endorse products because they are paid for the product and have little, if any, knowledge about investing. Perform Your Due Diligence There’s nothing wrong in learning about the stocks and other investments made by the rich and famous. In fact, many people have found great investments by learning what the rich and famous invest in. However, the rich and famous are often different than other investors in areas such as risk tolerance. Therefore, when you find out what a rich and famous person is investing in, always do your due diligence to make sure that the investment fits your goals and risk tolerance. Performing due diligence might help you find some great investments, just make sure you are not making investing decisions just because a celebrity did.

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