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Local Investing

By GUY FIORITA

November 2015

Locally grown. Locally sourced. These days it is all about going local. But what about investing? Can a portfolio be locally sourced? Is it a good idea?

Bryan Sadoff of Sadoff Investment Management says that in southern Wisconsin, it is possible to build a locally sourced investment portfolio because the area is blessed to have a diverse group of publicly traded companies with significant revenues beyond the borders of our community. But he warns, "when one builds an investment portfolio, one should be diversified across stocks and industries financial, industrial, retail, consumer, staffing and auto companies, to name a few."

Sadoff says that there are significant risks to limiting a portfolio to local stocks. "One risk is that if some major event happens in the area that negatively impacts the community and leaders of these companies, these stock prices could fall worse than the market, especially in the short-term."

Although if someone is adamant about investing locally, they could build a diversified portfolio, but it is not something Sadoff would recommend. "The local companies may not be the better companies in their respective industries or indexes. For example, we own MGIC, but our screening process did not involve a search based upon where their headquarters are located," he says. "We simply did our research, and we like the stock."

 


This story ran in the November2015 issue of: