This past week a few friends and I pondered the question about which investments were best if we were under a "survivalist" mode. In other words, we wondered which commodities would survive when gas hit $5 per gallon or more - a price that may keep many people at home when they're not at work. We agreed that people will not go without food or water, as those items are necessary for survival. But, we also learned that many food companies produce other items, such as undergarments. We wondered whether we'd need those latter items if we spent most of our time at home?

This process was fun and enlightening, and the group research and following discussions were similar to the activities involved with an investment club. The addition of mind power and alternative ideas fueled our discussion. Several of the people involved in the discussion (which was conducted online) lived in other parts of the world, so we were able to learn more about regional areas, information that wouldn't be included in national or international news programs or newspapers.

For instance, we learned that a certain soda company that also produces water lied to their customers about how they produced that water in Great Britain. The water brand was pulled from shelves, but not without a comment that all plastic water bottles are a concern for American landfills. We also learned that many other drinking water products have come under fire lately for their water sources and filtering processes. The alternative investment solution in this case was to look for companies that produced home and office water filters.

We also discovered that groceries are on an upward trend in all markets, an indicator that may mean that more people are staying home. We had to delve deeper into product lines to determine whether people are just eating for eating's sake or whether they're eating healthier foods. We learned that organic and natural food chains have more than doubled their profits this past quarter, and we also discovered that fast food chains are struggling to match these profits.

Several reasons exist for the previous scenario:

1. People have become more health conscious
2. People are staying home to cook, rather than stopping to purchase fast food, possibly because gas prices are so high
3. The heat is keeping people off the streets
4. Accounting mismanagement, lawsuits, and corporate scandals can alter market outcomes

The only way to determine which indicator listed above has created an impact on food market figures is to wait for stock market winter quarter results. If figures stay the same or change either up or down, we can still eliminate #3, as the heat won't keep people off streets (although severe winter storms might present a problem). Additionally, the hope is that gas prices will recede once the pipeline in Alaska is fixed and summer travel has ended. If gas prices go down, we can eliminate #2.

Even if market profits change, we agreed that people may have become more calorie-conscious simply because we have our "overweight" status pounded into our heads every day by media. But, this consciousness depends on where consumers live, their cultural surroundings and their income. For example, we noted that the grocery stocks that did very well during the third quarter were targeted to either very high or very low income markets.

While we could debate about the disappearance of the middle class as indicated by the above information, the point is to look for food product lines that might return a profit. It appears that high-end organic foods are doing as well as low-end packaged products in most cases, so the argument might fall somewhere along the lines where people who have money eat healthier than people who don't have the cash for high-end organic and natural foods?

During this search for healthy vs. unhealthy food products, we discovered a company that made calorie-rich snacks and undergarments. That discovery created an alert to look for other corporations that diversified along unusual lines, and we weren't disappointed with our results. One person commented that we could make a board game from this activity, as our discoveries were both enlightening and sometimes ludicrous.

The point to this exercise is to look beyond the national and international media when researching food for your portfolio. Note the weather, look for corporate diversification trends, and check out the social environment before you jump into any water or other food product lines for investments. Since many areas now upload their local news online, you can find immediate answers to questions about the region(s) where your investment is grown or produced.

Another way to research stocks is to pose possible scenarios, such as the "survivalist" game that we created, to look at the stock market from a different perspective. Sometimes a paradigm shift is all you need to locate new markets for investments. In addition, this strategy is a great way to stay mentally alert while your gas-empty car is parked in the driveway and you're at home alone?

Until Next Week,
Linda Goin