This piece orginally appeared on Blavity.com.
On Monday, news broke that media titan Oprah Winfrey purchased a 10 percent stake in Weight Watchers International. Winfrey purchased her allotment of shares at the stock price of $6.79 per share with a total investment of $43.2 million. On Monday evening, Weight Watcher’s stock price increased to almost $14 per share.
Why should this news be important to you? Let’s put it this way.
If you were lucky enough to have taken $1000 of your hard-earned savings and invested in Weight Watchers (WTW) on Friday, October 16 at the price Oprah purchased her stocks at ($6.79), your $1000 would now be worth over $1900 (as of 1 p.m. EST on Monday, Oct. 19). This is called a come-up and I believe everyone should be interested in come-ups.
Reasons Why This Matters to You
1. Oprah is a boss and it’s important to take note of what bosses do so that you might incorporate said bossness into your own way of life.
This doesn’t need anymore explanation. Continue to number 2.
2. Oprah recognized an investment opportunity and took advantage.
A key to investing and growing wealth is recognizing opportunity and being willing to invest in said opportunity. Weight Watchers’ profits are down 50 percent in 2015 and their stock price has plummeted 72 percent since the beginning of the year. It’s a company that has had to make changes as a result of new smartphone apps and online programs playing in the weight management space once dominated by Weight Watchers. Oprah saw the opportunity to leverage her value, personality, and media properties to prop up and revitalize a brand that aligns well with her existing business assets; she made the call and is already enjoying a 100 percent increase in the value of her investment.
3. Picking your opportunities using research and common sense.
Consider the scenario I mentioned earlier wherein a person purchased $1000 worth of Weight Watchers stock last Friday. This individual would have seen a 100 percent increase in their investment in a matter of days. Of course, unless you’re an executive at Weight Watchers, you wouldn’t have known Oprah was planning on lending her name to the company. But there are companies who have undervalued stock prices and could move higher in the future. Investing in stocks always carries a risk, but if you believe in a company, it happens to be priced low (relative to past price points) and you believe there is potential for the stock price to move higher, would you be willing to risk an acceptable portion of your savings in exchange for even just 20 percent growth on that investment?
4. Buy Low, Sell High
Oprah’s investment in Weight Watchers is a classic example of what it means to buy low and sell high. People who “flip houses” essentially bet they can buy a fixer-upper, renovate the home and sell it for a price greater than what they spent to buy and fix the house. At its core, Oprah is betting she can do the same at Weight Watchers, raising the stock price above the point at which she originally purchased it.
That’s it and that’s all. If Weight Watchers stock is above $6.79 five years from now, (when Oprah can legally sell her entire stake in the company) then she wins. Her money grows and works for her with minimal effort. This is the meaning of a successful investment and a core component of building wealth in American life.
5. What investment opportunities are you missing?
Are there opportunities or investments you see that could sell higher than what you originally pay for the investment?
Any kind of investment comes with risks and potential losses. However, growing wealth is primarily about taking calculated risks to increase your net worth over time — with limited effort. Oprah is obviously able to execute on a grand scale, with no real risk to her lifestyle and well-being. But there is potential, even on modest incomes, to make sensible investments in the future of your financial well-being.
Ben Carter is the Host of Manage Your Damn Money and author of Fictitious Financial Fairytale: A Completely Untrue Story About Money, Friends and Moscow Mules.