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I hate Starbucks (Nasdaq: SBUX  ) .

I admit that I felt a little jolt of smug pleasure when I heard that the company was closing 600 stores. Starbucks’ brewed coffee is too bitter and too expensive, its computer-controlled lattes are mediocre, and the whole attitude of the stores makes me roll my eyes.

These are a few of my un-favorite things
The coffee king isn’t alone in receiving my disdain, though. Here are some more companies that make my hate list:

  • Toyota (NYSE: TM  ) . I think too many of their vehicles are designed for people who hate cars -- and I love cars. And how can they be our green transportation saviors while offering all those huge V-8-powered pickup trucks and SUVs?
  • PepsiCo (NYSE: PEP  ) . I took the Pepsi Challenge when I was a kid -- and chose Coke three times out of three. And given what I know now about food and health, how can I like a company that is all about selling water mixed with corn syrup?
  • Adobe (Nasdaq: ADBE  ) -- or at least Acrobat, which gives my computer fits for some reason I don't understand. I curse this company every time I reboot. Lately, that's a lot.
  • Microsoft (Nasdaq: MSFT  ) -- simply because it’s Microsoft. (This article is being written on a Windows PC, but I've owned Apple (Nasdaq: AAPL  ) stock since 1983, and I remain a big Steve Jobs fan. I probably don't need to say any more than that.)

You know what else I hate? If I bought those five stocks right now, I'd have a pretty nice large-cap portfolio, one that could serve as a cornerstone of my retirement portfolio for the next several years.

Stocks you hate can make you money
I actually did buy Starbucks stock for my IRA recently, after months of thinking about it and waiting for a good entry point. (I paid $14.97. Yes, it went lower, and may go lower again. But I think it was low enough for a stock I'll probably hold for a few years.)

I mentioned this trade to a couple of close friends, and they were both shocked. "You hate Starbucks!" one said. "How could you stand to buy their stock?"

Simple, I told her. I may not be a fan of their product, but lots of other people are. It's a well-run business, going through what looks to me like a temporary slump.

The stock might be fairly priced given near-term earnings estimates, or even a little overpriced, but I think it's cheap when you look at the company's longer-term prospects. It's still an iconic global brand with nice margins and no near-term danger of being overtaken by competitors (though I admit that Peet's (Nasdaq: PEET  ) expansion plans are worth watching).

Maybe time will prove me right, maybe not. But either way, I tried hard to look at it objectively.

That objectivity is a key to successful investing. Studies have shown that people tend to seek out and focus on information that confirms their preexisting beliefs. That tendency is called confirmation bias, and it can make a mess of your portfolio.

Investors, particularly new investors, who can keep an eye on their enthusiasms are more likely to notice and focus on information that others are missing -- and sometimes that will lead to well-timed buys (or sales) ahead of the herd. "Ahead of the herd" is another way of saying beating the market.

Retire well on other people's biases
I also think it's possible that Starbucks stock got cheap because other Starbucks haters were quick to trash the company once things got a little rocky. Lots of people roll their eyes at the $4 lattes and other parts of the Starbucks phenomenon.

Some of those people are stock analysts, and while plenty have made reasonable cases for their positions, there are a few where you can almost feel the wild-eyed glee. Think those are purely objective arguments?

We all know by now that bear markets are an excellent time to look for value stocks, and that value stocks are a key component of a well-structured retirement portfolio. As you sift through beaten-down stocks looking for the real values, think about confirmation bias, and how that might have affected others' decisions to sell. You may find a lot to love about some of the stocks other people love to hate.

If you'd like to see how to build that "well-structured retirement portfolio" from scratch, check out the excellent model portfolios created by the team at the Fool's Rule Your Retirement newsletter service. Full access is yours free for 30 days.

Fool contributor John Rosevear owns shares of Apple and Starbucks. Starbucks and Microsoft are Motley Fool Inside Value recommendations. Starbucks and Apple are Motley Fool Stock Advisor picks. The Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 11, 2008, at 2:52 PM, rkresge wrote:

    everytime I read an article from the Fool I ask myself why am I doing this. Like driving a car, we should have to pass a test before being allowed to own a computer. Minimum system requirements.....are placed on the box for a reason.

  • Report this Comment On August 11, 2008, at 4:55 PM, coffeestore wrote:

    Speak for yourself! I love Starbucks ... their coffee isn't bitter and as for the cost, you pay for coffee and a place to hang out while you're sipping your coffee. Starbucks stores are always crowded with people doing just that !

  • Report this Comment On August 12, 2008, at 10:57 AM, texcitizen wrote:

    I have only been a Fool for a few weeks now. As I was reading this article, I got just past your Unfavorite Things - especially the part about MSFT vs. Steve Jobs - and I was compelled to post my comment on how ridiculous it was to analyze investment vehicles in that manner.

    I personally believe that Steve Jobs has - past to present - done more to hold back the growth of share holders equity than any other factor out there. Just look at the 50% price cut of the first I-Phone and the reaction of his devotees like yourself. Just another reason why I do not trust him in the long term because that‘s free-markets 101, and they didn‘t seem to see that reaction coming.

    However - so as not to be a fool - I stuck with my principles and read on because I believe that if you're going to have an opinion about a thing, it is best to gather as much information as possible.

    In the end your point was right on. The importance of Objectivity can not be understated. I wish only that our politicians could exercise such Objectivity. Maybe then they would actually understand why they have been elected and what they should be representing...

  • Report this Comment On August 12, 2008, at 10:58 PM, toycel02 wrote:

    First as an investor, what do you have against Toyota from trying to make more money. I think they are almost genius, they get talked about for their fuel economy by tree huggers and for the ability in off roading by their enthusiasts and to top it off over all quality by everyone else.

    Second Pepsi owns way more than the beverage angle, and since we're publishing opinions, although I think this is more factual. You can taste Pepsi more, why, more sugar. Some people like that coke is mostly carbonation I can't stand a fresh coke its like someone shook a soda in your mouth and you have to swallow it. Lets just drink the head off a beer that might be good too. Back to reality are you really going to not buy a company based on the simple fact that you don't like ONE of their soft drinks?

  • Report this Comment On August 14, 2008, at 10:04 AM, TMFMarlowe wrote:

    toycel02, I think you missed my point. Toyota and Pepsi (and the others) are excellent businesses and their stocks are all worth owning. I would consider buying any of these stocks -- I did buy one, in fact -- despite the fact that there are things about each company that annoy me. My whole point is that one should look past one's own brand preferences and biases -- good and bad -- when looking for investments.

    John

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John Rosevear
TMFMarlowe

John Rosevear is the senior auto specialist for Fool.com. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

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