Welcome to a New Weekly Feature by our own financial guru, Susan Stewart, CEO of Charter Financial Group. Read Susan's impressive bio here. She and her writing partner, Kerry Hannon, have put this series together for us as part of their forthcoming book on investing for women. -Elaine L.

by Susan Stewart

We women have our fingers firmly on the pulse of what’s happening around us. I'm a talented portfolio manager, and I credit that mostly to the fact that I'm a woman. Let me count the ways that being a woman helps me manage portfolios.

First, I'm astute at spotting popular trends because I'm in charge of my family's daily existence. I'm the head of a household at the heart of American consumerism and know that I can use that knowledge to build investment portfolios.

You know the same stuff, too. For instance, you know from your children, nephew, niece, and grandchildren about Xboxes, Playstations, Halo 3, iPods, iPhones, Motorola Razors, JCrew, Abercrombie and Fitch, Jimmy Choo, Google, Facebook, YouTube, TIVO, Disney, and Visabuxx.

Once your daughter is taller than you, you'll hear all about Clairol's Root Touchup, too. You know all about Botox, Lapband, Medspa and dermal filler – not from personal knowledge, mind you, but from your best friend. And from your husband? Big Bertha, Under Armour and Lab Series for men. Your parents are a wealth of information on new hips, knees, stents, macular degeneration, assisted-living communities and Depends.

By keeping in the loop on goods and services that my family, friends and I consume, I'm at the vanguard of new things. To be sure, I don't hang out and talk investment ideas in my spare time. But I do talk about stuff like hair and skin care, doctor's visits, insurance coverage, the new fall fashions, aging parents, real estate, and home improvements. Who knew that your challenging, demanding, time-stacking existence would yield such a spectacular fringe benefit?

Everything you need is all there –- life's little experiences seen in a different light as investment opportunities. It's the time you have logged as a granddaughter, daughter, sister, friend, mother, aunt and wife, that's equipped you with what you need to invest well.

Here's a perfect example of what I mean. A couple of years ago, in a fit of mother-daughter bonding, I watched "Extreme Makeover" with my then 13-year-old daughter. In the shower the next morning, an epiphany struck: Holy crap, my generation is embracing plastic surgery like our mothers embraced hair color and blow driers.

I tick off the friends who've had their eyelids tucked, their bosoms raised, plumped and reduced, and their foreheads and frown lines frozen with Botox. I remember thinking this phenomenon must have reached deep into soccer-mom culture if it's touched my world, as neither my friends nor I are "Desperate Housewives" types.

But now I needed to figure out if I could make money from that revelation. I clicked around and found that there was a newly developing industry called vanity pharmaceuticals, a sector virtually created by and for baby boomer women. I searched to see what companies made up this sector, and found several stocks that stood to benefit from what I coined the "Mr. Potato-Head Phenomenon."

Remember that plastic toy we played with as kids, with all those removable features on a russet potato head? That's vanity pharmaceuticals. What you don’t like, you pull off and replace with a better part. Not only does it keep us beautiful and young, it also presents an investment opportunity.

Of course, I'm not the first one to come to brilliant realization that buying shares of companies who make the products you like can lead to good investment results. It's just that I believe the real power lies in the sorting and measuring — working the recipe if you will, instead of just buying those things willy nilly. 

That's why my process uses a healthy dollop of this common sense thinking combined with a simple, systematic approach to picking stocks and bonds. By following my user-friendly sorting method, you arrive at what to buy and in what proportions. And that allows you to make smart decisions, limiting the odds of making poor, emotion-driven choices.

Next Week: Why Brokers Have No Incentive to Make You Wealthy

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  • Elizabeth Hemmerdinger April 3, 2008 at 12:40 am

    I hadn’t really thought until reading this about the mother-wit of stock picking. But it makes total sense that obviously has lead Susan Stewart to dollars and cents. Can’t wait to read more. E

    Reply