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But have you ever made an investment decision based on the assets location?
Shark Tank star Kevin OLeary has.
In arecent Facebook Reel, OLeary shared three reasons he neverinvests in Californian assets.
High Minimum Wage
First, OLeary pointed to Californias $16 minimum wage.
This is significantly higher than the federal minimum wage of $7.25.
OLeary said this has made reaching profitability difficult for businesses like restaurants, which primarily rely on low-cost workers.
When companies have to pay workers more, that eats into their margins.
This can lead to higher prices for consumers and make corporate growth difficult.
OLeary may be trying to avoid issues like these by staying out of the California market.
Prohibitive Regulatory Environment
Next, OLeary called out Californias regulatory environment, which he described as prohibitive.
Practically, this means its difficult for California businesses to be agile.
When regulations are strict, its hard to make fast changes in evolving markets.
That can provide a competitive advantage to companies based elsewhere.
For people who think like OLeary, this makes investing in California difficult.
Regulations also impact the cost of doing business.
Higher taxes can increase supply chain costs and property values alike.
Companies nowadays may end up having to pay more just for the sake of being headquartered in California.
Poor Leadership
Finally, OLeary claimed California has poor leadership.
He called out Governor Gavin Newsom directly, saying hes a bad manager.
Thats based on the states high business tax rates, for one.
OLeary isnt just looking at companies when he decides what to buy.
Hes considering where theyre located and the financial conditions theyre operating under.
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