I'm a little embarrassed to admit it, but my first love in stocks was essentially a blind date.
How can an investment be a blind date, you ask? It can if it's part of an employee stock purchase plan, or ESPP. Somebody basically set us up on our date -- that "somebody" being my employer's parent company.
My first job, right out of college, was for a company called Disclosure, which had many revenue streams that stemmed from its role as the major subcontractor for the Securities and Exchange Commission. I worked with SEC filings -- from completing abstracts for a database that included salient bits out of '33 Act documents (insider-speak for the Securities Act of 1933, which regulates the registration of securities in the U.S.), to working the phones and selling full SEC filings or extracting certain pages out of them for delivery to clients. Yet despite being surrounded with the filings that are integral to investing, I was in my early 20s, and investing was the furthest thing from my mind.
So when Primark, the company that bought Disclosure in 1995, offered an ESPP, I thought, "Why not?" I didn't know much about Primark; the company had been formed as a holding company to diversify Michigan Consolidated Gas, then went on to invest in trucking, mortgage banking, aircraft leasing, and finally, financial-information concerns. These were all areas I couldn't speak about with any authority. So I can't say that my decision to participate in Primark's ESPP was a very educated one, but it was an easy way to dip my toe into investing, with money extracted from my paychecks and put toward shares of the parent company. (Even better, like all ESPPs, this one allowed employees to pay less than market value for their shares.)
The good news is, this investing version of a blind date didn't end badly. I sold my shares after I stopped working there, and as I recall, they had appreciated rather nicely. And I learned later that Primark -- which had focused its business into financial information -- was purchased by Thomson (NYSE: TOC ) . I guess you could say I . well, got lucky. Woohoo!
Now, there's nothing wrong with investing in the company you work for, especially if you understand its business. But as many crestfallen Enron employees learned, investors should still stay on their toes and diversify their portfolios.
My investments after that were definitely what you could call romantic cases of chemistry. I'm sure you recall that the dot-com boom was like some kind of free-love orgy of Bacchanalian exuberance. Everybody was doing it. I bought stocks from companies with great, cutting-edge ideas -- firms like Amazon.com (Nasdaq: AMZN ) , TiVo (Nasdaq: TIVO ) , and XM Satellite Radio (Nasdaq: XMSR ) . Although you could argue that all of those companies had -- and still have -- Rule Breaking attributes, my thought process in buying them was definitely the investing equivalent of going on a date thinking, "He's so cool and he's got so much potential!"
Many right here at The Motley Fool saw signs of trouble during those freewheeling days; here's an excellent article from 2000 on the demise of Pets.com. But even though I was enamored with the Fool's mission for years before I actually worked here, it still took me a long time to learn to invest for the right reasons. When I invested in Starbucks (Nasdaq: SBUX ) , for example, my decision included a lot more research and time spent monitoring the Starbucks story -- rather than a love-at-first-sight observation that the company makes a darn good cup of coffee, I noted its high growth, consistently impressive profits and sales numbers, and apparently stellar management team. I've made a far more logical investment in Starbucks. That's what we hope to do here at the Fool, for ourselves and others: educate investors on how to make more solid investments.
It's Valentine's Day, and just as that holiday means different things to us at different phases in our lives, I can look back on stock love affairs past and realize that I have matured. And with that realization, of course, comes the understanding that I still have a lot more learning to do.
Yes, anybody can hook up with a stock. But growing up, taking a hard look, making the perfect match -- that's what takes a little extra effort. Just as in love, though, the work is worth it, with far better chances for success than you might have had with the first blush of infatuation.
Take a look at the rest of today's package:
- Fools' First Loves
- Fools' First Loves: Vanguard Target Retirement
- Fools' First Loves: Starbucks
- Fools' First Loves: Disney
- Fools' First Loves: Miva
- Fools' First Loves: ING Russia A
- Fools' First Loves: The Foolish Four
Amazon.com and TiVo areMotley Fool Stock Advisorrecommendations, and XM Satellite Radio is aMotley Fool Rule Breakersselection. Learn more about our full suite of newsletters, and try out your favorite for 30 days, free of charge.