Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Don't Invest Like a Kid

Let's face it: Children, from toddlers on up to teens, are not well known for patience and forethought. Kids want what they want, and they want it now. It doesn't matter what it costs, or whether it's worth it. If you don't believe me, buy your teen an MP3 player from SanDisk (Nasdaq: SNDK  ) and send her to iPod High, where you either flaunt your Apple (Nasdaq: AAPL  ) or you take a lunch-room seat with the paste-eaters.

So what if I told you that every time the apple of your eye huffed and puffed or merely pouted, instead of costing you money, it might make you a few bucks? Sound impossible?

Not entirely. The world's biggest tantrum-tosser gives you this opportunity all the time. It's called the stock market. It's a place where all the brains and technology in the world can't overcome base and immature urges like peer pressure, childish greed, and mindless panic.

It's a place where great financial minds will encourage you to buy what's new and hip, no matter what the price. Shares of Research In Motion (Nasdaq: RIMM  ) ? Go for it, dude! It's already richly valued, but so what? Everyone likes the Blackberry, right? Look at that top- and bottom-line growth! Never mind the lackluster returns on capital, or returns on equity that actually lag the average of the S&P 500. Oh, and pay no attention to minor potential competitors like palmOne (Nasdaq: PLMO  ) , Dell (Nasdaq: DELL  ) , and the rest of the computer industry.

And if you think the Street's youthful exuberance can cost you, wait until it pitches a fit. That's when analysts who are quite capable of determining a firm's real financial value ignore lead-pipe bargains and scream "Sell!" Why? To be cool like the rest of the kids.

There is another way: Invest like a grown-up.

It's a method followed by minor successes like John Neff, Warren Buffett, David Dremen, Bob Olstein, and others. And it's a path we follow at Motley Fool Inside Value.

It's pretty simple, really. It's refusing the urge to fall for the overpriced hot new item. It's looking for the quality firms that the fickle kiddies have tossed aside in their Streetish fits. It's buying Nokia (NYSE: NOK  ) late last summer, after it had been through some tough times, and seeing it rise from $12 to near $17 in only a few months. It's snapping up shares of Inside Value's inaugural pick, MCI (Nasdaq: MCIP  ) , and seeing similar 40% returns.

Don't get me wrong; we don't expect quick bucks like these all the time -- and we all endure our share of sinkers -- but by controlling our immature urges and concentrating on what a company is really worth, we expect to see our current, market-beating returns continue for years to come. If you'd like to take a break from the Street's 24/7 kiddie cavalcade and learn how to invest like a grown-up, join us at Inside Value by taking a free 30-day trial. We're beating the S&P 500 by more than six points since inception.

For related Foolishness:

Seth Jaysonis a recovering growthaholic. That's right, he's addicted to growthahol. At the time of publication, he had shares of SanDisk, but no position in any other firm mentioned. Dell and palmOne are Motley Fool Stock Advisor recommendations. View his stock holdings and Fool profilehere. Fool rules arehere.

Read/Post Comments (0) | Recommend This Article (0)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 495780, ~/Articles/ArticleHandler.aspx, 10/7/2015 3:54:31 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Seth Jayson

Today's Market

updated Moments ago Sponsored by:
DOW 16,873.70 83.51 0.50%
S&P 500 1,992.91 12.99 0.66%
NASD 4,781.23 32.87 0.69%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/7/2015 3:39 PM
AAPL $110.50 Down -0.81 -0.73%
Apple CAPS Rating: ****
BBRY $7.14 Up +0.36 +5.23%
BlackBerry CAPS Rating: *
DELL.DL $0.00 Down +0.00 +0.00%
Dell CAPS Rating: *
NOK $7.03 Up +0.05 +0.72%
Nokia CAPS Rating: **
SNDK $61.44 Up +0.20 +0.33%
SanDisk Corp CAPS Rating: ****