Please ensure Javascript is enabled for purposes of website accessibility

Deep Blue

By David Gardner – Updated Nov 15, 2016 at 6:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing communities can beat the market.

Recognize that headline? Chess players and technology mavens will quickly identify "Deep Blue" as the chess computer that famously defeated world champion Garry Kasparov in 1997. Today, Deep Blue has a much broader significance to me and many of my fellow investors. In fact, Deep Blue means more to you than you may realize.

That's because Deep Blue is how you beat the market.

The pieces are stacked against you
Let's step back for a moment. Actually, let's step back lots of moments -- all the way to May 1997. Reigning world chess champion Kasparov is defeated in a six-game match by an opponent whose playing strength, in the words of Wikipedia, was mainly "brute force computing power." Deep Blue, built by IBM, brought its 11.38 gigaflops of calculating power -- along with some guy in spectacles pushing pieces around -- to the table. The headlines soon read: "Machine Beats Man." It was the first time under standard tournament chess rules that a machine took down the world's best chess player.

As I start to explain how Deep Blue is going to help you beat the stock market, let me ask you this: Had a machine really beaten the man? I don't think so. Forget the headlines. Concentrate instead on the particulars of the situation. A whole bunch of IBM programmers, teaming up with a gaggle of grandmasters, worked together to program the machine that beat the man. It wasn't really a story of a machine winning. It was a much simpler story, the sort that plays out on the proverbial unsupervised school lot: A bunch of bullies ganged up on one geeky guy and knocked him down. It was a completely unfair match.

At The Motley Fool, we're quite aware that investing isn't a fair match either. People who go it alone -- even the grandmasters -- are increasingly in deep trouble. That's exactly why we're aiming to be the bullies. We believe that by working really hard as a community -- together -- we will ensure that we all arrive at better information, deeper insights, broader perspectives, and bigger profits than a single mom-and-pop investor, or a single Wall Street analyst, or even an entire hedge-fund research team. We are building a new model for research that brings together tens of thousands of people, not one lone analyst.

The pawn stands alone
Do you still invest by yourself? Are you quoting your portfolio, reading your 10-Qs, checking the stock charts, keeping a journal, typing it all into Quicken, and tracking your performance ... alone?

Rather than settle for solitude, why not add your efforts to our community intelligence and reap the benefits of what we have to offer? The reason Motley Fool Stock Advisor has a great record of achievement in its first five years is that we open and close our recommendations guided by the insights of our growing global community.

Did you notice the other day how Petco (NASDAQ:PETC) got bought out by a private equity firm? That has direct implications for my recommendation of PetSmart (NASDAQ:PETM). Using the Fool's interactive website, the entire Stock Advisor team shares the information and perspective, and then does research together. And we like PetSmart at these prices.

How about Garmin (NASDAQ:GRMN) -- the premier manufacturer of Global Positioning System (GPS) devices -- a company I recommended after reviewing our community intelligence? Since I tapped the company last October, Garmin is up more than 30%, and it appears poised to continue creating more wealth for long-term shareholders. But it started with community research, community intelligence. If you weren't embracing the interactivity of The Motley Fool, you may well have missed the stock.

InterDigital Communications (NASDAQ:IDCC) can be an awfully hard business to understand. It's another of my Stock Advisor recommendations, but even I must admit that I'm ill-equipped to evaluate and follow the intellectual-property portfolio of a company that is fighting to defend its patents -- and profits -- in the coming wireless 3G era. The average investor is going to have problems sizing up InterDigital's prospects if he's competing against a Wall Street research team. But if he joins a team thousands of times the size of a Street team, he's Deep Blue, not Kasparov.

It takes a village ...
If you take away just one thing from this article, let it be this: Investing should not be a solo venture. Going it alone might just make it harder than it needs to be.

So I encourage you to get your family involved. Get your friends to help you cover public companies -- and reciprocate the research for them. Join an investment club. Find a discussion board where you can share thoughts and analysis with like-minded investors. Remember the power of Deep Blue.

When you get the benefit of interactive, community-based research -- which draws doctors, techies, homemakers, accountants, mall rats, and investment junkies of all shapes and sizes -- you will operate like a good venture capitalist. You will operate like those that get in front of "deal flow" and locate the best companies because their information is simply better.

Think of your portfolio as a chess computer. You want as many people -- as many expert insights -- as possible programming your portfolio. I invite you to try our interactive investment service, Motley Fool Stock Advisor, for 30 days free of charge. Come see if you can benefit from the power of numbers.

The Deep Blue approach has led Stock Advisor to an average gain per stock of 54% since the service launched in March 2002. That compares to the S&P 500's average return of 18% over the same period. Click here for more information on the free trial.

Motley Fool co-founder David Gardner does not own shares in any of the companies mentioned in this article. PetSmart, Garmin, and InterDigital Communications are Stock Advisor picks. The Fool's disclosure policy is stronger than a queenside castle.


Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.