I'm not entirely comfortable with one-liner market philosophies. Either they're fabled mantras like "buy low, sell high," or they're golden nuggets of ear candy -- from sharp mouths like Warren Buffett's or Benjamin Graham's -- that pack wit and substance but skimp on direction.
The pursuit of the elusive bumper-sticker motto can drive one batty, because stock advice is supposed to be malleable. Spooning out a universal elixir in concentrated form, as if some expansive deluge will bring uniform answers to all ... well, it's no easy task. However, I think I've finally stumbled on a simple statement that will work if time is of the essence -- for example, if someone on the other side of the elevator door begs for that one morsel of market advice as the doors slide shut. There are five words that I'm willing to hang my hat on.
Invest like you mean it.
It's as simple as that. Take a stand. Show conviction. Believe in what you're doing. Whether you come around to embrace the ultimate growth investing strategy in our Motley Fool Rule Breakers newsletter service or find another philosophy that gels with your plan for financial empowerment, just do it. Hop off the fence. Make it happen.
Taking a stand is easier than you think
Why do you think we have thousands of mutual funds out there specializing in hundreds of investing mantras? Could it be that, in the long run, they're all winners? Losing stock selection strategies have a funny way of bumping their head on the way to extinction. There has probably never been much of a cheering section for the Washington Generals as they take on the Harlem Globetrotters, no matter how much we all might love the hapless underdogs.
Personally, I'll side with folks like David Gardner who really know how to pick great growth stocks early in the revolutionary process. If there is too much octane in that tank for your investing tastes, that's fine. Just take an interest. Investing is not a spectator sport.
If you can commit to the appropriate investing philosophy and take the time to understand the nuances and mechanics, how can you not beat the market? Somewhere out there in the vast investing universe there may be someone who will buy only into companies that start with the letter E. Yet, with some due diligence and resolve, even this selectively phobic investor can wind up with money manager Eaton Vance
In fact, the way our real-money Rule Breakers portfolio trounced the market through the late 1990s on the strength of companies like Amazon.com, AOL, and Amgen, one could argue that you can slap the Street senseless without ever getting past the first letter of the alphabet. You don't think so? Consider aQuantive
Every investor can be a Globetrotter
Investing without research is like riding a bicycle without brakes: Getting started is easy, but you'll often end up in a collision. That means that the person unfolding the grenadine-stained cocktail napkin in an effort to make a killer purchase on the basis of a blurry ticker symbol obtained at a party the night before is as good as a Shirley Temple toast in the market.
If you've been investing for a long time, you probably know that your best investments have likely been in companies that you already knew well. Maybe you were a customer. Maybe you toiled away in the same sector and understood what made the company great. You saw the spark. Early. You kicked the tires. Often. You made the call. Once. For those of you who are relatively new to the market, trust me -- or ask someone you know with a little more market seasoning.
So why waste your time -- and your money -- speculating? Don't fear the educational process just because you think that the market is going to toss you a learning curve. Investing is easy. It's investors who are complicated. Yet the only investor you really need to get acquainted with a little better is you.
Tapping into your "inner investor"
Some of my best investments in recent years have been in companies that I knew so well, I thought we could complete each other's sentences. Anyone care to check out my DVD rental queue at Netflix
This doesn't mean that your case has to be so compelling that others will have no choice but to nod in agreement. One of my favorite stocks right now happens to be a company called Akamai
Isn't the Internet fast enough already thanks to the wider adoption of broadband? What's the big deal? Well, if you've ever seen a site that delivers software patches in a hurry, or high-traffic destinations that don't buckle under pressure, you've probably seen Akamai's handiwork.
If you can drum up the courage to arrive at your conviction early, you will stand to gain that much more when the rest of the world comes around. A company like Universal Display
So who are you? Do you have Rule Breakers potential? Are you willing to take on the greater risk that is often shackled to the pursuit of greater returns? These are questions that only one person can answer, and that person will be staring back at you when those shiny elevator doors come together.
Yet, before they reveal this ultimate investor, and while the doors are still cracked open enough to whisper words that will carry, tell me the five words that I long to hear as much as I long to have you understand my advice.
Invest like you mean it.
So where do you stand?
- Take us up on a free 30-day trial to see if Rule Breakers will really help you invest like you mean it.
- Read up on David Gardner's six signs of Rule Breaking investing.
This story was originally published on Feb. 3, 2005. It has been updated.
Longtime Fool contributor Rick Munarriz really doesn't condone alphabet-soup investing -- although it may be the basis for another column that ferrets out the most lucrative letter in the investing alphabet. He owns shares in Netflix and Akamai. eBay and Netflix are Motley Fool Stock Advisor recommendations. The Fool has adisclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.