Maybe it's a Darwin thing -- you know, the way we admire the cold executioner. Maybe on the grasslands, it was that unflappable stalker who bagged the big game. But I doubt it.
Are you an "unemotional" investor?
You might like to think you are. But I'm not even sure there are such creatures. And if they do exist, are they really better than those of us who let emotion cloud our judgment? I think just the opposite. You're about to hear why.
But first, a confession: I grow attached to things. This probably explains my ridiculous wardrobe and a yard littered with old cars. (Which may, in turn, explain why, when I left town for my cousin's wedding, my "pal" Danny quipped, "So your cousins are finally getting married?")
Good one, Danny. But it was also Danny who told me to dump my shares of Midway the last time the stock hit $12. I couldn't bring myself to do it.
Is it time to sell?
Over the years, I've made the head case for not getting cute and jumping into and out of stocks. Today's plea is from the heart. I've been through a lot with my Midway over the past five years. You might even say we understand one another.
And if habit seems a lame excuse to hold a stock, it sure doesn't hurt. After all, what do you get when you buy a stock? A piece of paper? Of course not -- you get a tiny piece of a company. And the more you get to know that company, the better off you are.
And brace yourself, because I'm going to take that one step further. The more in love you are with a company -- that is, the more deeply you care about its products, its people, its history, and the crosses it has to bear -- the more likely you are to know about it.
You may be a Fool ...
That's how I fell in love with Rule Breaker investing. Here was this guy David Gardner, who actually bought AOL way back in the day -- because he used and loved the product. Same for Starbucks
For the record, these stocks don't hit valuation screens. You don't find them searching Bloomberg or Baseline for companies that meet certain fundamental or technical criteria. To get in early and make a killing, you buy great companies like these on faith ... youfall in love with them.
And if you don't want to get whipsawed by these tigers, you stick with them in sickness and in health. (Trust me on this. I know you are picturing a 10-year chart for Microsoft
The only reason David Gardner's original Rule Breaker portfolio survived the crash (in fact, it returned 20%-plus annualized even after the bear market ran its course) is that when he caught lightning in a bottle as he did with Amgen
Do you have the guts to make money?
Be honest. Because that's what it takes to crush the market: guts. And "guts" is 95% emotion -- at least. Fancy spreadsheets and black-box models didn't keep folks invested in Apple
The truth is, love hurts. Midway taught me that. I rode that sucker from $10 to near $20 to almost zero. But a funny thing happened along the way. I didn't bail at the top but got in the habit of buying more whenever it clunked to around $4.
As a result, I've got a new Bell exhaust and four Panasport wheels riding on Midway. Now, I have to let a little go (as soon as I'm cleared under the Fool's strict trading guidelines, that is). Baby needs a new set of wheels! I'll probably sell it directly to Sumner Redstone.
Talk about the passion
You don't really need to fall in love with your stocks, but please do fall in love with investing. I joke about Bill Mann and the other clowns around the Fool office, but there is no doubt that great investors do it out of love. Just like great wrench-turners and great dancers.
This is why The Motley Fool and services like Rule Breakers work. You'll find those Rule Breakers types online chatting endlessly about their stocks. Believe me when I tell you it makes them better investors. (I think they may even be falling in love.)
I know how it feels. I talk stocks myself way too much here at the office ... and on the phone ... and via email. Heck, I even talk stocks in bars. No wonder I'm single.
Looking to crush the market?
If you like growth investing and think there is a grain of truth in what you've read today, you should check out David Gardner's Rule Breakersnewsletter service. Already, a number of picks are moving in on doubles, and these folks love their stocks.
Best of all, David will let you try the service for 30 days for free. That way, you can verify what I've said and find out for yourself if this type of high-stakes-and-high-reward investing is the thing for you. If not, it's always better to have loved and lost (though when it's free, you can't really lose). Click here to learn more about David's free trial offer.
This article was originally published on Aug. 11, 2005. It has been updated.
All picks and results are posted on the Rule Breakers website. Paul Elliott owns shares of Midway but of no other companies mentioned. Time Warner (parent company of AOL), JetBlue, and Electronic Arts are Motley Fool Stock Advisor recommendations. The Motley Fool isinvestors writing for investors.
