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 investors like Warren Buffett or Benjamin Graham that pack wit and substance but skimp on direction.
The pursuit of the elusive bumper-sticker motto can drive you batty. Spooning out a universal elixir that 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 -- say, when someone on the other side of the elevator door begs for that one morsel of market advice as the doors come together. There are five words that I'm willing to lay my hat on.
Invest like you mean it.
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 jells 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 are 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.
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 its 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 companies that start with the letter E. Yet with some due diligence and resolve, even this investor can wind up with Israeli hospitality specialist ElscintLimited
In fact, given 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
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, we could complete each other's sentences. Anyone care to quiz me on the most memorable movie lines crafted by the animated wizards at Pixar? The company and its knack for trouncing Wall Street targets has me sitting pretty with a stock that has nearly tripled since I first bought a half-dozen years ago. Want to know what it plans to wear at the next Academy Awards ceremony? Or how it takes its coffee?
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 CNET
Then you explain how advertisers pay the highest premium for shoppers ready to make a decision -- you know, like on a review site -- and it all starts to jell. CNET also owns tech-news haven News.com, video-game hub Gamespot.com, and the legal file distribution oasis that Download.com has become. The company's high-traffic collection of sites, drawing 110 million unique visitors a month, has generated plenty of interest lately. From sponsors who want in to dot-com giants who wouldn't mind swallowing CNET whole, the company's paths all seem to lead to higher share prices.
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 Blue Nile
So who are you? Do you have Rule Breaker 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 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 can help you invest like you mean it.
- Read more on how a company like Blue Nile can take your portfolio's breath away.
This article was originally published on Feb. 3, 2005. It has been updated.
Longtime Fool contributor Rick Munarriz really doesn't condone alphabet-soup investing -- though it could be the basis for another column ferreting out the most lucrative letter in the alphabet. Rick owns shares in Pixar and is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. Pixar, Amazon, and AOL parent company Time Warner are all Motley Fool Stock Advisor recommendations. Blue Nile is also a Motley Fool Hidden Gems recommendation. The Fool has adisclosure policy.