Today's Fast Money

We're all wired to respond to offers of fast money -- particularly if there's no work involved. Instant riches make for one of the world's oldest and most successful enticements.

There are advertised trading systems that offer fast money into my account. There are television shows that push that button as well. And there's my email account, overflowing with such temptation.

In our Motley Fool Hidden Gems small-cap investing service, we've never pursued any investment on the basis that it could lead to fast money, but I decided to check and see whether we've ever stumbled on any by accident.

How I did it
I broke down our recommendations over the first four years of the service (we're currently in the middle of the fourth) to first see whether there was any pattern to stocks that had doubled since their recommendation date. Here's the breakdown:

• First year: nine out of 24
• Second year: six out of 24
• Third year: three out of 24
• Fourth year: zero out of 16 (though one is awfully close)

Are we getting worse? Not at all. And actually, what you see is simply proof of the benefits of staying invested over time. The longer you hold an investment, the better it should do over time in terms of raw capital gains -- assuming it's a good company in the first place.

The average time it took for the successful stocks to double has been just shy of a year and a half.

Then I wanted to see what had doubled the most rapidly, perhaps to discover that moving up 100% quickly nevertheless had not resulted in the best absolute returns.

Darn it. Here, the numbers conspired against me to tell a different story. Marvelous Middleby, one of the truly remarkable stocks of this young millennium, doubled within two months of first being recommended in October 2003, and it has continued its relentless march upward. It's now up more than 500% for subscribers.

Hey that reminds me of something ...

The true friend of investors
Time, as you may be aware, is the truest friend to an intelligent investor, and it's the surest butt-kicker of the inept investor and speculator. Fast money is a product of luck or, worse, manipulation. Absent manipulated penny stocks (a category of excitement and danger all its own) the category of fast money that comes most quickly to mind was the (also manipulated) IPO market of the late 1990s and very early part of 2000. Let's take a look at some of the most famous and "successful" fast-money opportunities of that era.

That fast money is a very sad lot. But for the acquisition of Cobalt by Sun Microsystems in 2000 at a still-lofty price, it would look far worse. Although these companies provided very rapid riches (hey, that's another way of saying "fast money"!), to those lucky friends and family members who were accorded shares at in the IPO, and maybe a few of the traders who got in during the first few minutes of trading, as a group, these have been awful investments.

The real secret
Compare that with, say, a real builder of wealth -- though one not concerned with speed. Consider that Warren Buffett's purchase of shares of Washington Post (NYSE:WPO) was underwater for about two years. His purchase of Coca-Cola (NYSE:KO) took about three years to initially double, and his purchase of both Wells Fargo (NYSE:WFC) and American Express (NYSE:AXP) essentially flat for the first three years. Look at how they are reported as of last year's Berkshire Hathaway annual report:

And these figures understate the true rewards of those investments, because they don't include dividend returns.

The Foolish bottom line
We would much rather be on the Buffett side of the equation than the conflicted Wall Street investment bank fueled fast-money-and-then-gone IPOs, and so far, we have been. I suppose at Hidden Gems, we've gotten off to a bit of a fast start -- faster than we ever intended.

The returns for all picks, including those that haven't doubled, is 54% versus 23% for the S&P 500 over the same time. I believe those numbers will be going up though, because we've got time on our side.

As do you, as long as you're not pursuing the fast-money schemes of the world.

Our newest issue released at 12 noon ET today, so we're excited about the opportunity to share our latest thoughts with subscribers. You can check out the service today with a risk-free no-cost 30-day guest pass and see what we've managed to accomplish so far. It's just the beginning of a very long story.

Bill Barker owns shares of Berkshire Hathaway. Akamai is a Motley Fool Rule Breakers recommendation. Coke and Berkshire Hathaway are Inside Value picks. The Motley Fool has a disclosure policy.