Fads and Fashions
"Following the crowd" is something that we have all been guilty of. But new investors are more likely to "follow the crowd" and fall in love with the latest fad. This is a great risk, and a dangerous one. Newer investors tend to be particularly attracted to fads and fashions in investing. Remember the internet bubble back in the 90s? So many people lost money buying in at the end of the cycle. Of course, those who bought in early made great profits, but these investors often bought in on fundamentals, not hype.
As investors, we look toward the "next big thing." Sometimes this motivation leads us right into a Red Alert zone. The investment mess from the internet bubble is just one example. History is full of stories like the Tulip Craze in Holland back in the 17th century. These crazes cause people to follow each other over an investment cliff without thinking, like lemmings on a Science Channel special.
Think about the clothing industry and its fashions. History shows that the "latest" trend lasts only a short time. So, while investing in trendy clothing stores may bring short-term success, the failure is often even more spectacular?and inevitable. Typically, by the time we learn about a "new" trend, it's already "so last season".
We can even get hurt in fashion trends that are not immediately visible. Oh sure, athletic shoes are every bit as popular as they've ever been. Or are they? Over the past 5 years, hiking shoes have snuck up on the "sneaks" in popularity. That's right, hiking boots and shoes are in; tennis shoes and sneakers are out. But instead of buying stocks from Timberland, think about Nike as a long-term stable investment instead. Anyhoo, it's probably too late to buy Timberland now. The fashion trend has already had its day. But because of this experience we can expect new footwear trends to show up. It may be too late to adapt, it's nearly impossible to keep up, and by the time we figure out where the trend is headed, we've probably missed the stock price rise.
So how do we avoid the mistake of buying out of sheer excitement? The answer is simple. Look for companies that are bor-ing. Investing in apparently dull companies can actually be beneficial. Boring companies normally don't have share prices that are puffed-up by mood swings and emotional buying. We're simply buying an income stream ? the most affordable way to invest. Also, the company's future prospects are more secure, because they aren't at risk of missing a major shift.
Okay let's face it. Owning a firm in Ohio that makes widgets for industrial fasteners is not as "cool" as discussing your ownership of Tiffany's, or the latest nanotechnology corporation in Silicon Valley. But guess what? That widget-producing firm in the heartland will be more dependable, and will probably provide a better return on your money. And isn't that why you're investing anyway?
Now, we're not telling you to avoid trends altogether. Trends are important to investing. In fact, if you can get in ahead of the curve, there are great short-term opportunities when you buy in to fads. But here, we're usually playing the "greater fool theory": we assume that someone else will pay more than we did, even when we know it isn't worth it. I mean, many of us made money in the internet days playing this game, but if someone else saw the fad first, we could be wasting our money.
There's no harm in buying stocks that might become "popular" in the future, if you can predict future fads, and then sell them after they become overpriced. But to remain sane and safe, stick to companies with solid fundamentals: earnings, stable growth, strong balance sheet, etc. In other words, only buy companies that are good values with good prospects. If a company carries some attraction for fad-followers, so much the better. But don't pay extra just because of the "bling-bling" and the "glam" appeal. Fads and fashions are unpredictable ? make no mistake. Don't buy the stock unless you'd want to own it even if your fashion prediction falls flat. If it still looks good ? even if your guesses about tastes are wrong ? then maybe it's a worthy holding.
Successful investing is not just finding profit opportunities, but keeping your losses to a minimum. Don't buy stocks that have no substance. Stay away from the bling!
Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide variety of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally, and in the U.S. http://www.valueview.net
Scott Pearson can be reached for questions and comments directly at scott@valueview.net or by visiting www.valueview.net.
 Google News Updated : Fri, 22 Aug 2008 00:13:38 GMT GM to Invest $500 Million To Build Chevy Cruze - Wall Street Journal
Wall Street Journal - By KATHY SHWIFF General Motors Corp. will spend more than $500 million in the US to build the Chevrolet Cruze, a next-generation compact car. GM announces $500M investment for small car GM to invest $500 million in small car plant Publ.Date : Thu, 21 Aug 2008 21:10:12 GMT My Super Sweet 16: The Miley Cyrus Edition - E! Online
E! Online - Miley Cyrus is about to show up all those spoiled brats on My Super Sweet 16 who think they're cool being flown to their party by helicopter or when they're carried in like a princess by a group of hot dudes. Miley Cyrus to Celebrate Turning 16 at Disneyland Miley Cyrus Sweet 16 Publ.Date : Thu, 21 Aug 2008 20:21:48 GMT UPDATE 1-Microsoft enlists Seinfeld for ad campaign--source - Reuters Reuters - By Steve Gorman LOS ANGELES, Aug 21 (Reuters) - Comedian Jerry Seinfeld will star in a $300 million marketing campaign for Microsoft Corp aimed at burnishing the image of its computer operating system, a person familiar with the effort said on Thursday ... Jerry Seinfeld and Bill Gates to star in anti-Apple ads Seinfeld to be pitchman for Microsoft Publ.Date : Thu, 21 Aug 2008 21:27:28 GMT IAC Officially Breaks Up - Wall Street Journal
Wall Street Journal - By DAVID BENOIT and KATHY SHWIFF IAC is left as a collection of more than 35 Internet companies -- including search engine Ask.com, dating site Match. IAC: And Then There Were Five Diller's IAC Split May Fail to Boost Investor Returns (Update2) Publ.Date : Thu, 21 Aug 2008 23:17:40 GMT Marlins let one slip away in San Francisco - Sports Network
Sports Network - San Francisco, CA (Sports Network) - Marlins reliever Kevin Gregg's wild pitch in bottom of the ninth inning scored Emmanuel Burriss to send San Francisco past Florida, 4-3, in the finale of a three-game series. Giants walk off on Gregg's wild pitch Giants beat Marlins on wild pitch in 9th inning Publ.Date : Thu, 21 Aug 2008 23:33:45 GMT Hillary Clinton's Staff Looking to Avoid Embarrassing Anti-Obama ... - FOXNews
FOXNews - Hillary Clinton's staff is trying to avoid an embarrassing anti-Obama demonstration by her supporters during the floor vote at next week's Democratic convention in Denver. Clinton Will Attend Fund-Raiser for Towns Clinton for VP? She Says Ask the Obama Campaign Publ.Date : Thu, 21 Aug 2008 23:15:16 GMT Microsoft's Photosynth wilts under pressure - Computerworld
Computerworld - By Gregg Keizer August 21, 2008 (Computerworld) Within hours of its launch, Microsoft Corp.'s new photo-stitching service went dark, overwhelmed by demand, the company said Thursday afternoon. New Microsoft photo site spends first day offline New Microsoft Tech Converts Photo Soup Into 3-D Image Publ.Date : Thu, 21 Aug 2008 23:28:59 GMT Earn Money With Surveys |
PARLOT::Ebooks, Scripts,
Websites, and more... Reading glasses or readers have evolved from those old black... Read More New jewelry fashions need several factors going for them if... Read More Choosing appropriate clothing for the business environment can be challenging... Read More Here's the second installment of the "Menswear" series, on adding... Read More Most people will agree that leather jewelry is great. Whether... Read More Summer is here so it's time to freshen up that... Read More You've finally worn out those comfortable old shoes that you... Read More Every man should know the mens dress shoes details before... Read More What is Fashion? Embracing style, trend, and comfort is called... Read More The Ralph Lauren Spring & Summer 2005 Collection is simply... Read More Celtic jewelry like the Celts themselves has a rich history... Read More THERE IS POWER IN YOUR CLOSET and it is in... Read More Ugg Australia boots are not just for winter anymore. These... Read More Do you ever wonder where all the dress rules have... Read More Parrot jewelry is the mark of a bird-lover, someone who... Read More "Hail to that foot of the lusty beloved which hits... Read More The overall theme of fashion for Fall 2005 is an... Read More Have you been searching for that certain piece of jewelry... Read More There is no use fighting the fact that at some... Read More It's that time of year when we pack up our... Read More The Ugg Boot is one of the most popular types... Read More Summer is always a good season for people doing various... Read More Fashion style is important. You clothes make your fashion statement,... Read More There are more than three hundred fifty named diamonds famous... Read More Studies show that an estimated 60% of Americans do not... Read More
Adsense
websites
Find Your Style Of Reading Glasses To Show Off Your Sense Of Fashion
Threader Earrings -- a Fashion Jewelry Success Story
What to Wear: Summer Dressing in a Business Environment
Menswear ? Putting Together A Business Wardrobe - Part 2
Leather Jewelry - a Touch of Forbidden (and Friendship)
Fruity Fashion Picks & Tricks for Summer
How to Choose a Comfortable Pair of Shoes
Mens Dress Shoes: Details that Define Quality in Mens Fashion
Leather Jackets, Pants, Skirts: Bikers - The Hot Products In Leather Market
Ralph Lauren 2005 Spring & Summer Collection
Celtic Jewelry - A Beautiful Mystery Unraveled
The Power of Color in Business
Do My Ugg Australia Boots Put Me Ahead of Fashion or Behind?
A Clothes Encounter In The Business World
Parrot Jewelry: Colorful, Exotic, Fun!
Anklets Ahoy!
Fashion Trends for Fall 2005
Freshwater Pearl Necklace Sets Foundation for the Perfect Look
Turn Boring Reading Glasses Into Fun With Color, Shape And Design!
Looking Fab at The Beach!
The Ugg Boot and More!
Shoes You Need for Summer Holiday
Fashion Style is Important
Ten of the Most Famous Diamonds and Who Owns Them
How to Shop for Comfortable Pilates Workout Wear
Affordable and Reliable Web Hosting Starting at $4.49/Month
Celtic Jewelry - A Beautiful Mystery Unraveled
Celtic jewelry like the Celts themselves has a rich history... Read More
What Shoes Should You Wear for Unforgettable Prom Night
Prom night is always something you long to have during... Read More
Reading Glasses for Fashion and Function
It will happen to most of us baby boomers?one day... Read More
The Marc Jacobs Handbag is a Reflection of Style and Sophistication
The Marc Jacobs handbag is a reflection of style and... Read More
Celebrity Birthstone Jewelry
It seems that birthstone jewelry isn't just for us normal... Read More
Looking Fashionable At The Beach
It's that time of year when we pack up our... Read More
Horse Jewelry: Bold and Free
A popular motif in jewelry, even among city dwellers, is... Read More
Why is Orlando So Popular?
Lets clear up a few misconceptions about Florida in general... Read More
Men?s Fashion - Designer Suits
"Two thousand dollars for one suit?! Are you crazy? I... Read More
The Secret to having these Ten Pairs of Shoes
Whether you love shoes or not, there are ten shoes... Read More
Mirror Tinted Contact Lenses: Wild, and Practical Too
As a contact lens wearer, if you have searched the... Read More
Public Awareness of Conflict Diamonds Increases - What You Must Know About This Important Issue
Both Hollywood and the rap industry are promoting a diamond... Read More
The Pearl Necklace -- A Timeless Beauty
It has been said that of all the pieces of... Read More
Celebrity Engagement Rings
Whether we like it or not current trends in engagement... Read More
A Cigar Box Purse or Handbag is a Unique Fashion Accessory With a Touch of Old World Charm
There's an unmistakable charm about a cigar box purse or... Read More
Beyond Gold and Platinum: Mokume Gane
In many ways the "ultimate" noble metal that one might... Read More
Menswear ? Putting Together A Business Wardrobe - Part 2
Here's the second installment of the "Menswear" series, on adding... Read More
Do My Ugg Australia Boots Put Me Ahead of Fashion or Behind?
Ugg Australia boots are not just for winter anymore. These... Read More
Mens Fashion Coordination on Solid Colored Mens Dress Shirts
It is common to find men choosing white for their... Read More
Colours of Contact Lenses
Colours of Contact Lenses - Get Lost in those Purple(?)... Read More
Eyewear Frames - Catch the Wave of Fashion
With so many eyewear choices it can be difficult to... Read More
Angelo Carbotti Handbag Line Karen
As some of you might already know Angelo Carbotti handbags... Read More
Jewelry and Gemstone Care & Cleaning Tips
Diamond earrings, emerald rings, ruby bracelets, sapphire pendants; no doubt... Read More
Kate and Laura Mulleavy
If you've been following the fashion scene, by now you've... Read More
The Power of Color in Business
THERE IS POWER IN YOUR CLOSET and it is in... Read More
Fashion & Style |