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Chasing The Newest Shiny Thing and Why That's a Bad Idea

Every time a company announces the latest and greatest answer to all the needs we didn't know we had, a swarm of investors jump into the market hoping it will make them rich.

Whether it is the latest high-tech device or software or a new drug that will cure a really expensive problem, many investors can't refuse the possibilities.

The reality is many of these market stars turn out to be market duds.

Every once in awhile, one of these high-growth stocks actually takes off.

But, more often, by the time the average investor has an opportunity to buy the stock, the price has already risen dramatically.

This puts investors in the position of buying high and hoping the stock will go higher.

Is there a way to reduce the chances that you will get burned?

The answer is yes with a "but" attached.

Yes, you can improve your chances for success, but there are no guarantees and it may take some time.

It is seldom wise to invest in a company based on one product or service.

One-shot wonders usually have a short life span.

A better approach is to invest in companies that have a record of more winning than losing ideas.

It is the nature of technology or knowledge companies to push new products or services - sometimes the company has correctly read the market for this new innovation and sometimes the company misses completely.

One place to start looking for these innovation leaders is in your own life.

Which companies consistently bring new ideas to their industry? Which companies have correctly read new markets for their products?

Which companies cut their losses quickly when a mistake is made and which companies exploit their competitive advantage when a product or service is just what the market wanted?

You may know these companies from your own experience as a consumer or customer.

You may have to do a lot of reading to discover the kind of company that strings together winning strategies.

Your investment is not for the current product or service, but for the next one and the one after that.

As long as the company continues winning more than it loses, you have an opportunity to earn a nice return for a long period.

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