Nintendo Co., Ltd appreciated more than 100% in July after the launch of Pokemon GO. A month later the shares have already declined 27% from the peak.
Speculating is not investing
It’s great if you got in on the action before Pokemon GO was launched, but after the launch and the stock already went up, it’s too late to jump in.
To add to that, no one knows how long people will continue playing Pokemon GO. Actually, Pokemon GO already lost some users as the hype dies down a bit.
If investors are buying Nintendo just because of Pokemon GO, it’s purely speculation and not investing, unless they believe in the future of Nintendo as a company.
Besides, it’s not like Nintendo owns the Pokemon game. Check out Quora for the relationship between Nintendo, Niantic, and the Pokemon company and find out who benefits from the game.
In fact, I was surprised by the answer that Apple Inc. (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL) get a share of the pie. I think both of these tech giants are better investments than Nintendo, especially Apple, which trades at about 12.9 times earnings and yields 2.1% at about US$108 per share.
Gotta catch ‘em all?
In the Pokemon world, one of Ash’s goal was to catch all the pokemon. Not for investing, though. You better not try to catch ‘em all.
Especially when you start out investing, it’s best to stick to quality companies whose products you’re familiar with, such as The Coca-Cola Co (NYSE:KO) and Johnson & Johnson (NYSE:JNJ).
However, if you don’t know how to value stocks, even that can be dangerous. In that case, the tried and true way is to invest when the whole market tanks, such as during a recession. That way, you can be sure that you’re buying at a discount.
The other tried and true way is to average into your positions over time. For example, you can buy $1,000 worth of shares of each company every year. When the shares cost more, you pay a higher cost. When the shares cost less, you pay less. Overall, you’ll pay an average cost for the shares.
Stocks can help you out, too
Pokemons help their owners out in battles or in their daily work. In the investing world, stocks can help you out, too. You can earn a regular income from quality dividend stocks. For example, Apple, Coca-Cola, and Johnson & Johnson all pay dividends.
Other times, you can sell shares for gains to do whatever you need to, including paying the bills, eating out, going on vacation, or even making a down payment or mortgage payment for your home.
However, you should be very selective about what companies you invest in. Never speculate or buy a company that you don’t understand. If you don’t understand it, you probably won’t be able to hold on when it goes underwater.
If you like what you've just read, consider subscribing via the "Subscribe Here" form at the top right so that you will receive an email notification when I publish a new article.Disclosure: At the time of writing, I own shares of Apple.
Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
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