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EnigmaDude (93.40)

The Softer Side of Investing

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August 04, 2010 – Comments (6) | RELATED TICKERS: IMAX

Sometimes you just have to go with your gut.  Forget PE ratios or book value for a moment (not altogether though).  And think about what you really like or don't like about a company's product or service.  Or maybe its the management that really impresses you, or not.

I decided to write this post after thinking about the emotional side of investing.  Most people will tell you to keep your emotions out of the way.  And in many cases that is good advice.  But when it comes to picking a stock to invest in, sometimes your intuition is your best friend.

One of my favorite stocks is IMAX.  I realized that my love affair with them started several years ago when I took my daughter, who was in 4th grade at the time, to an IMAX movie at the Denver Museum of Nature and Science.  At the time, they had one of the biggest movie screens in the world.  We watched a movie about the solar system, and my daughter was whispering interesting facts about each planet in my ear as we gazed at the spectacle over our heads.  It was fascinating and awe inspiring, not to mention a bit embarassing!

Since then their stock has soared.  They are signing deals left and right with China, Russia, and other parts of the world who are just discovering the beauty of IMAX.  I'm an investor in their stock because I have a good feeling about them.  And of course, their earnings story is pretty good, too!

I'm interested in hearing other Fool's thoughts and opinions on this subject.  Feel free to flame away!

EDude

6 Comments – Post Your Own

#1) On August 04, 2010 at 11:30 AM, truthisntstupid (81.04) wrote:

Numbers aren't everything - you're right!

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#2) On August 04, 2010 at 11:42 AM, SultanOfSwing (96.92) wrote:

There's a whole discipline called behavioral economics that can be applied to picking stocks.  Dan Ariely, a repeat guest speaker on NPRs MarketPlace has a book out that sounds pretty interesting.  I hope to read it soon.

I think your IMAX pitch is pretty intuitive too.  Definite global theater expansion going on in BRIC countries and elsewhere.  That has to translate into earnings.... doesn't it?

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#3) On August 04, 2010 at 12:31 PM, EnigmaDude (93.40) wrote:

SultanOfSwing - thanks for the tip.  The book looks interesting and when I googled "behavioral economics" I got 437,000 hits.  So obviously, this is not a new idea.  I am intrigued by some of the research.  But mostly I wanted to bring it to the attention of people who read these blogs and never give a second thought to the irrational side of the investor's dilemma.

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#4) On August 04, 2010 at 12:57 PM, lemoneater (81.74) wrote:

Nice blog, Enigma. 

Behavorial economics sounds interesting, Sultan. I once defined economics as the "poetry behind the math."

Since my math skills are less than stellar, I would like to think that the human element in investing gives me an edge:)

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#5) On August 04, 2010 at 1:28 PM, Option1307 (29.65) wrote:

I definitely agree that sometimes it is best to avoid numbers and go with your gut feeling. I often will use my "gut feeling" when entering/exiting positions of comapnies that have the strong fundamentals I'm looking for. I guess you could say that I like to use a combination of both tactics. Find solid companis based on fundamentals/technicals etc., and then add in a touch of feel too.

Along these same lines, Ultralong wrote a great blog a few weeks back that you should check out if you haven't already.

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#6) On August 04, 2010 at 2:43 PM, XMFDataPrincess (< 20) wrote:

I was just thinking of IMAX yesterday as I passed the big theatre here in Alexandria. I used to think of them as just existing in the Air and Space Museum, but was surprised to see a regular theatre here right next to our local AMC.

Seems to make sense to invest in things you really like. What better endorsement? At the very least, researching IMAX could lead you to some things you never knew about their industry and how they are affected by the overall economy. For example, candy and snacks are a pretty good investment even in the worst of times, but what about movies, big, BIG movies?

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