Scuttlebutt

How can we discover worthwhile companies out of thousands of companies in the world?

July 2016, a worldwide phenomenon happened that few people would not have known. You could see people standing around under the hot sun, gathering at cafes and malls, the parks and gardens are suddenly full.

That phenomenon, of course, refers to the Pokémon Go game released on 6 July 2016.

The ability to interact with the environment in an augmented reality platform on a global scale, where players go about catching new Pokémon creatures in different locations.

What if you followed your instincts and intuition and devoted as much time into researching and investing in the Maker of the game, other than just playing the game (or watching your kids play)?

Incidentally, if you researched and invested into Nintendo (TSE:7974), which happened to be Pokémon’s publisher, before the mobile app was launched, you would be sitting on more than 60% gains as of today. But a quick check on Nintendo’s fundamentals may leave you jittery, given the industry is fast-changing and game technology leapfrogs in weeks and months.

A second choice might then be to research and invest in Niantic, Nintendo’s key augmented reality technology partner? Well, except Niantic is not listed – but their parent company is!

Had you researched and invested in the parent company of Niantic, which is none other than Alphabet Inc (Nasdaq:Googl) right on the day Pokémon Go was released, you would have made more than 20% returns as of today, not bad for a mega cap!

Never underestimate what you know. Consumers like ourselves holds significant power in the way we buy products and services, in the way we influence our peers to join us, and collectively turns the key that shape the world.

However, it would be unwise to blindly chase listed companies after such phenomena, particularly if you do not know what you are doing in stock investing, have not done extensive research into these companies, and unfortunately fall into the pitfall of over-rated hype.