This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Avoid Sucker Stocks: Beware New Stock-Buying Apps

NEW YORK (TheStreet) -- I had to do a double-take when I saw the news from TheStreet's Gary Krakow last week.

TD Ameritrade (AMTD) upgraded its mobile app to include a feature -- "Snapstock" -- that allows customers to scan the UPC barcode on a product, download information on any public company behind the product and then buy the stock of that company right there on the spot. TD tells us that this functionality "allows investors to approach shopping through a whole new lens." It also takes the Peter Lynch invest in what you know concept to a whole 'nother level.

Face it -- in practice, it's really invest in what you sort of think you know, but you don't, and hope for the best.

I've never been a fan of Lynch's model. He makes investing sound way too easy. He gives instinct and intuition too much credit. The idea that we can just pluck "ten-baggers" out of the air by recognizing the things we see people, including ourselves, buying and using day-to-day, stinks. It's dangerous. This new smartphone app runs the risk of upping the ante vis-à-vis impulsive and uninformed investment decisions.


To be fair, TD deserves some credit. It's one of a handful of retail brokerages that provides solid platforms for a wide range of investors. And this app allows you to gather information and add stocks to a watch list. TD offers the option to make a trade, on the spot, as just one of the features. Ultimately, it's up to the individual investor to not abuse the convenience.

But, for many, it will likely prove all too easy to abuse. Perhaps those who are most prone to hurt themselves will not be at the stage of their investing lives to even get wind of the app in the first place. Then again, something like this could actually open the door to the uninitiated, making it more likely for beginners to make costly mistakes.

However it shakes out, it got me thinking about the Lynch way. Like any other model, it often works wonders. Think stocks like Apple (AAPL) and Chipotle Mexican Grill (CMG). If you walked into an Apple Store or a Chipotle location three, four or five years ago, acted on Lynchian instinct and bought the stock, you're better off for it today. But, for every Apple or Chipotle, you'll find quite a few dogs, fads and fleeting phenomena you probably should have left alone.

Stock quotes in this article: AMTD, AAPL, CMG, CROX, BBW 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,501.65 -12.72 -0.08%
S&P 500 1,875.39 -4.16 -0.22%
NASDAQ 4,126.9670 -34.4910 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs