This Day On The Street
Continue to site right-arrow
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

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 - Get Report) 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 - Get Report) and Chipotle Mexican Grill (CMG - Get Report). 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.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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.
Submit an article to us!
AAPL $126.60 0.15%
AMTD $37.69 2.89%
BBW $20.05 -3.33%
CMG $658.68 -1.76%
CROX $11.38 -0.61%


DOW 17,856.78 -278.94 -1.54%
S&P 500 2,071.26 -29.78 -1.42%
NASDAQ 4,927.37 -55.4390 -1.11%

Partners Compare Online Brokers

Free Reports

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