Tulsa World: My Dumbest Investment

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My Dumbest Investment

By MOTLEY FOOL
Published: 11/9/2009 2:21 AM
Last Modified: 11/9/2009 5:05 AM

Good Idea Not Enough

My dumbest investment happened when I got a tip from a friend about a manufacturer of imaging equipment that had developed a way to detect breast cancer without having to compress a woman's breast (as is done in today's mammography machines). I'm not a woman, but that sure seemed like a welcome development. The bottom line is that the last time I checked, my $3,000 investment was worth less than $4.

L.M.B. Maiden, N.C

The Fool Responds

It's easy to get excited by companies with revolutionary products, such as cures for cancer, or hints of great profits, such as via discoveries of gold. You have to look more closely at these companies, though. A good idea isn't enough. Does the firm have enough cash to start making and selling the product? Will it be priced affordably? Is it healthy, paying its bills and collecting its accounts receivable? Can a competitor quickly materialize and steal profits? Does the miracle cure or gold mine really exist, or is there merely the hope of it? Is management talented and trustworthy? These questions and others are critical before you invest. By MOTLEY FOOL

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