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Remember Pokemon Go? Here are some investment lessons about that craze

Many investors around the world try to find the next business that is going to change everything. Apple’s iPhone has completely transformed how we consume media and where our eyeballs spend a lot of time looking. You might be reading this on an iPhone right now.

Google, Netflix, Amazon, Microsoft, Cochlear Limited (ASX: COH) plus many others have all brought something unique into the world and have created enormous value for shareholders.

Nintendo seemed to have created a similar thing with Pokemon Go. The augmented reality game resulted in hordes of kids (and adults) searching for pokemon. They were going into people’s gardens, cafes, parks and everywhere else trying to catch them all.

The Nintendo share price almost doubled in the two weeks from before Pokemon Go’s release to after its launch. A couple of weeks later it was down almost 25%.

Pokemon Go was not a key part to Nintendo’s business, but investors got excited. The market can get excited about a business despite not knowing (or caring) how much of a financial impact it will actually have on the business.

Warren Buffet tries to find the businesses that have competitive advantages that aren’t going to change much in ten or twenty years like chocolate or chewing gum.

In 20 years we will still be dying, meaning InvoCare Limited’s (ASX: IVC) business model won’t change. In 20 years international passengers will still be arriving into Sydney Airport Holdings Ltd (ASX: SYD). In 20 years we will still need healthcare products from CSL Limited (ASX: CSL) to remain healthy as a whole population.

Foolish takeaway

A lot of money can go up in smoke if you invest in a fad business with no long-term future. The best way to achieve strong returns is to find those businesses that can compound profit for a long time.

These top ASX shares are all predicted to create large returns for investors over the next decade, which is why one of them is in my portfolio.

3 Top Shares To Buy In August 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for FY19."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

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Motley Fool contributor Tristan Harrison owns shares of InvoCare Limited. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited. The Motley Fool Australia has recommended Cochlear Ltd. and InvoCare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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