Even After the Pop, This Strategy Is Too Risky

The following video is part of our "Motley Fool Conversations" series, in which consumer goods editor and analyst Austin Smith discusses topics across the investing world.

In today's edition, Austin reflects on the amazing pop in Talbots share price following the announcement that Sycamore Partners will be moving forward with its buyout. This is great news for existing shareholders, who realized a practical double in just one day. Just a few days ago Austin cautioned against chasing buyout rumors, and used Talbots as an example. At the end of the day, one impressive buyout materializing doesn't justify the risky game of big buyout hunting. The odds are still decidedly stacked against investors. Instead of chasing buyouts, investors should tune out the noise of rumors and continue doing their due diligence and buy great companies instead. Sure, a few big buyouts will materialize, but many won't.

You can start by learning about one company our chief investment officer named "The Motley Fool's Top Stock for 2012." We've created a special free report for investors to uncover this soon-to-be rock star. The report highlights a company that is revolutionizing commerce in Latin America, and you can get instant access to the name of this company by clicking here to download it now.

At the time thisarticle was published Austin Smithhas no positions in the stocks mentioned above. The Motley Fool owns shares of Best Buy, Infinera , and RadioShack.Motley Fool newsletter services recommendInfinera . Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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