The HOT STOCK: and staying disciplined for the long haul

I received the following email from a client this week.  It ties in with what we’ll be talking about at our upcoming events, and I wanted to share the exchange with the rest of you. He gave me his permission to copy his email and my response:



A friend of mine told me about a possible new product coming to market that will be handled by [Company Name] and I would like to invest. I know this is a bit outside your investment advice but seems like it could be quite a deal.

My plan is to request about $1,500.00 from my Roth account to be used to purchase $1,500.00 worth of shares. The company is [TICKER].


First of all, let me thank the thoughtful investor who sent this and encourage others of you who have this idea or other ideas to call or email me. I am more than glad to have the conversation and give you my reasons for or against what you’re thinking about doing. What follows is my response plus a few more thoughts and research I’ve added since.


If you were to do this, you would need to open a Roth IRA account somewhere else and then request the transfer – takes a day or two. But before you do that, I’d love to talk about it – the experience rarely turns out as expected.

Consider the following: 

  • You are an investor who needs to maximize return over the next four to five decades, not four or five months or even years.
  • You currently own 13,000 companies in 46 countries, a portfolio engineered on the best correlation science available to maximize return and reduce volatility.
  • 95% of all stock trades made in the US are made by professionals who do this for a living.
  • If you purchase this stock it is almost certain that you are purchasing your shares from a professional who is willing to let it go for that price.
  • Is the information you have about this company information that they or others don’t have?
  • If they do have it, which is almost certain, and the information really does clearly suggest a brighter than average future for this company, why would they still sell you the stock if they already own it, and for today’s price? Why would the price not already be moving up?
  • All public companies are always coming out with new ways of making money and expanding. They must do this to satisfy their boards.
  • Is there a very good reason for you to believe that this company has the ability to outperform the other companies you already own over the long term?
  • If you put $1,500 into this stock now, when will you pull it out? How do you define success in making this purchase?


I have a number of clients (more than I know of, likely) who have side accounts where they play around with some of their investments in a variety of ways including this way. I’m not naïve to that, neither am I threatened by it.  What I’m most concerned about is the mental side of this which can affect your peace of mind as well as how you think about investing.

Moral of the story: If you have a question, don’t hesitate to call me.  I don’t have all the answers, and I possibly have a different answer than the one you’re looking for, but hopefully I can add some insight to how you are thinking about things.

Call me anytime.






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