Melvin was 72 years old, blind in one eye and could smack the crap out of a golf ball. Probably 270-280 yards off the tee…
It was maybe 4 years ago that my buddy Pete and I got paired up with Melvin and his friend, who’s name escapes me, for a round of golf at Baltimore’s Clifton Park golf course.
Clifton Park is the site of industrialist and university founder Johns Hopkins’ former home in Baltimore. It’s a beautiful plot of land that he left to the city to become a park – rolling hills, big old trees, perfect for a golf course.
The first green and the tee boxes for the #2 and #18 holes share a plateau that is the highest point in Baltimore City. The gorgeous view down the fairway of the par 5 18th hole takes in Hopkins’ house in the foreground and the Baltimore skyline behind it:
Smack a high, arcing drive over that fairway and it feels like the ball will fly forever. But it’s an illusion – those carts you see on the fairway, that’s where their second shots landed. That hill drops away a lot steeper than it looks…
(In fact, I once almost killed my partner here at Pro Trader Today, Dave Roberts, when I ran our cart straight down the hill and slammed into a cart-path switchback, but that’s a different story.)
I was playing Clifton a few years before the round with Melvin, the day before Baltimore celebrated the bicentennial celebration of the Star-Spangled Banner. The Blue Angels were practicing over the city. And they were roughly eye-level when you stood on that 18th hole tee box – an amazing sight.
Back in the day, Clifton Park had a somewhat notorious reputation. It was the home for Baltimore’s golf gamblers and hustlers. I heard stories that former PGA pro and Morgan State University graduate Jim Thorpe used to make some money working over unsuspecting players on Clifton’s fairways…
Melvin and his friend told us that, yes, indeed, they had done their fair share of gambling at Clifton Park. And given how well Melvin was still striking the ball at 72 years of age and with only one eye, I’m sure he did pretty well…
Of course he didn’t offer up any details when I asked about money changing hands – he just chuckled a little and said “Well I haven’t played much lately, and I stopped gambling on golf after I lost my eye.”
To which I blurted: “What the hell, Melvin? You bet your eye?!? On golf??”
Don’t Bet Your Eye
I don’t really have an investing corollary for that little chestnut. I expect it goes without saying that when investing, you should never put yourself in a position for a devastating loss, like, you know, your eye…
It’s an issue because investment newsletter business, or the personal advisory business or whatever you’d like to call it has a tendency to push some pretty speculative stocks as if they are truly the next big thing.
I know, because I’m in this business and I am subscribed to probably 20 different investment e-letters. And I see the promotional headlines. Here’s a few that showed up in my inbox this morning:
Why I Short Stocks (And Why You Should Too)
Act Now: Your Second Chance for AI Success!
3 Undiscovered Cryptos
Sell Your Stocks… Keep Only One (ticker revealed)
Bill Gates is all about this tiny $2 stock
Now, we in the newsletter biz know you, our reader, pretty well. For instance, we know that the vast majority of our subscribers are older, probably retired, and have most of their money invested in what you’d probably call traditional investments. They’re certainly not going to “Sell their Stocks and Keep Only One” – that’s just crazy…
But we know our subscribers also have a little surplus money to “play” around with, and they turn to us for research and insights that you really can’t get anywhere else. And I gotta admit, while I know that with a net worth of $150 billion “Bill Gates definitely isn’t all about this tiny $2 stock,” I’m still intrigued by the headline. I may have to go digging around later and figure out what that stock is…
And that’s kinda the point: at the end of the day, for the reader/subscriber, the newsletter biz should be entertaining, interesting and maybe even fun.
I’m not sure it’s a good idea to just assume that your reader missed the ramp for AI stocks earlier this year, but that if you “Act Now: You’ll get your Second Chance at AI Success.” Seems almost insulting…
As for “3 Undiscovered Cryptos” – yeah, I bet there are. In fact, I bet there’s a lot more than three cryptos that nobody’s ever heard of, and I also bet it should probably stay that way.
And finally, imploring investors to “Short Stocks” strikes me as questionable advice. Of course we’re all aware that stocks move up and down. It’s reasonable to have a strategy that can profit when stocks move lower. But shorting stock requires a margin account. And when a trade on margin goes awry, it can snowball quickly. Trading on margin in general is a great way to lose an eye. In fact, in my early years, I blew up my trading account because I didn’t fully understand the risk of margin. To this day, I much prefer to use put options instead of outright shorting to capitalize on downside moves.
What’s the Risk
What I’m really getting at here is that newsletter biz promotional headlines have everything to do with opportunity, and almost nothing to do with risk. I’m sure you’re well aware of this fact.
So this all got me thinking about the diverging fortunes of two of the stocks from Pro Trader Today “Recommended Buy” portfolio.
You’ll find Amazon (NASDAQ: AMZN) in there, recommended just about a year ago at $87. And you’ll also find Fisker (NYSE: FSR), even though I’m pulling the plug on Fisker as I told you in yesterday’s article.
Now, there is clearly a big difference between essentially a start-up like Fisker and a bellwether like Amazon.
Interestingly, top mutual funds agree about Amazon. So far this month, mutual fund managers have bought $16.2 billion worth of Amazon stock. For perspective, that’s 10 times more than mutual funds put into Nvidia during the entire month of October…
Amazon has only rallied 7% so far this month. There’s probably more upside coming…
That’s it for me today, take care and I’ll talk to you on Friday.