Thursday, April 25, 1996
Missing the Good Ship Hot Stock
by TJ1234567

I've been reading posts from Fools and others bemoaning the fact that they failed to act on that 'Hot Tip' which would have made them gazillionaires. You know how they feel. . . someone in a chatroom mentions that Such-and Such, Inc. is on the verge of a *major breakout* as soon as the resistance level is reached on the fifth consecutive day, and the 90-day trailing earnings align with the book-to-bill ratio (and the moon is in the seventh house, and Jupiter aligns with Mars). Or someone drops you an e-mail touting a sub-mini-microcap that's about to be bought out by Gates & Co. for quintuple its current price. Ah, the pursuits of youth---the ultimate tan, a shiny convertible, and the 'One Little Break' that makes you just enough cash to depose Warren Buffett.

But you played it safe and missed the boat, and now you are miffed.

There, there. . .

Let's look at this annoying habit---the habit we have of missing those skyrocketing Hot Stocks. Occasionally we need to remind ourselves that if we were to invest based on the mythical Hot Tip, what a mess things would be.

The obvious problem with the Hot Tip is that in the time it takes to get good information on a company, and to read, analyze and act on it, it's already made its move without you. Sayonara. On the other hand, we should realize that it's this very dilemma which keeps us from buying those penny stock hype-dogs that take our money for that infamously quick and tornadic ride, round and round and down. . . the toilet. And this, if the truth be told, is the mass transit system of preference for so many Hot Stocks.

However, this truth is oft not told. Rather, the guy who just walked eight verifiable dogs through the halls of the venerable Internet will be back, lickety-split, with yet another pitch, conveniently forgiving himself his earlier sins. Don't hate him, he's just following Hot Tipster Axiom Number One: forgive and forget, especially if you are the goat.

So he's back, and has he got a deal for you. . .

"Hey," he says, "let me tell you about the next Microsoft. It's this new company, Defcon One---symbol CON on the Vancouver Exchange, last close 3 cents. They make PREFABRICATED AIR-RAID SHELTERS, that's right, and the best part is they make 'em with old tires. Do you KNOW how MANY old tires there are? They're the ONLY company doing this, a MONOPOLY! And, hey, listen, there's a BIG announcement coming about an order from the Montana Militiamen---practically a government defense contract! Better move quick, 'cause this baby's gonna go ballistic! Blah, blah, blah.."

Yes, he's back all right. Snake-oiled sales pitch and all. The problem is, once in a while he's right (likely by accident, but even hype-mongers are subject to the law of averages). He's right, and YOU didn't listen. And in case you're tempted to forget, he will be there to remind you that you didn't listen, Fool. Strange, but he never reminds you of those deep-sixed wonder stocks of last week, does he? Hmmm.

Now it's an integral part of human nature to fret over lost opportunities. Mutual fretting makes for great bar stories "Well I knew about Intel back when they were giving shares away in boxes of Post Toasties. Could've had a gold mine if only I'd taken the plunge {whimper}. Hey, bartender! Another round for me and my buddies."

But we rarely get any pleasure (or conversational mileage) from bragging about the Hot Tips we ignored, which subsequently fell through the floor and are currently swimming in the nether regions of penny stock purgatory. There seems to be no glory for the guy who declined a ticket for the maiden voyage of the Titanic.

It's like *just missing* the million dollar lottery number that would have bought you prime property on Easy Street. You missed the boat, and you're inconsolable. However, if you'd put your daily lottery funds into reasonable, researched, responsibly Foolish investments, you'd have had an excellent chance of at least moving to within a couple of blocks of Easy Street.

This is a lesson which should not be lost on members of Hot Tip Addicts Anonymous. Hot Tips work much the same way as those lottery tickets. You *could* win big, but you'll play heavily against the odds to try, plundering your precious purse and greatly diluting your future pot o' gold. But of course it has been said that a fool and his money were never the best of friends in the first place. So if you do decide to pursue the mythical Hot Tips mirage just to avoid "missing the boat," don't forget to wave at your friends as they sail by on that other pleasure craft you missed. The Ship of Fools.

-- TJ Roberts

Transmitted: 4/25/96