Tuesday, July 8, 1997
Bless the Slow Mail
by
[email protected]
I must get four cold-calls a week from brokers urging me to open an account and to buy this or that stock. Some of these guys sound like they should be at the "2-headed man" booth at Coney Island. Generally, I blow these guys off. But one time, I had just made a pile of easy money in my business and I was feeling on top of the world and unstoppable. Which sometimes means stupid.
Before I continue, all names are changed or omitted to protect the parties involved. No aspersions are being cast; no accusations are being made.
So I get this call from a broker just brimming with enthusiasm. "Say, don't you ever go to a new restaurant and try a new dish? Sometimes you find great new places this way! Why don't you try this stock? I know the principals in this company personally and they are great guys and just signed this deal and ... etc.; We see this stock headed for 10 or 11 in just a few weeks." "Try?" I said. "Wait a minute, if I go to a new restaurant and try some new dish, I have a $20 or $30 limit on my cost. Unlike investing, I have to eat anyway. And, like it or not, there is a totally certain outcome (no pun intended) on where that meal is going to end up in 2 to 6 hours. So I don't get the analogy."
Needless to say, there wouldn't be a story here if I didn't bite. So I buy 1000 shares at $5. I get off the phone and realize that I didn't even get the broker's address and telephone number. (Remember, I said stupid! And I meant "me"!) I figure, OK, I'll get a confirmation in the mail and send in the money. I start checking the stock price. Next day: $3.50. Ouch! Three days go by and no mailed confirmation. Now I start to get worried. I look up the broker's company name on the net using every possible spelling variation I can think of. Nothing. I have an "11 Million Business Addresses" CD, which also gave no listing for the brokerage. Now I'm thinking that the SEC 3-day rule will kick in and I will have my shares forcibly liquidated, losing $1,500 on the spot.
The next day, I get a "thanks for opening an account" letter from the brokerage, obviously with an address and phone number. I call the "800" number. No answer. I FAX the brokerage and ask what's going on. FAX goes through. They call back. "What's the problem?" the secretary asks. I say I don't have a confirmation and don't know where to send money and I'm concerned that the shares will be forcibly liquidated. The secretary says, well, if you want, we can cancel the transaction, but Mr. X (the broker) wants to talk to you. The right answer would have been: "Cancel the transaction and I don't want to talk to him." I talk to the broker, who insists that I can't cancel the transaction and that I own the shares (1-day loss: 30%). Both of them say that opening orders are always acknowledged/confirmed via Federal Express and they can't understand what went wrong in my case. Neither can I, except for the "stupid" part. I decide to ignore the broker and send a FAX acknowledging and accepting the secretary's offer to cancel. Two days later, a "cancel" confirmation arrives in the mail. Since then, the stock has continued to drop. Phew!
Any statement of moral would be redundant here.