By Irvin W. Rosenzweig, CFP®, ChFC®, CLU®, CRPS®, AEP®

No matter one’s tolerance for risk, people are eager to “catch the next wave.” For years, due to limited availability of information and access to investment choices, the greater the search for market beating returns, the greater the risk of loss. Investors that didn’t have the wealth to participate in private equity or pre-IPO investments had either been buying a more traditional listed stock or an “unlisted” over-the-counter (OTC) stock.  

Securities must meet a number of criteria to be listed on an exchange. Minimum standards for publicly traded stocks include: an annual income or market capitalization threshold, issuance of a minimum number of shares, and, the ability to afford an exchange’s listing fee which often exceeds $100,000.  These requirements allow only the higher quality companies to trade on exchanges.  Therefore, unlisted securities may be of lower quality and present higher risk to investors.  

During the “ Bubble” many investors wanted to buy stocks they had been “tipped” about through various sources. Many of these stocks were unlisted and only accessible through the “pink sheets,” pages of securities and quotes printed on pink paper and issued daily with the prior day’s data. Therefore, it was difficult to obtain analysis, get accurate quotes and ultimately purchase an unlisted stock.  In 1999, technological advances in the OTC Markets allowed for the creation of the Electronic Quotation Service and “real-time” quotations.  

Fast forward to today and there are significant changes in product, information, trends and delivery.  Starting with delivery and the fact that in my role as a fiduciary, I am only allowed to function in a prudent manner in the best interests of the client.  This sometimes puts me in a “Big Brother” role since if a client wants to invest in something that I don’t think is in their best interest, I may refuse.   In a broker/dealer environment, as long as the trade is “suitable”, which is subject to interpretation, the broker is compelled to make the trade.  

In the investment climate today, due to the availability of information on a constant basis, through widespread analytics, social media and multiple channels devoted to finance and the markets, a highly informed and efficient market has been created.  Changes have also been made in the narrowing of spreads as stocks now trade to the penny vs. the quarter and most importantly, the tremendous availability of product.  For example, in the past, if one wanted to follow a trend or invest in a sector, it was nearly impossible until the availability of mutual funds that tracked broad sectors such as utilities, financials, technology, etc. It was really the explosive growth of Exchange Traded Funds (ETFs) that opened the door for retail investors.  Not only could one participate in sectors but, you could invest in a particular segment of those sectors.  So, for example, instead of just owning stocks, broadly, in the Technology sector, you could “cherry pick” amongst the various components of Technology such as Semiconductors, Cyber Security, FinTech, Software, Smartphones, Cloud Technology, Social Media and more by choosing a vehicle with a narrower focus within Technology.  

There are now over 2150 ETFs, well beyond the early broad-based passive indices, there are many more offerings that invest in select and novel investment areas that are highly topical and newsworthy.  This segment is often referred to as “thematic investing” which follows certain social, economic, corporate, demographic or other themes that are popular in society.  Consider Lithium batteries for electric cars, video games, virtual reality, robotics, artificial intelligence (AI) and “alternative harvesting” (code name for marijuana) are all available as investment themes. How about crypto-currency such as Bitcoin or the technology behind it, Blockchain?  Yes, these ETFs are available with more being developed to further represent niche investment opportunities.  The ability to “catch and ride the next wave” is now at hand but in a diversified portfolio of choices available through reputable issuers, publicly traded and listed on major exchanges. Caution should be exercised when investing in a less broad, more specialized manner.  Please see some investor tips below.  


  1. Have a Starting Point: Know your income and expenses, an overview of your assets and how your investments are allocated are critical to a sound financial plan.  Software such as MINT, Quicken and tools such as eMoney that we use are available to analyze your current positions.
  2. Know which Accounts to Use: Different types of investing may be more suited for a particular account.  For example, rapid trading and high turnover may be best accomplished in tax-deferred accounts to avoid tax-implications of short-term gains.  However, if losses are incurred through trading activity a tax-deferred account will not allow the deduction for losses, so speculative investments may be a better idea in taxable accounts should you want to claim tax losses.
  3. Proceed with Caution: Riskier investments should be held as a much smaller percentage to the core of your equity portfolio, which generally would be large company stocks and “blue-chip oriented.”
  4. Do your Research: There are a number of excellent resources we use including Morningstar Analytics,, ETF Database, and more.  

Consult your Experts: Speak with your financial advisor and accountant to confirm that your assessment of finances and allocation are on target, so you have a clearer sense of how best to move forward.