Exception to One Rule Taught at Jeff Macke Trade School

[Post Summary]

I have eaten my honeycomb with my honey;
—Song of Solomon

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When is a stock whose fundamental picture continues to appear compelling ... even after its price has fallen from $30 to $25 ... not worth the risk of holding?

CNBC Fast Money personality, Jeff Macke, in his Trade School lesson titled, "Building Positions" says, if a stock's "fundamental picture remains intact," you should be willing to buy more shares, lower your cost basis, and boost your overall return.

Let me tell you. There is something missing in that rule. Something critical.

It is the element of time. That is your time on earth ... and the times in which you live, as well.

Don't get me wrong. There's merit in Macke's idea. Yes, even in the worst of times some company's fundamental picture will shine. Indeed, it's stock price might be the one to buck a wide-reaching stock market decline.

This, however, represents a "special situation" ... affecting just one stock ... among thousands. Could your sense of prospects be so acute you could ferret out the one ... the only ... the special?

How long are you willing to wait? What if the moment ushers circumstances you did not anticipate?

If you're not Warren Buffett (or a handful of others), then you might better question your odds at finding that one company. Play it safe. There's an old adage on Wall Street you might contemplate...

"As goes the stock market, so go 90% of all stocks that make up the stock market."

So, beware...

—Tom Chechatka