Fellow investors,
If it's too good to be true, why do people believe it it's true?
"Because they're either greedy or stupid." That's the most frequent take I hear about anybody who falls for an investment scam -- including the victims of Paul Regan, the subject of my most recent article. He is a convicted Ponzi schemer who recorded himself ripping investors off so he could teach his salespeople how to do it, too.
That take couldn't be more wrong. These victims aren't greedy or stupid; they're vulnerable. I spoke with close to two dozen of Regan's investors. Almost none were young, employed and in robust health. Most were disabled or chronically ill; unemployed or retired; widowed; or living alone. When life hasn't gone your way for years, an investment that's too good to be true feels like the answer to your prayers. You don't evaluate it as savings; you evaluate it as salvation.
This exchange of comments on the Regan story nails it:
What's more, Regan's methods closely parallel the principles outlined in the classic book "Influence: The Psychology of Persuasion," by behavioral scientist Robert Cialdini.
At my request, Cialdini listened to several of the recordings Regan made.
"We like those who give to us, who provide hope, who offer ways out of distress," Cialdini said after hearing a recording of Regan telling one woman that he could "come through for you and be your deliverance."
"He's presenting himself as her benefactor, not just her business partner," explained Cialdini. "In effect, as the recipient of his gratitude, it's her turn to give back and say yes to his request." In another form of reciprocity, Regan often adjusted his offerings while he was talking to clients, promising them higher rates or longer terms if they invested more or committed sooner.
Speaking in his soft, deep voice, Regan variously -- and falsely -- claimed that he had been a top trader at Goldman Sachs, had run Citigroup's alternative-investments division, was a chartered financial analyst and had earned a degree in "advanced mathematics."
"Especially when people are uncertain," Cialdini told me, "they go for authority, gravitating to the person with confidence and credentials."
Regan also swayed investors with what Cialdini calls "social proof," namedropping influential-sounding people or institutions. The California Teachers Federal Credit Union was a major investor, Regan claimed. "They came in with 46 million [dollars] and they applied tremendous due diligence," he said on one call.
There is no credit union by that name.
Regan took elemental signals of trustworthiness that seldom steer people wrong and used them to create a powerful impression that he was honest and caring. "These principles that [the investors are] responding to are deeply embedded in us," said Cialdini, "and normally give us good outcomes."
To have confidence in someone literally means to place your faith in them (from the Latin fidere, to trust or believe). A con artist is someone whose craft is to win your trust. That's most likely to happen not because you're stupid or greedy, but because you're vulnerable -- and because the con artist knows exactly how to fabricate trustworthiness.
The best advice I can give?
First, don't assume you're too sophisticated to be suckered. In the 1990s, John Bennett and his New Era Philanthropy, a Ponzi scheme, bilked an ex-U.S. Secretary of the Treasury, a former co-chairman of Goldman Sachs and other financial titans out of hundreds of millions of dollars. Later, Bernie Madoff scammed billions from many of Wall Street's leading institutions.
Second, as Ronald Reagan put it, "Trust but verify." No matter how likable or trustworthy someone seems, check their credentials independently. Don't let your gut feelings prevent you from doing a background check -- and a check into the financial logic of the investment.
This is an edition of the Intelligent Investor newsletter, where Jason Zweig writes twice monthly about investment strategy and how to think about money. If you're not subscribed, sign up here.
The Ultimate Long Shot: Buying and Holding a Handful of Stocks
Lots of readers have been asking a version of this question:
Can I buy SpaceX or OpenAI or Anthropic stock, hold it for years or decades on end, and beat the market?
We've all heard of investors like Ronald Read of Dummerston, Vt., or Grace Groner of Lake Forest, Ill., who bought a handful of blue-chip stocks, owned them for decades without selling a single share, and ended up worth millions of dollars.
In 1984, Bob Kirby, a leading stock-fund manager, wrote about what he called " the coffee-can portfolio." It was, in effect, a couple of handfuls of stocks stuffed into a can and then left undisturbed for at least 10 years. With zero trading costs, he argued, the coffee can could outperform most active managers and perhaps even the market itself. (A new book, "The Coffee Can Investor" by Neeraj Khemlani, makes a similar argument.)
A 1992 study for the Brookings Institution found that pension funds would have earned an annualized average of 0.8 percentage point higher on their stock portfolios in the 1980s if they'd frozen them each Jan. 1 and then never made a trade all year.
Morningstar has found that even the S&P 500 index would have earned a higher return if the committee that oversees it had never made any changes to it. That's right: If you'd bought all the stocks in the S&P 500 and then never touched them, you would have outperformed the index itself, even as it kept adding winners and dropping losers.
Can investors do better by doing nothing?
Not really, according to new research by Hendrik Bessembinder, a finance professor at Arizona State University. Looking at the returns of all the stocks in the S&P 500 from 1971 to 2025, he found:
-- If you bought every one of the stocks in the S&P 500 and then did nothing,
you'd have averaged a 217.3% cumulative return over all 10-year periods.
-- The S&P 500 itself returned a cumulative average of 222.8% over all
10-year periods -- barely any better than the Do Nothing approach.
But the comparison is hypothetical! Buying exactly proportioned stakes in 500 stocks would be extremely cumbersome and costly (and, over longer periods, mergers and delistings would make the Do Nothing portfolios drift away from the index). On the other hand, you'd never incur any fund-management fees with the Do Nothing strategy. The comparison also ignores taxes and assumes you reinvested all dividends.
Bessembinder also considered this question: If you bought and held only a subset of the stocks in the S&P 500, would you have beaten the index? (Remember, we're talking HODLing here: holding on for dear life, never selling.)
He tested portfolios consisting of 100 stocks, 50 stocks, 25 stocks, five stocks and only one stock, drawn at random from the S&P 500.
The fewer stocks you put in your coffee can, Bessembinder found, the more likely you were to underperform. With 100 stocks, you'd have earned returns almost identical to the S&P 500 itself if you HODL'd for 10 years. But with only five stocks, your odds of beating the market over decade-long periods fell below 50%, whether you weighted your picks by size or put the same amount of money in each. If you put all your money in a single stock, you'd have beaten the market less than 42% of the time.
Ronald Read and Grace Groner have their own Wikipedia pages because they were lucky (or, perhaps, skillful) enough to pick a handful or two of winning stocks that they never sold. The vastly greater number of investors whose "narrow portfolio underperforms or even becomes worthless don't get press or dedicated Wikipedia pages," Bessembinder told me.
Of course, if you already own a broadly diversified index fund, you're assured of capturing the return of the overall stock market. In that case, taking a small amount of your money and concentrating it in a small number of stocks is harmless fun, and you might even end up owning the next Nvidia. If you end up owning the next Enron instead, your diversified fund will prevent that loss from hurting much.
But if you don't have nearly all your stock money in a broadly diversified fund, the coffee-can approach is a bad idea.
Jason vs. Jason
Several readers emailed me to ask me what I thought of what my colleague Jason Gay wrote earlier this month about the oceans of money New York Knicks fans poured into tickets at the NBA finals:
For the people who paid to be there, it's the best five or six figures they ever wasted. Don't tell Jason Zweig, but nobody's going to feel bad about dipping into a college fund to be there. Again: school's overrated.
Don't tell Jason Gay, but I don't think most of these people were raiding a college-savings plan.
After all, as David Uberti and Gunjan Banerji also reported for the WSJ:
Getting close to the action at such live events confers status, said Jaclyn Sienna India, founder of the concierge agency Sienna Charles. Think Taylor Swift madness for finance bros, with Jalen Brunson jerseys instead of friendship bracelets. A ticket is a rare opportunity to mingle in VIP areas over sushi rolls, not to mention fodder for Instagram posts or a chance to appear on television.
India's firm arranges travel and other experiences for dozens of members -- most of them in private equity -- with net worths ranging from tens of millions to billions. The lower end of that spectrum tends to shell out more "because they have the most to prove," she said. Her team already booked Knicks tickets as expensive as $176,000 apiece.
"If you're not there, you're a loser," she said of the psychology behind such purchases.
If you brought friends or family with you to the Knicks championship, you created a shared experience you'll always remember together -- one of the best ways money can buy happiness.
I just hope you didn't ransack your college-savings account to do it.
Money Mailbag
Have a question you'd like me to answer?
Want to weigh in on what you just read? Got a tip on something that I or my colleagues should investigate? Itching to tell me I'm wrong about something?
Just email intelligentinvestor@wsj.com and I'll see your note. Don't forget to include your name and city.
Be well and invest well,
Jason
Investors, rich and poor alike, gather in Bubble Alley to pick stocks. One offering, priced at five shillings per share, is the New Cabbage and Potatoe Co., "no cooking required." Another is the "New Company of Mowers of Beards," with "a New Machine to Shave 60 men in a minute." This image should remind all investors that there is nothing new under the sun.
Last Word
About The Intelligent Investor
In The Intelligent Investor, Jason Zweig writes about investment strategy and how to think about money. To send feedback, reply to this email or send a note to intelligentinvestor@wsj.com. Sign up to get an email alert every time Jason publishes a column. Got a tip for us? Here's how to submit.
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June 30, 2026 09:55 ET (13:55 GMT)
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