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The Ramsey Minute: Sinking Stock

2 Minute Read

The stock market meets the football field.

In a move that is a first of its kind, a company called Fantex Holdings is offering stock in athletes, with Houston Texans’ running back Arian Foster being the first athlete to sign on. The stock value will be based on the athlete’s economic success, which will include his or her contracts, endorsements and appearance fees.

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According to Yahoo, Fantex has registered with the Securities and Exchange Commission for an initial public offering of $10.5 million in “Foster stock”. Foster will reportedly make $10 million off this deal, and there is talk of stock becoming available for other pro athletes and celebrities as well.

Unlike Foster’s jukes on the field, this isn’t a good move.

Purchasing single stocks is dangerous because they are inherently unpredictable—doubly so when you add in the human element. What if you invest money in Arian Foster stock and he blows out a knee? What if you had purchased Michael Vick stock before that whole dog-fighting thing became public and he lost his endorsement deals? All of a sudden, that stock becomes worthless.

If you don’t want to spend your retirement warming the bench, avoid single stock investing.

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