Tuesday, January 9, 1996
A Fool and My Money
by JKIP

Seven years ago a stockbroker friend of mine was touting a "sure thing" with a company you may know named Circle K. He told me that soon it was going to be "boughten out" and that it was a "sure money maker for those of us wise enough to invest ***RIGHT NOW***!" Ahh, the emphasis on the immediate. Naturally, I did so. . . foolishly---small f.

Apparently taking my newfound financial interest in the Company as a sign of bad times ahead, Circle K "management" (used liberally) took out their little red copy of "The Book of Bankruptcy," leapt forward to the good stuff on Chapter 11, and took notes. They then informed their stockholders that (paraphrased): "We were only a 'little' in bankruptcy, but after a 'little' reorganization, happy days were here again." Two things stuck with me: 1) that emphasis on "we" since I was an owner of the company (oof), and 2) that talk of a wee "little" bankruptcy and a wee "little" reorganization. Sure, and Charlie Manson was just a wee "little" crazy, and Al Capone is a just a wee "little" dead.

This experience pretty much taught me that the only faster way to lose a large percentage of my net worth than via uneducated investing would be to sell my house, hand over the cash to a seedy looking man selling watches from under his overcoat in the parking lot of the Local Race Track and say: "Please, sir, I'd like one of those $5.00 Rolexes, and by the way, you look ***Honest***, here's $30,000 and my phone number. I'm quite late for my Therapist and really In Crisis, so could you bet this money on the horse over there. . . you know, the one with the short little man in tights riding it, and call me if I win? I'll be home at six. Thanks"

Now *that's* investing.

Boy, then I harkened back to all that talk of a *sure-thing moneymaker.* The only beneficiary of the "sure money" style of investing, it turns out, was the broker, who probably made around $45 while I lost $30,000, half of which I hadn't even known I'd invested. "So explain to me just what IS this 'margin' thing you did for me??" I begged. That (unanswered) question was a good $15,000 too late.

Anyway, that was some time ago, and in the words of way too many Sports Figures turned Politicians making what they feel is an Earth Shattering Observation, "The Past Is Mostly Behind Us." Okay, fine.

So what's up now after the $30,000 loss? This year I got a great steady job playing in the orchestra of "Ms. Saigon" for ten months here in Los Angeles. After I got over the shock of the steady income and the stress of finding ways to hide it from my ex-wife (just kiddin'), I decided it was time for some of my money to leave home and get a job.

This next part gets a bit hazy, so bear with me: I remember waiting at the airport for a friend of mine and being approached by a short, somewhat-balding man dressed in green tights, pointy shoes and a bellcap of some sort, waving what looked like a computer disk in front of my face and saying, "Have You Heard About AOL?" I told him to get in line behind the Hari Krishnas and the "Have You Found Our Version Of Jesus" crowd.

But he butted in and asked me again, "Have You Heard About AOL?" I told him that my religion was a personal thing and that I respected the beliefs of others. One of the Krishna-like guys cried, "No, stupid, it's America Online. Take the disk and go home." Dazed and confused (and forgetting my friend's arrival altogether), I went home, slapped the disk into the Mac and, as if by some kind of Divine Intervention, found myself in the living room of The Motley Fool.

I read the Fool School folders and did some other research on my own, joining in on Boston Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:BSTN)") else Response.Write("(NASDAQ:BSTN)") end if %>, America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:AMER)") else Response.Write("(NASDAQ:AMER)") end if %>, Iomega Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:IOMG)") else Response.Write("(NASDAQ:IOMG)") end if %>, and Ride Snowboard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:RIDE)") else Response.Write("(NASDAQ:RIDE)") end if %>, a couple of minor downers and two stocks not in the Fool Portfolio, but fitting ever-so-snugly into the Foolish Mold. At age 50, I had joined the Freshman Class at the Fool School of Finance. . . Eight Stocks, no waiting.

In six months, I have turned up with a gain of 55%---fully accountable. And I'm darn near four-fifths of the way back up to zero from that Circle-K mugging. I estimate that I'll have recouped those losses sometime in Feb '96, and all will be profit from there. . . though we'll just have to see how good I am at estimating, won't we?!

I still have too little of a clue about investing---I even own shares in one mutual fund---but I'm doing so well that my broker friend asked me how I landed these gains so quickly. I told him that I don't buy "sure things" anymore, and am addicted to being more than slightly Foolish. Oh, and I threw in that if he had 'boughten' MY stocks when I told him about them, he could probably easily afford a new toupee and a copy of Will Safire's book.

Then he said, "Come on in sometime and I'll show you what I REALLY do. It's called arbitrage."

Say WHAT??

Not until the FOOL has an Arbitrage Folder, that's for sure.