Tracking The Market Like A ProStuart Weiss
Rick Boettcher can rattle on like a seasoned Wall Streeter. He prefers to invest in stocks "with a market cap under $100 million" and "with a p-e multiple less than the earnings growth rate." And his performance? One that a pro would kill for: by his count, a 21% annual rate of return since 1980.
Boettcher, however, is no pro. But the 42-year-old Portland (Ore.) pharmacist treats his six-figure portfolio as a serious business--and even works four 10-hour days a week to leave more time for his investments. He keeps the portfolio at around 20 stocks--it's enough names to provide diversification but not so many that he can't keep track of what's happening with each of them. To save money, he uses a discount stockbroker.
"BY THE GUT." Boettcher lets his computer do the drudge work. With Microsoft Works, an inexpensive software program that includes a spreadsheet, a few keystrokes allow him to spot each stock purchase, its date of purchase, buying price, and commission cost. By updating the prices each day, he can compute the gain or loss on each position and the entire portfolio.
Boettcher also puts his computer to work searching for information. By dialing into Prodigy, an on-line service, he can check for items on companies he's following. But he still finds some investment ideas the low-tech way--in newsletters, newspapers, and magazines.The stocks in Boettcher's portfolio are hardly household names: Frozen Food Express Industries, up 284% over three years; Bowl America, a family-run company that owms a string of bowling centers in Virginia, up 69% over the four years (plus a 3% annual dividend); Jean Phillippe Fragrances, up 244% in about 18 months; and Lattice Semiconductor, a back-from-bankruptcy turnaround, up 340% in a little more than two years. His biggest loser was Floating Point Systems, a now-defunct manufacturer of components for supercomputers. He bought it at 14 in 1986 and finally threw in the towel at 3 in late 1987. His big weakness, Boettcher admits, is that he has never come up with a good system for deciding when to sell stocks. It's all done "by the gut."
PAYING "TUITION". Boettcher got hooked on stocks 20 years ago and, like many others, learned by trial and error. "I got my first tip on Wall Street Week," he recalls, and he is still an aficionado of the show. The stock was Boise Cascade Corp., which he bought in early 1974 and sold the same year at a 15% loss. He later fell prey to a high-pressure broker who talked him into selling uncovered or "naked" options, a highly speculative endeavor. He lost about $5,000--about three-quarters of his investment capital at the time. Says Boettcher: "I paid some tuition there."
Boettcher learned from that experience to stick with a system he understands. But he's always expanding his horizons. He owns 25,000 shares in Air Transport International Inc., a penny stock he bought for 31 that now trades at 50 . He also bought American depositary receipts in Germany's huge Dresdner Bank, which he believes will benefit from the fall of interest rates in Europe. Those stocks are educational plays as well as investments. Says Boettcher: "It's nice to read books, but unless you've got some money at risk, you really don't learn."