DOLLARS & SENSE HUMOR HELPS TEACHER SURVIVE VOLATILE MARKET, WIN CONTEST IN PICKING STOCKS.

Byline: Chris Sieroty Staff Writer

A volatile stock market can make or break an investor.

That certainly was the case in the seventh semiannual Daily News Stock Picking Contest. In six short months, several contestants suffered serious setbacks by investing in Internet stocks, while one enjoyed the dough that investing in doughnuts can make.

On Jan. 21, six contestants were given an imaginary $100,000 to invest in the stock market. Participants this time around came from Burbank, Camarillo, Panorama City, Granada Hills, Northridge and Palmdale.

If they have followed the stock-picking contest on a regular basis, readers may have noticed that, at the end of the game, some of our contestants' portfolios weren't as large as in previous games. That's because of a rules change.

To eliminate day trading from the contest, all orders to buy and sell were priced at the next day's close. For example, any stock purchased on Tuesday was priced at Wednesday's close.

The payoff for all contestants was that whoever had the largest portfolio by July 7 stood tallest. Two of the contestants finished in positive territory, while the four others suffered the bitter taste of financial defeat.

The winner was Alan O'Hara, a teacher at Ranchito Avenue School in Panorama City.

His final portfolio: $116,655.35. In six months O'Hara made a 16.7 percent return, or 33.4 percent annualized.

When the contest began, he said his investment philosophy came from Will Rogers: ``Buy a stock and wait for it to go up. If it doesn't go up, don't buy it.''

On the same day he was given his imaginary $100,000, O'Hara bought 200 shares of Broadcom Corp. at $312.813, 100 shares of Commerce One at $197.813, 100 shares of China-dot-com at $92.75 and 100 shares of Siebel Systems, a company that produces eBusiness software, at $84.75.

Then on Jan. 24, he sold 100 of the 200 Broadcom shares at $287.625, worth $28,762.50, to purchase 50 more shares of Siebel Systems and 113 shares of JDS Uniphase Corp.

He didn't make another trade for about a month before dumping 100 shares of China-dot-com at $125 for $12,500,, a profit of $3,503.25 in the first month of the contest.

O'Hara used the cash to purchase 100 shares of Microsoft at $98.563. He then sat back and watched as the markets went south in April and several of his companies, including Broadcom, split 2-for-1.

Finally, on May 2, he purchased 47 shares of China-dot-com at $55.81.

``The only mistake I made was selling 100 shares of Broadcom early in the contest. If I hadn't done that, I would have doubled my portfolio,'' he said.

``It's like my dad says: If you laugh at your own mistakes, you'll considerably lengthen your life. Laugh at the mistakes of others, and you'll considerably shorten your life.''

O'Hara said the key to successful investing is simple: ``Buy the good companies, the best in their individual groups, and hold onto them for the long term.''

In second place was Ronald Schulkin, a 53-year-old certified public accountant from Northridge. He ended with $102,419.78, up 2.4 percent for half a year, a pace of 4.8 per year.

Unlike O'Hara's, Schulkin's strategy was to purchase stocks in companies that were likely to split. Several of his companies split 2-for-1, including Kolhs Corp. and Alpha Industries.

But it wasn't enough to overcome earlier losses suffered at the hands of Good Guys, Rite Aid and the World Wrestling Federation.

Schulkin, a lifelong wrestling fan, said buying 1,000 shares in the World Wrestling Federation at $15 was a sentimental choice.

``Being a fan, I also have some knowledge of the company by going online to various wrestling sites,'' he said. ``The sites give me television ratings along with how many people attended each event and how many T-shirts were sold.

``In today's market, it's nothing but a money-making machine,'' Schulkin said. ``I would have been very happy to have kept it.''

Schulkin sold his WWF on Feb. 14 for $11.13 a share, a loss of $3,687.00.

In third place was Charlotte Brown, a Camarillo resident and five-year veteran of investing. Her final portfolio: $89,380.63, down 10.6 percent for six months or 21.2 percent annualized.

Brown, who began the contest by sticking with all cash, ended up with a portfolio that included companies ranging from Nokia to Cisco Systems.

Wilbert Brewer, an aerospace worker from Lancaster, came in fourth with a final portfolio of $81,836.22. He suffered a 18.2 percent loss in six months, or 36.4 percent annualized.

His most interesting stock was Krispy Kreme Doughnuts. He bought 300 shares on April 11 at $12.88 and then sold on May 26 at $56.50 for a profit of $13,086.

About a month later, Brewer got another craving for Krispy Kremes and purchased 115 shares at $62.38, followed by an additional 80 shares on June 28 at $72.50.

Coming in fifth was Nick P. Cruz, a mechanical engineer with the city of Glendale, who describes himself as a selective and long-term investor, but willing to take a chance on a company.

He ended up with $78,532.07, a 21.5 percent loss for half a year or 43 percent annualized.

``Holding only technology stocks (was) not a good bet this first half of the year,'' said Cruz. ``Diversification is really a must for stock investors.

``I could have done better if I had the Old Economy stocks and other industries, not only tech, in my portfolio during the downturn in April and May and the slight recovery in June,'' he said.

Landing at the bottom was Sean Williams, a 20-year-old college student from Panorama City. He ended with $39,008.97 in his portfolio.

He started out near the top, but a correction in Internet stocks in April and May sank him, proving that these little-known equities were risky investments.

He bought 308 shares of communications company Harmonic Lightwave for $113.438. On May 10, he sold 108 shares for $60.81. When the contest concluded, Harmonic was valued at $26.63, a 76.5 percent decline in six months.

WANT TO PLAY?

To participate in the next Daily News Stock Picking Contest, send a brief, typed, doubled-spaced letter explaining your investing history to Stock Contest c/o Business Department, Los Angeles Daily News, P.O. Box 4200, Woodland Hills, CA, 91365-4200, or e-mail your letter to dnbiz(AT_SIGN)aol.com.

CAPTION(S):

6 photos

Photo: (1 -- color) Alan O'Hara, a teacher in Panorama City, says he used humorist Will Rogers' investment philosophy to win in the Daily News Stock Picking Contest.

Michael Owen Baker/Staff Photographer

(2 -- color) Ronald Schulkin

(3 -- color) Charlotte Borwn

(4 -- color) Wilbert Brewer

(5 -- color) Nick P. Cruz

(6 -- color) Sean Williams