STOCK CONTEST RIDES WILD INTERNET TIGER.Byline: Deborah Adamson Daily News Staff Writer Internet stocks can make or break an investor. That certainly proved true in the fourth semiannual Daily News Stock Picking contest, which ended Friday. In six short months, Internet stocks propelled the front-runner to dizzying heights and plunged the also-rans to painful depths. Depending on timing, it made fictitious fortunes and slashed fake portfolios. On Aug. 3, eight contestants were given an imaginary $100,000 to invest in the stock market. Half were financial consultants and the rest were amateur investors. The score: Three of the top four spots went to amateurs. It's not surprising they came out on top, since all of the amateurs bought Internet stocks, which experienced a fantastic run-up in the last few months. Only one professional played with the Internet. Most didn't, constrained by their professional reputations and training. Seven contestants beat the Dow Jones industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. , which rose 6.5 percent in the last six months. Six beat the 15 percent return of the Standard & Poor's 500 and four beat the Nasdaq's 35 percent return. Right out of the gate, Rick Zulawski, a 43-year-old toolmaker from Canoga Park and an avid day-trader even when he isn't playing stock-picking contests, surged to the front. The amateur was in his element; the stock market's volatility gave his day-trader skills ample opportunity. His final portfolio: $516,813.98. No, that's not a typing error typing error n → faute f de frappe typing error typing n → Tippfehler m typing error n → . In six months, Zulawski made close to a 417 percent return, or 834 percent annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. . ``The way the Dow moved, you can only make money,'' Zulawski said. ``I have to thank God for my ability.'' Zulawski's strategy was as gutsy guts·y adj. guts·i·er, guts·i·est Slang 1. Marked by courage or daring; plucky. 2. Robust and uninhibited; lusty: "the gutsy . . . as his performance: He figured his big trades would carry multiple losers. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke" put differently , he went for home runs on each trade and didn't worry about striking out a lot. And he did both. On Nov. 25, he bought 9,995 shares of Books-A-Million, an Internet bookseller, for $12.9375. On the next trading day In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. , he sold at $38.9375, pocketing a cool $260,000. From that moment on, he was untouchable untouchable Former classification of various low-status persons and those outside the Hindu caste system in Indian society. The term Dalit is now used for such people (in preference to Mohandas K. . He continued to trade heavily. After investing in a few losers, where he lost as much as $70,000, Zulawski hit it big again with Excite, America West, Producers Entertainment Group and Broadcom. He bought 1,000 shares of Internet search engine Excite for $67.50 and sold it at $110. He bought 22,000 shares of America West airlines America West Airlines was one of the United States' ten major airlines. The airline was based in Tempe, Arizona, and is now a part of US Airways Group. At the time of its integration into US Airways, the airline maintained two hubs, one at Phoenix Sky Harbor International for $19.50 and sold it at $23.0625, purchased 75,000 shares of Producers for $2.50 and sold at $3.8125, and invested in 4,639 shares of Broadcom for $129.50 and sold at $145. Zulawski hit a high of $707,000, but a few losers in the last week brought him to ``only'' $516,000. How does he pick stocks? He said the news moves stocks. So he chooses stocks based on what's being announced. Earnings up and a split coming? Zulawski said it's more than likely the stock will go up. That's how he picked Broadcom. In second place is Marvin Karelitz, a 64-year-old investment adviser at Crowell Weedon in Encino. He ended with $216,166.30, up 116 percent for half a year or 232 percent a year. Unlike Zulawski, Karelitz's strategy was to grow one step at a time. He only had one high-flier high·fli·er also high-fli·er n. 1. One who is extravagant or extreme in manner or opinions. 2. A stock that sells well above its original value. and didn't invest in penny or Internet stocks. Instead, his portfolio ran the gamut from stalwarts such as Intel to virtual unknowns. ``I've stayed away from penny stocks Inexpensive issues of stock, typically selling at less than $1 a share, in companies that often are newly formed or involved in highly speculative ventures. Penny stocks are usually available for sale over-the-counter, that is, among brokers and customers themselves, as ,'' he said. ``I've learned that with penny stocks, you lose money.'' Impressed with his showing, two potential clients called him up. But Karelitz dashed their expectations that he would trade their accounts the same way he handled the contest. He told them he's usually more conservative, following a buy-and-hold strategy Buy-and-hold strategy A passive investment strategy with no active buying and selling of stocks from the time the portfolio is created until the end of the investment horizon. Opposite of active strategy. . He just took more risks with a fake portfolio. ``It wasn't real money,'' Karelitz said. Initially, he jostled with everyone else for the first four spots. But he broke out of the pack in late October by buying 5,000 shares of SDL (Specification and Description Language) A modeling language used to describe real time systems. It is widely used to model state machines in the telecommunications, aviation, automotive and medical industries. Inc. for $16.4375 and selling them at $24. Those trades netted him almost $38,000. His other performers were 3Com, which he bought for $34 and sold at $45.4375, American Home For the American mortgage lender, see . The American Home is a center of intercultural exchange located in Vladimir, Russia. The home is designed to model a typical American suburban home and its main focus is the ESL school that provides lessons for Russian students. Products (bought for $48, sold at $54.875), and Disney (bought for $28.3125, sold at $34.5625). In third place is Jose Arevalo, a 50-year-old accountant and amateur investor from Mission Hills. His final portfolio: $161,029.71, up 61 percent for six months or 122 percent annualized. ``It was a good challenge,'' he said. ``I broke my own rules.'' In order to stay ahead, he traded more frequently and took greater risks. His portfolio combined technology, Internet and pharmaceutical stocks. He scoured scour 1 v. scoured, scour·ing, scours v.tr. 1. a. To clean, polish, or wash by scrubbing vigorously: scour a dirty oven. b. business news, listened to pundits and checked trading volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. . If a company he liked announced a split, he bought the stock. But what put him solidly in third place were Internet stocks. He bought 180 shares of Amazon.com for a split-adjusted $27.92. It closed at $116.9375 on Friday. He bought 69 shares of Yahoo! for $114.375 (closed at $354.25), 300 shares of Dell for $54.59375 ($100), 125 shares of Intel for $84.8125 ($140.9375), 75 shares of Microsoft for $108.4375 ($175). He kept all these companies in his portfolio until the end. In fourth place is Nancy Sy, a 42-year-old credit specialist from Simi Valley Simi Valley (sē`mē, sĭm`ē), city (1990 pop. 100,217), Ventura co., SW Calif. in an oil, fruit, and farm region; laid out 1887, inc. 1969. . ``The contest gave me a lot of experience about short-term trading,'' she said. ``I was testing the strategy of in-and-out trading, so I'm very happy I made a 40 percent return. . . . It proves that sometimes short-term trading works.'' She ended up with $144,644.09, a 45 percent return for half a year or 90 percent in a year. To critics of day-trading, Sy said her experience made her reconsider her previous belief that it's akin to gambling. It's not, she now believes. Day-trading takes discipline and control. Day-traders learn how to cash out of down positions right away while gamblers always try to make up their losses. ``I don't belittle be·lit·tle tr.v. be·lit·tled, be·lit·tling, be·lit·tles 1. To represent or speak of as contemptibly small or unimportant; disparage: a person who belittled our efforts to do the job right. day-traders, because it takes a lot of discipline and a certain mind-set,'' she said. ``They're not gamblers. They know the risks.'' Sy started out slow in the contest, buying lesser known companies that languished, such as Excel Switching. But then she broke out of her passivity and began aggressively buying tech stocks, many of them Internet companies. Her best performer was America Online See AOL. . She bought and sold it several times, ending up with 562 shares purchased for $68.5625 each. The rise of AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. saved her portfolio, especially after it was hammered by Books-A-Million (bought for $38.9375, sold at $12.125) and Broadcast.com (bought for $285.0625 and sold at $151.875). Coming in fifth is Ron Kaku, a 46-year-old first vice president of investments at Prudential Securities in Encino. He ended with $134,292.54, up 34 percent for the half-year or 68 percent for a full year. Kaku said his return may be boring compared with the performance of the other contestants who bought Internet stocks. But he said he handled his portfolio the way he would handle a client's: Buying a diverse group of stalwart Stalwart A description of companies that have large capitalizations and provide investors with slow but steady and dependable growth prospects. Notes: The annual gain that would be viewed as the norm for investing in stalwarts is about 10% to 12%. stocks. Indeed, his was one of the most diverse portfolios in the group. He had 10 stocks, including Lucent, Oracle, Caterpillar and Cisco. ``We have a portfolio result we can be proud of,'' he said. Going for volatile Internet stocks would have been unacceptable to him as a professional money manager. ``Internet stocks will make or break careers - usually break them because the Internet bubble See dot-com bubble. will burst,'' he said. Kaku's best stock was Oracle, purchased for $26.625. It rose to $55.375 on Friday. His worst stock was Schlumberger, bought for $59.50 and sold at $43.50. Sandy Lechtick, a Woodland Hills attorney headhunter headhunter A popular term for a person–or employment agency who recruits physicians, upper echelon executives or other professionals, matching potential employees with employers , came in sixth with a final portfolio of $127,553.37. He had a return of 27.55 percent in six months, or 55 percent annualized. ``It was fun,'' said the business owner, who nevertheless wasn't satisfied with his performance. ``I thank God that I've done better in real life.'' Lechtick, 49, started out with a stable of technology stocks such as Compaq, Dell, Tellabs and Earthlink. Throughout the contest, he rarely strayed out of the computer technology industry. Ironically, his best and worst stocks were both Internet issues. The best was Earthlink, which he bought for $32.1875 and sold at $44. The worst - and it was a stinker for him - came to be Books-A-Million. The same stock that propelled Zulawski to the top sank Sy and Lechtick. It was all a matter of timing. Lechtick bought the Internet bookseller for $21.1875 and sold at $15.375. ``In the contest, I allowed myself to be seduced by the Internet hysteria - which was fraught with peril,'' he said. ``I usually go for singles and doubles but this time I went for a grand slam grand slam n. 1. The winning of all the tricks during the play of one hand in bridge and other whist-derived card games. 2. Sports The winning of all the major or specified events, especially on a professional circuit. and struck out.'' In seventh place is Glen Chester, a 31-year-old financial consultant from Granada Hills. His final tally: $110,053.12, up 10 percent for half a year or 20 percent for 12 months. ``My biggest surprise was that there were so many concentrated portfolios, those with only a few stocks,'' he said. ``To me, that's like a risky approach to investing. It's almost like gambling.'' Chester likes to invest slowly - at first, he held $80,000 in cash and the rest in stocks. Over six months, he slowly increased the portion for equities. His final portfolio held about $9,200 in cash. Chester had one of the most diversified portfolios, with nine stocks. His best performer was AirTouch, bought for $58.625. It closed at $96.5625 on Friday. His worst was Mirage, bought for $21.50. It ended at $14.375. He said he wouldn't sleep well if he became a day-trader like Zulawski. ``I would never do what he did. I am a buy-and-hold investor. I like to buy good companies and hold them,'' he said. ``Am I jealous? No. Ten years from now, I think I'll do just as well.'' Rounding up the bottom is Julie Stav Julie Stav is a financial planner, broker, bestselling author, and host of an acclaimed daily call-in radio show. Julie has dedicated her career to the education and empowerment of millions of Americans. , a Calabasas financial planner Financial Planner A qualified investment professional who assists individuals and corporations meet their long-term financial objectives by analyzing the client's status and setting a program to achieve these goals. . Her portfolio ended at $46,079.85. She started out within striking distance of everyone else, but two gambles with Internet stocks sank her - proving that these equities were risky. ``The Internet stocks were tempting and it's make it or break it,'' said the 46-year-old Cuban-born professional. ``I tried it and I lost.'' On Nov. 13, she bought 1,000 shares of TheGlobe.com for $63.50. It dropped, and she bailed out at $40.3125. She bought 129 shares of Yahoo! at $414.50. It closed at $354.25 on Friday. The public airing of her losses was a challenge that she rose above. Instead of blaming others, she matter-of-factly acknowledged that she took a risk and it backfired. The same gutsy move that took Zulawski to first place devastated dev·as·tate tr.v. dev·as·tat·ed, dev·as·tat·ing, dev·as·tates 1. To lay waste; destroy. 2. To overwhelm; confound; stun: was devastated by the rude remark. her portfolio. But she said her clients took it in stride Adv. 1. in stride - without losing equilibrium; "she took all his criticism in stride" in good spirits . ``My clients were very supportive,'' she said. ``We had a good laugh.'' CAPTION(S): 9 Photos Photo: (1--Color) Contestants in the Daily News Stock Picking contest were a mixture of professional and amateur investors from the Valley area. Evan Yee/Daily News (2--Color) First Place Rick Zulawski Six-month total: $516,813.98 (all cash) (3--Color) Second Place Marvin Karelitz Six-month total: $216,166.30 (includes $89,566.30 in cash (4--Color) Third Place Jose Arevalo Six-month total: $161,029.71 (includes $2.43 in cash) (5--Color) Fourth Place Nancy Sy Six-month total: $144,644.09 (includes $92.84 in cash) (6--Color) Fifth Place Ron Kaku Six-month total: $134,292.54 (includes $1.63 in cash) (7--Color) Sixth Place Sandy Lechtick Six-month total: $127,553.37 (includes $52.56 in cash) (8--Color) Seventh Place Glen Chester Six-month total: $110,053.12 (includes $9,243.74 in cash) (9--Color) Eighth Place Julie Stav Six-month total: $46,079.85 (includes $381.60 in cash) |
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