BusinessWeek Investor -- The Barker Portfolio
Boot Camp for Buffett Wannabes
Lots of stuff about investing for myself gets on my nerves. That got me curious to hear what's bugging other amateurs, so I spent some time recently among 130 of the most motivated, who paid $795 to attend the American Association of Individual Investors' six-day "retreat" in Boca Raton, Fla. With sessions starting at 7:30 a.m., it seemed at times more like boot camp. And as I looked around the windowless room, I couldn't help wondering: How'd all of us Walter Mitty-Warren Buffetts get here?
Maybe like you, many of these investors hardly set out in life thinking they would take on Wall Street. Yet, like David Hardman, an anesthesiologist from Chapel Hill, N.C., many grew disillusioned with the quality of advice and service they got from traditional brokers and advisers. Now, Hardman is hooked on running money--he even got an MBA in finance to add to his MD. Picking stocks, he told me, "is fun. Like medicine, it's a detective story."
Hardman feels in no way disadvantaged vs. big-money investors, but others do--running into lots of puzzles and problems along the way, while sharing none of his relish in the task. "I personally find it kind of tedious," Eugene Lin, a 31-year-old New York pharmacist, told me. "If I could streamline it, I would, but you can't. I've made mistakes" taking shortcuts. Schuyler Nunn is a 29-year-old former schoolteacher, now a suburban Philadelphia homemaker with a portfolio inherited from family. She wants to handle it wisely, but two days of talk on stock selection and investment philosophy still left her asking: "How does investing in the stock market differ from gambling? You buy. You sell. You never know."
More experienced hands, such as Robert Charshafian, a real-estate property manager from Ridgewood, N.J., have other worries. Charshafian is proud to have held onto shares in Microsoft he has seen go to 95 from 15. But he frets over when to sell, in part because small investors are often late to learn corporate news. He's glad to see the Securities & Exchange Commission cast a cold eye on the questionable accounting that some companies use to smooth out quarterly earnings. Yet what's worse to him is the custom of companies discussing their prospects in conference calls with a select few. "Companies give their news to pension funds and mutual-fund managers before the public," he said. "By the time I move on the news, I'm out of date. The SEC would do a lot more for the investing public by focusing on that."
An even hotter issue is initial public offerings, specifically how Wall Street underwriters dole out shares in IPOs first to favored clients. Russell Rockwell, a newly minted certified financial planner from Davidson, N.C., is annoyed at not getting many shares in the November IPO of United Parcel Service. "It just leaves a bad taste in the mouth--that this is an inside game and the cards are stacked against us, and Wall Street is using the rules of the game to solidify their relationships at the expense of the individual investor. With IPOs, the word fairness doesn't compute."GREENSPANNED. We had been chatting during a coffee break. Rockwell ate some corn muffin, then volunteered that a close personal tie helped him get his 50 UPS shares. Besides an online account with Charles Schwab, Rockwell uses a Morgan Stanley Dean Witter broker. "I am godfather to his children, so I am a good friend," he told me. "If this cronyism is going to be allowed to go on, I'll be honest, I'm going to try to take advantage of it, too. But it stinks."
What irks Judy Pohnl, a sales rep from Boynton Beach, Fla., even more is feeling the need to pause in her trading before a Federal Reserve meeting. "Greenspan's every comment is analyzed to death," she said of the Fed chairman. "I watch CNBC each morning, but it's starting to bug me--all the drama. Greenspan is getting overdone." With the most recent meeting over and done with in mid-November, Pohnl is trading again, an hour or two a day, with capital from refinancing her home. She's just one more in the growing army of investors learning, often the hard way, to run their own money on their own.Questions? Comments? E-mail firstname.lastname@example.org or fax (321) 728-1711By Robert Barker