OCR Text |
Show The Salt Lake Tribune BUSINESS Sunday, November21, 1999 : ts Fool ‘How Stock Prices Move When watching a company's stock ticker, I wonder what percentage or numberofshares is fnecessary to movea stock's price. Whodetermines this number? — fee Tom,Los Angeles There is no required number or perc fike an meee where sharestrade at prices that buyers are willing to payand sellers are willing to take. Imaginethat shares of Spackle World (ticker: SPACK) close at around $30 eachat the end oftrad- ing one day. Then Spackle {announces that it has recently been experiencing an amazing growth in salesandthatit expects to report record earnings next month. Well, all of a sudden,there will be a surge in demandfor Spackle World shares. The very next shares to trade may go for $35 each or more. ‘The price won't necessarily inch its wayup. Similarly,if Spackle World announcesthatit’s goingto file for bankruptcy,then there will likely be many more sellers than buyers, andtheprice will shortly be considerably lower.It’s all a balance betweensupply and demand. Do youthink that investmentclubsare a ood idea for teen-agers? — §.S., via e-mail They're terrific idea. The only problemis that minozs can't trade stock on their own. Still, teens can form clubsto learn together and can form and maintain a pretend portfolio on their own. Once they find and research companies they want to own,they can do so individually, with a par- entacting as custodian of their account. Teens (and adults) can leam more aboutinvestmentclubs at www.better-investing.org and wwwfool.com/InvestmentClub. Or call the National Association of Investors Corp., at 877-ASKNAIC(that’s 877-275-6242). Got a question for the Fool? Send it in — see Write to Us The Motley Fool What Is This Thing Called The Motley Fool? Remember Shakespeare? Remember “As You Like It”? In Elizabethan days, Fools were the only people who could get away with telling the truth to the King or Our Mission: To Inform, to Amuse, and to Help You Make Money ® Focusing inordinately on a My-Dumbest Investment stock's Price. Contrary to popular Good Today Is Good Tomorrow Den’t Bea Turkey Mydad lost almost $30,000 on CAI Wireless. He was watching some stock show on TV,andthe president of Whenit comesto managing, your money, don’tbe a turkey. the company cameon biathering about how the sales were aboutto “take off.” So my father boughtthe next Here are some commonfinancial day without checkinginto the company.it tured out he mistakes to avoid. % Rackingupcredit card debt. boughtnear the stock's peak price, when it was around $12 pershare. Theprice soonslowly worked its way downto $3. Moral It feels like free money, but it isn’t. High interestrates increase ofthe story: Don't buy on hype.If the stock is good today, it will be good next week when you havehad timeto lookinto it. — John T., Cleveland your debt, making it harder and harderto pay off. That’s reverse investing! The Fool Responds: great lesson!If you're Foolishly planningto hangonto a company’s stock for the long haul (a good thing),it's not likely to matter whether you got in at $12 per share or $14. It’s much more important to makesure that you really understand the company’s business,prospects andfinancial position. Do you have an embarrassing lesson learned the hard way? Boil it downto 100 words (orless) and send it to The MotleyFoolclo My Dumbest Investment. Got one that worked? Submit to My Smartest ° . ° ° My master pian ° is 1Recor the 8 world’s most recog- ° nized and respected ° brand, andit all with a handful of beans in Seattle’s Pike Place Market in ° 1971. | sell high-quality products in more than 2,200 company-operated retail stores and also through a direct-r se business, supermarkets and ontine. I’m selling ice cream now, through a joint venture, and tea, onmy subsidiary, the Tazo Tea Co. even launched a new magazine. The Motley Fool's Rule Breaker Portfolio owns s of me. i was first mate on Herman Melville's Pequod, pursuing Moby Dick. Who am !? Knowthe answer? Send it to us with Foolish Trivia on the top and you'll be entered into a drawing for a ne % Over- or under-diversifying. If all your eggs are in two’or three baskets, you’re exposed to too muchrisk. If you have too ited, you can alwaysjust buy a few shares. ® Investing in what you don’t understand. The more familiar you are with how your company works and how well it’s perform- ing, the fewer unpleasant sur® Relying onthe advice of others. It’s great to learn from others, butultimately whocares the most about your finances. ® Nottracking your returns. Shrugoff this duty at your ownperil. You always wantto be (in the Jong run) beating a benchmark such as the S&P 500. If you’re notbeatingit, you might as well meetit, by investing in an index fund. Impatience. Building great wealth takestime. Perhapsthe worst mistakeis many baskets to count, then you probably aren’t able to keep up with each company. Betweenfive nevertaking the time to learn numberfor mostpeople. article! and 15 stocks is a manageable Not Rushing te IPO A $150 stock can actually be a bargain and if your funds are lim- can benefit from leaving § for five or 10 years. & Investing too conservatively. Anylong-term investmentis likely to grow mostrapidlyin stocks. Mee Lae each, are risky and dangerous. prises you're likely to encounter. ® Not investing soon enough. You're rarely too young or too old to invest. Kids haye the mostto gain from many decadesof stock apprecia tion. But evenretirees 0 about investing, and hopes you'll laugh all the way to the isn’t a bargain. Penny stocks, those trading forless than $5 in stocks whatever money they won't need Investment. If we printyours, you'll win a Fool’s cap! Name That Company opinion, a “cheap” stoc Queen. The Motley Fool tells the aboutinvesting. You're not making that one, though,if you're reading andthinking about this ooo LAST WEEK’S TRIVIA ANSWER | was bom in 1919 in Shanghai, era arene: neur(and formerice cream parlor owner) established American Asiatic Underwriters.| landed in America in 1926 and today operate in 130 countries and jurisdictions. I'm the top international insurance ition that's based in the United States. | was a pioneerin I AC Tet vie Ot IGE companies. Insurance may not be exciting, but my stock has advanced an average of about 20 percerit per year in the last two decades. | bought SunAmerica,a leaderin retirement serMeeeNi ore SayCrewinrAmerican feewresire! roup Inc, Wirite to Us! Send questions fur Ask the Fool, Dumbest (or Smartest) Inyesiments (up to 100 words), and your Trivia entries to Fool@fool.com or via regular mail c/o this newspaper, attn: The Motley Fool. Sorry, we cun't provide individualfinancial advice. ©Copyright 1999 The Motley Fool/Dist. by Universal Press Syndicate eeeccecccnes° It’s not every day that a profitable and dominant companyseils shares to the public for the first time. That's what just happened with United Parce! Service, and investors might wantto take a closer look. ‘The 92-year-old company, which delivers more than 12 million packages and documents daily, recently became thelargestinitial public offering (IPO)in history, raising $5.47billion. Its stock was priced at $50 the day it went pub- lic and promptly climbed 41 percentto $70 1/2. Ata time when companies with half-baked businessplansraise millionsin the public markets, UPS is an exampleof a firm that never viewed its IPO as an end in itself. Rather, the IPO was a means offurthering its business goals. UPSwill use the money to repurchase someof its stock, invest in technology, and expand in the U.S. and abroad. As a publicly traded company,its stock is both valuable andliquid. This makesit an ideai currency when the company considers acquisitions. Many companies that exercised patiencein going public have gone onto reward shareholders. Investmentbanking firm Goldman Sachs waited 130 years to go public. Even Microsoft, founded in 1975, didn’t go public until 1986, Asyouread in the business pages about the latest red-hot IPO — probably a companythat has little operating history and mount- ing net losses —consider the patient, brown andprofitable UPS, which seems to havedelivered just in time. Good news: It’s a color inkjet printer for only $79. Even better news: Xerox DocaPrint C8 color lakjet prieten * Up to 5 ppm black & white, 2.5 ppm color. ° Print at up te 1260 x 600 dpi. + bndivideal ink tanks save money. + Just $79 after $80 mail-in rebate. TH ERAAT COMPANY XEROX Fie) ofricemax |