Beating the Street Read Online Free PDF Page B

and Terence Kiernan) divided their pretend money among Philip Morris, Coca-Cola, Texaco, Raytheon, Nike, Merck, Blockbuster Entertainment, and Playboy Enterprises. Merck and Texaco got their attention because of the good dividends. Playboy got their attention for reasons that had nothing to do with the fundamentals of the company, although they did notice that the magazine had a large circulation and that Playboy owned a cable channel.
    The entire class was introduced to Raytheon during the Gulf War, when Ms. Morrissey’s students sent letters to the troops in Saudi Arabia. They developed a regular correspondence with Major Robert Swisher, who described how a Scud missile hit within a couple of miles of his camp. When the portfolio managers learned that Raytheon made the Patriot missile, they couldn’t wait to research the stock. “It was a good feeling,” Ms. Morrissey says, “knowing we had a theoretical financial interest in the weapon that was keeping Major Swisher alive.”
THE ST. AGNES CHORUS
    After visiting Fidelity, eating pizza in the executive dining room, and giving me the Pentech advice I wish I had taken, the St. Agnes stock experts returned the favor by inviting me to address the school and to visit their portfolio department, a.k.a. the classroom. Inresponse to my visit to this 100-year-old institution, which offers classes from kindergarten through eighth grade, I received a cassette tape the students had recorded.
    This remarkable tape included some of their own stockpicking ideas and stratagems, as well as a few that I’d suggested and they decided to repeat back to me, if only to make certain that I wouldn’t forget them myself. Here are some of their comments:
    Hi, this is Lori. One thing I remember you telling us is over the last seventy years the market has declined forty times, so an investor has to be willing to be in the market for the long term.… If I ever invest money in the market I will be sure to keep the money in.
    Hi, this is Felicity. I remember you telling us the story about Sears and how when the first shopping malls were built, Sears was in ninety-five percent of them.… Now when I invest in a stock, I’ll know to invest in a company that has room to grow.
    Hi, this is Kim. I remember talking to you and you said that while K mart went into all the big towns, Wal-Mart was doing even better because it went into all the small towns where there was no competition, and I remember you said you were the guest speaker at Sam Walton’s award ceremony, and just yesterday Wal-Mart was sixty dollars and they announced a two-for-one split.
    This is Willy. I just want to say that all the kids were relieved when we had pizza for lunch.
    Hi, this is Steve. I just want to tell you that I convinced my group to buy a lot of shares of Nike. We bought at fifty-six dollars a share; it is currently at seventy-six dollars a share. I own a lot of pairs of sneakers and they are comfortable shoes.
    Hi, this is Kim, Maureen, and Jackie. We remember you were telling us that Coke was an OK company until five years ago when they came out with diet Coke and the adults went from drinking coffee and tea to diet Coke. Recently, Coke just split its stock at eighty-four dollars and is doing quite well.
    At the end of the tape, the entire seventh-grade portfolio department repeated the following maxims in unison. This is a chorus that we should all memorize and repeat in the shower, to save ourselves from making future mistakes:
    A good company usually increases its dividend every year.
    You can lose money in a very short time but it takes a long time to make money.
    The stock market really isn’t a gamble, as long as you pick good companies that you think will do well, and not just because of the stock price.
    You can make a lot of money from the stock market, but then again you can also lose money, as we proved.
    You have to research the company before you put your money