Stocks And Bondage

Stocks And Bondage

I’m a boomer, and when I was growing up the Dow Jones Average was a three-digit number. And it served purposes other than measuring the value of a basket of stocks. It’s said the ad agency for the makers of Colt 45, a malt liquor favoured by inner city blacks, bought the radio sponsorship of the daily closing Dow Jones Average. The client was dumbfounded. The last thing their customer base was interested in was equities. What was behind this? It turned out the Dow Jones closing average was also the “number” in the “numbers game”, the illegal gambling lottery played in every American inner city. It was the one radio hit that Colt 45’s customers ALL listened to.

I’ve had my adventures in the equities trade. The first stock I bought was a penny dreadful I bought on the Vancouver Stock Exchange (probably brokered by the legendary Murray Pezim). This was when I was working in the bush, prospecting and line-cutting. The stock was in a mining claim I had actually staked, which might yield gold. It was a true penny dreadful, 10 cents a share, 1500 shares, $150. A lot of money for me in 1977. The stock moved up a few cents, down a few cents. The assay results came in and they were inconclusive. I sold the stock back to the prospector who owned the claim for the $150 I’d spent on it. He had more faith than I, but he I think died poor.

In the mid-90s, I met a man in Alberta with the best business plan/hobby I’ve ever heard of. CN and CP were divesting short lines all over the west, spurs to grain elevators off the main routes. This was inconveniencing grain farmers no end, who now had to truck their grain farther and farther to the railhead. He was a ferroequinophile (a railroad lover, basically) from a railroad family.  He raised a stake from farmers along the short lines and made lowball bids to the two main railways, who were only too glad to get rid of the lines. He built a fleet of yard engines suitable for short line work and leased grain cars. He started to spread his operations across the grain belt, until he had lines in Manitoba, Saskatchewan and Alberta. He called his venture Western Central RR and had an appropriately art deco railroad script logo. He used to go to model railroad conventions, and when asked what gauge his layout was, respond "Standard Gauge, what's yours?".

I owned 100 shares at $15 each, $1500 worth. For a long while, I’d tell people (this was the late 90s) “railroads are going to be the railroads of the 21^st century”. I firmly believed the energy efficiency of railroads would lead to their commercial resurrection.

Western Central’s stock rose past $25 then settled back down to $12. I sold it at $15 when it got back there. Those two first ventures into the stock market were strictly get-rich-quick plays, and I swore to myself, next time I would invest for value.

Well the next time came in the dot com boom peaking around 1999. I owned Nortel. I bought it about $40 and watched it geyser up to $140. I sold it the day before the stock crashed. I made rather a lot of money on that, which I turned around and put into a magazine I was involved with. I got out of that with about half what I’d put in.

Meanwhile, all these years, ever since I got my first Macintosh Classic II computer, I’d been buying Apple stock. Warren Buffett says buy what you use, and nowadays everything I use except my razor is made by Apple. I’d buy 10 here, 20 there. I started buying at $12. By the time I got out of the magazine investment, I had about 120 shares, value about $45 each. I poured the rest of my capital into AAPL. I basically stopped trading at this point and slept on them.

The next time I looked, they were worth $450 each, ten times what I’d bought them for, and were climbing towards $600. If I had kept those shares (they split 7-for-1 a year ago and are now worth about $120 US), they’d be worth six figures. You’d think I was a very smart value investor. Too bad. You'd be wrong.

The financial meltdown hit my business hard, Market research is one of the first corporate expenditures to be slashed in difficult times. I was a freelancer, with a small number of clients, several of whom were in trouble too. I started selling my Apple shares to live on, even as they climbed in value.

The crisis is over, I have 35 shares left, and I’m holding on to them for now. After all, I’ve had them since Steve Jobs had hair.