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Letter to the editor

In the market for stock answers

A Clearwater accountant has become an apostle for a business newspaper's investing tips.

By Helen Huntley, Times Personal Finance Editor
Published June 9, 2007

When Michael Hicks starts talking about stock charts, breakouts and trend lines, he can hardly contain his excitement.

"With a modest amount of capital, you can earn unusual returns with a minimal amount of risk," he said. "This is an amazing journey that I've been on since 2003."

Not that it's made him rich, but rather that it's offered the tantalizing potential. The goal isn't just making money but mastery of the investment principles espoused by the newspaper Investor's Business Daily, or IBD, and its founder, William O'Neil. The idea: Screen stocks based on fundamentals such as accelerating earnings, then figure out which ones to buy and sell based on trading trends.

Each month, Hicks shares his blossoming knowledge with 20 to 50 fellow IBD fans as volunteer leader of the St. Petersburg-Clearwater IBD Meetup, one of several hundred such meet-and-learn groups around the globe. They study stock charts in a Clearwater hotel meeting room equipped with a borrowed projector and screen. Lining the back wall are stacks of handouts Hicks has copied.

Although he's been an IBD subscriber since 1990, Hicks said it wasn't until four years ago that he became a true believer.

"I was so disappointed with my results that I made a commitment to study this like I was studying for the CPA exam," said Hicks, a Clearwater accountant. "I was either going to master it or discredit it."

Hicks, 57, said he pored over the IBD Web site (www.investors.com) and went through an ink cartridge and a ream of paper printing what he found. He got so excited, he said he "felt like God came down from heaven and touched me."

Soon after, he made his first and only $100, 000 profit on a single stock, Taser International. "After that, I said there's really something to this." However, he hasn't been able to replicate his feat. Hicks says his account was flat last year.

"The hardest thing to do with this method is to learn when to sell," he said. "I literally let $140, 000 in gains slip through my fingers in the last 18 months."

The challenge has prompted Hicks to try even harder: "The market has gotten weaker and more choppy as the bull market has aged and I didn't adjust. You have to start taking 15 percent gains instead of trying for 20 percent gains."

As the market dropped this week, Hicks sold some of his positions and put in orders to sell others if they fell below his specified price.

In addition to reading books and the IBD newspaper ($295 a year), Hicks subscribes to IBD's premium online research ($999 a year). IBD sells an average of 166, 669 papers a day, reports the Audit Bureau of Circulations.

Mike Zoller, 62, owner of Economy Stationers in St. Petersburg and a regular meetup speaker, says he started following IBD methods 17 years ago because his investments did so poorly.

"In the 1980s, I used to listen to what the brokers and analysts would say and I would lose money consistently, " he said. He gets the print version of IBD charts delivered weekly and spends four to six hours every Sunday poring over them.

Now, he says, his investing is "very successful," but he declines to get specific.

Most meetup participants are middle-aged and older white men, but Jesse Hicks, a Tampa optometrist, lowers the average age.

"It's hard to attract the younger crowd to such a complex thing," said Hicks, 29, who is Michael Hicks' son. He said he got serious about the IBD methods two years ago and spends an hour or two every day studying them.

"It's been rewarding to understand the financial world much better," the younger Hicks said. "But it's not a get-rich-quick thing. It takes a lot of time and effort. I wouldn't suggest doing this with money you need."

Fast Facts

So, you want to be an investor?
Some principles advocated by Investor's Business Daily:

- Buy only when market indexes are trending up.
- Buy only high quality stocks selling for $15 a share or more.
- Look for stocks with accelerating sales and earnings.
- Look for stocks with increasing institutional ownership.
- Learn how to use charts to determine buy points.
- Don't buy stocks based on dividends or price-earning ratios.
- Don't bottom fish or buy a stock with a falling price.
- Sell a stock if it falls 8% below your cost. No exceptions.

Fast Facts 

Markets recover
Stocks snapped a three-day losing streak Friday, with the Dow Jones industrial average posting a gain of 157.66 after losing about 410 points over the previous three sessions. The Standard & Poor's 500 index crossed back above the 1, 500 mark Friday, gaining 16.95 points.

Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.

[Last modified June 8, 2007, 23:08:13]