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To Our Readers

By John Flanagan

Saturday, January 13, 2001

Brother, can ya
spare a clue?

MY wife got a mid-career MBA in 1996. After graduation, she and her University of Hawaii classmates started an investment club. It was an excuse to get together with friends once a month, keep hard-earned business expertise in play, learn something about investing and maybe, just maybe, make a few bucks.

The Big Bull Market wasn't our fault. Honest, we were just along for the ride. The Internet boom, the cell phone explosion, venture capital-fueled IPOs, the rise and fall of, the giga-hertz Pentium III, they were all in the dim future when we plunked down our initiation fees and started kicking in dues.

We bought some turkeys, of course. One morning we all woke up to the news that somebody had cooked the books at our most promising company. Its stock dropped from $80 to $26 in the day's first hour of trading.

Then there was the oil exploration service company stock we bought at $16, sold at $20, bought again at $26 and sold a second time at $8. No, we still aren't ready to quit our jobs and day trade for a living.

Still, last January, three years after we launched the club, we'd more than doubled every penny we'd put into it -- a 104 percent gain on our portfolio. Warren Buffet, eat your heart out.

Of course, we should have cashed out at that exact moment. A year later, our total return is hovering around 35 percent -- or about 8 percent a year. That's better than passbook savings or POGs, but a down payment on a ticket on the train to financial independence? Hardly.

We learned a lot along the way. While puts and calls remain mysteries, we understand the fundamentals: market orders, price-earnings ratios, stock splits, dividends -- and futility.

In two decades, we've seen two bubbles burst, one in Japan and another in Silicon Valley. Life goes on -- better for some, worse for others, but about the same for most of us waiting for the next Big Thing.

John Flanagan is editor and publisher of the Star-Bulletin.
To reach him call 525-8612, fax to 523-8509, send
e-mail to or write to
P.O. Box 3080, Honolulu, Hawaii 96802.

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