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Vita Sua in a Bygone Mobile

Part 20 in a series: A little celebrity, a strategy and an education.

Previous installments: 1, 2 , 3 , 4567, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and 19.

By A.D.
Mobile Bay Times
In 1966 I took on a sideline activity as a broadcaster of stock market reports for radio station WLPR in Mobile. For several months I did a two-minute broadcast each hour and a five-minute wrap-up report after the close of the market, a total of six reports a day. This was cut down to four a day after those few months and I did these reports every day, with very few exceptions.

As I write these words, I estimate that I have filed a total of about 8,500 stock
market reports.

I had a great deal of
favorable comment on
them and I'm certain
they produced
considerable business
both for me and for
others in the office. I
know, too, however,
that some of my
listeners believed that
broadcasting was my
only job with the
firm. They were not
aware that it was a
non-paying assignment and, that like all other brokers, I
depended on writing orders for a living. So it cut both ways.

Now these weren't your stereotyped CBS broadcasts. We might begin one thusly:

"Mrs. Housewife, if your doorbell rings and you hear the words 'Avon Calling', you better come quick. She's probably calling for help. Or so it might seem today with Avon Products down 11 points on the New York Stock Exchange."

It was all extemporaneous and some of it was awful, but it was never pompous.

I guess the greatest satisfaction I got was on the rare occasions when I missed a broadcast and the calls came cascading in. "What happened? I didn't hear you at ten o'clock."

I don't know whether they liked it or not, but they did listen. And since many stores and offices throughout the city had their public address systems tuned in to the station, most of whose programming was soothing music, I'm sure I had one of the widest audiences in the area.

In the fall of 1974 we were caught in the throes of one of the greatest bear markets in history, topped perhaps only by the 1929-32 debacle, depending on what measuring stick you used. It was certainly the greatest bear market I had seen in my nearly 23 years "in the street."

Brokerage firms were falling right and left. NYSE firms were at their lowest level since 1899.

My own earnings had tumbled to a level less than half what they had been just two years before.

And, of course, my own investments were taking a terrible thumping. The 1973 paper loss was more than I cared to contemplate and for 11 months of '74 the deficit amounted to an almost equally ghastly figure.

All of this, unfortunately, at a time when I was sending my three children through college at an approximate cost of $10,000 per year. Living costs were soaring as well.

The ability to obtain about 25 percent of my business from sources which didn't exist two years earlier, kept me going through 1974. Insurance, a new product at EFH, which few other brokerage firms offered, was a big help and so was the newest game
in town, the
CBOE -- Chicago
Board Option
Exchange.

The CBOE or
"Carbuie"
particularly
fascinated me and
I placed the
largest part of my
investable funds
in it.

I played the game
the safe way. I
bought stocks at
what I hoped
were reasonable prices and sold options to buy my stock at prices somewhat higher than my purchase price for periods of three months or longer.

To illustrate, I might buy 200 shares of Bethlehem Steel at
29-1/2 and, in November, sell options to permit someone to buy the stock from me at a price of 30, good through the end of April for $3. I would thus be out $5,900, but would earn a credit for $600, or wind up with a net cost of $5,300, disregarding commissions. If the stock went down, I
stayed in the black so long as it did not go below 26-1/2. If it stayed at 29-1/2 or thereabouts, I was $600 ahead at the end of April and could sell two more options. If it went up, I could let it be called away from me and receive $6,000 for my $5,300 investment, or, if I wished, buy the option back (win or lose) and then sell another option, perhaps for a higher "striking" price, say 35.

You couldn't miss, unless the market went way down.

Well, I started the game in the fall of 1793 and guess what? The market went way down. Ten months into 1974, I found myself in a hole, but with high hopes that the venture would eventually prove profitable.

My overall investing record at the end of October, 1974, showed net capital gains, both realized and unrealized, and other income (dividends, interest, etc.), equal to a return on my investment in cash of 9.13 percent, not allowing for compounding, which probably would reduce the figure substantially.

Bernie Baruch would not have been particularly proud of me, but then I took this reading at what hopefully was a temporary low point for the market. If I could boost that return figure up to 12 percent within three or four months, I would hike by profit total greatly, thus more than recovering my two-year, 1973-74 loss.    

(Next: Doom and Boom, cabbage and collard greens, a "grim" situation, "Is Bodet okay?"