Magazine article Public Management

Individual Stocks Fuel a Passion for Profits

Magazine article Public Management

Individual Stocks Fuel a Passion for Profits

Article excerpt

At 51, David Cole is doing exactly what he wants to do: He makes a living by investing directly in stocks and following the market on a regular basis. "My wife, Marie, and I are at a time in our lives where we're doing fine, and we have enough set aside so that I can invest in stocks full-time." He's stepped away from his career as a city manager and now works managing his investments. "I'm keeping my eye out for another full-time position," he says. "But this is what I want to do now."

David's interest in investing began in college, when he read The Wall Street Journal every day. "It was always in the back of my mind that I wanted to start investing. I finally began in 1979, and in the '80s--when I had more time and money--I spent my evenings and weekends doing research and actively following the market." But David felt he never had enough time to do what he really wanted with stocks. And at that time, researching meant going to the library and reading information that was already outdated or sometimes missing.

"In 1991, my job as city manager in Glencoe, Illinois, came to an end, and my daughter was heading for high school. I had my eye on California and decided, when she graduated from high school, that we would reevaluate our situation." Four years later, when daughter Jennifer went away to college in California, the Coles followed, and David began investing full-time. He already had a system, and the Internet made it much easier to research and stay up to date.

David, a member of the American Association of Individual Investors (AAII), is a value investor, which in one way means he buys stocks that have been beaten up but have a solid chance of coming back. He believes strongly in buying low and selling high and keeping his scope of stocks limited to industries he understands.

"As an individual, there is a human limit to what I can manage. I've narrowed what I invest in to the sectors I know and understand," David says. "I want a comfort level so that when I look at an annual report, I have an understanding of the jargon, technology, and the fundamentals of the company." David focuses on tech, biotech, computer peripherals, and medical stocks. He avoids retailers, gaming, real estate, and investment companies. "I got burned by a retail stock once, and these other areas I'm just not interested in," he explains.

Using a stock-charting service he subscribes to, David gets a visual picture of where the stock has been trading. When he finds a company that is starting to fall in price, he adds it to his watch list and then begins to learn about the company. "I don't buy anything simply because its price is falling," he says. "I'm picky about what I buy and have several screens for a company. …

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