From bandwagon to near bust
By HELEN HUNTLEY
© St. Petersburg Times, published February 11, 2001
When Jack Douglas inherited his share of his mother's estate in 1999, he thought investing in tech stocks would be the way to make it grow.
"Stocks were going through the roof," said Douglas, who lives in St. Pete Beach and owns a one-man carpet-cleaning business.
As he cleaned carpets, he gleaned snippets of stock market information from customers' televisions tuned to CNBC. The story of Qualcomm Inc. caught his attention.
"Employees who bought stock at the beginning of that year were seeing the new year come in as millionaires," he said. "It sounded pretty tempting."
Douglas, 48, jumped on the bandwagon, buying stock in the San Diego developer of wireless communications products after the price had run up more than 2,000 percent. Then he invested in CyberSource Corp., a Mountain View, Calif., provider of e-commerce transaction services.
"One of the stock-picking guys on CNBC said, "If I had the money, I'd pick CyberSource,' " he said. "Well, I paid $51 a share and it's worth around $3 now."
His $29,600 investment in the two stocks has dwindled to about $7,200.
Douglas, who has rented a house for 21 years, says he thought betting on two hot stocks would yield a hefty down payment he and his wife could use to buy a home.
"I figured $30,000 might be worth $40,000 or $50,000 in six months and we'd put it toward a house," he said. "In January (2000) we even started looking at houses. I guess we'll be renting for a while."
Douglas fared better with his investments in Putnam mutual funds, but the results were discouraging. The $57,000 he put into funds is now worth about $42,000.
Although he used a broker, he blames no one but himself.
"The lady we invest with said these were higher-risk mutual funds, but we wanted to take a chance," he said.
Douglas says his brother used some of his share of their mother's estate for a down payment on a house in northeast St. Petersburg. His sister put her money in the bank.
At the time, he laughed at his sister's conservatism, but he isn't laughing now.
"At least she's making money," he said. "If I could break even, I'd get out."
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