AN INVESTOR IS BORN

My dad was a banker. He explained compound interest to me when I was about six. Weekends we would cruise Southern California in dad’s big white Lincoln, inspecting real estate projects his bank had financed. Sometimes he would include me in meetings with investors who flew in from the East Coast to buy deeds of trust. I kept quiet and read my National Geographic, but it was great exposure for a little kid.

His home library held books such as “How To Be Rich” by J. Paul Getty, which I read when I was twelve. I always loved books and had read the World Book Encyclopedia from cover to cover. Dad would take me up to UCLA and show me how to research stocks at the Graduate School of Management. He set great store on insider trading reports. I still do. Dad would study stock reports after dinner, and I grew up thinking this is what men did.

My mother was the number one student in her high school class and aspired to be a teacher. She attended nursing school instead because student nurses could begin working after only six months of classes. I was the outlet for mom’s teaching ambitions, with lots of library visits and scrabble games. I was a precocious kid. My teacher ordered an IQ test for me in the fourth grade. I scored 141, putting me in the top 2%.

Mom taught me thrift. She would give us kids half a stick of gum rather than a whole stick. If we went to the movies she would give us snacks so we would not buy from the snack bar. She and her friends would get together and raise money for Hadassah by clipping coupons from the newspaper. Each coupon had a cash value of 1/20th of a cent!

My brother was 1 ½ years older, and we fought constantly. Though I was smaller, I compensated through speed and agility. Today I still rely on speed and agility to outmaneuver larger investors.

I made my first stock investment while working as a CPA in 1987. I learned at a tax seminar that interest on a car loan would no longer be deductible, but if the vehicle had a toilet or stove, it could be considered a second home and thus the interest would be deductible. So just by having a cheap portable toilet in a van, one could deduct the interest and possibly save thousands in taxes. I searched the commercial atlas at the library to find a company that made toilets for RV’s and found a company called Thetford. I liked the fact that the Thetford family had a big stake in the company. I bought 1,000 shares at $16.75. Eight months later, I sold for $27.31 per share. I made a 63% profit in just under eight months. I got hooked on stocks.

My tax clients would give me great stock tips. An inhalation therapist told me about a disposable oxygen sensor. A telecom salesman told me about a pipeline company that ran fiber optics along its pipelines. With my accounting background, I could see if there were great numbers to go along with these great stories. I loved using my research skills and thinking creatively to find great investments. The real breakthrough was the coming of the Internet, because now information was available to all. After 12 years of great success with my stock investing, I sold my tax practice and started Balopole Investment Management Corporation. I became a full time professional investor.