It's already clear that the stock market is going to be a recurring character in this year's election season. But what do politicians know about investing? Some indirect but interesting answers have dribbled out lately. This month, members of Congress have released financial disclosure forms for 1999 that deal with stock ownership, among other things; and presidential candidate Ralph Nader filed his financial public disclosure report to the Federal Election Commission. These documents are not exhaustive, but there's enough here to make it worth contrasting the investments of Nader with those of the man who seems to be the most aggressive investor in Congress, Sen. Robert Torricelli.
The hook in most of the coverage of Nader's disclosure was that it turns out he's a multimillionaire. But put that aside, and let's look at the man's portfolio. These forms tend to give information in ranges--and both Nader's and Torricelli's people turned down my invitation to offer specifics or commentary on this subject--so there's guesstimation involved in this, but Nader's holdings looked to be worth at least $3.8 million, and I would say that more than half of it is in two money market funds (Fidelity Spartan and JMS Money Market). That may sound a little wimpy to you go-go types, but Nader has said that this is for liquidity reasons, and besides, the man is 66, so he doesn't need to need to be particularly highly exposed to equities.
But he does, in fact, own six stocks, all of them tech picks: He has stakes in Fibercore, an optical fiber firm, ACTV Inc., a digital media company, and Iomega, the Zip-drive maker, that are worth between $15,001 and $50,000 each; in 3Com, Ziff-Davis, and software maker Cadence Design, worth between $50,001 and $100,000 each; and Cisco shares that were worth $1,158,750 as of June 2. (Nader gets specific when the amount tops $1 million.) Plus six figures in Fidelity Magellan, and smaller amounts in some other funds.
This seems pretty respectable to me. You could say that he's a little too concentrated in tech, and as a percentage of his portfolio, that chunk of Cisco is way out of whack. Then again, it's Cisco. And it's hard to evaluate without knowing when he bought it. I don't know what he's doing with those three stocks he's got smaller stakes in, but presumably that's risk capital at work. Overall, though, a perfectly respectable nest egg, as they say.
Sen. Torricelli's investment style is something different altogether. His disclosure form lists a startling 107 buy or sell transactions involving 31 publicly traded stocks in 1999. More than once, he bought a stock and sold it the same day. And a good chunk of what he was trading in was obscure, small-cap tech stocks.
Again, precise details of how much was traded and how much was won or lost are missing, but Torricelli played across several sectors, apparently with mixed results. He bought some Global Crossing, the fiber-optic cable firm, in mid-May, when it was trading at a little more than $60, and sold in late June, when it was at $45, and in late December, when it was at around $48. He had dalliances with Amazon.com, Tandy Computers, Shell, Schwab, and others.
Among smaller-cap issues, he traded in and out of drkoop.com a few times last August and September, when the company was mostly making news because of allegations of questionable financial behavior by insiders. He bought and sold shares in Neff Corporation, a Florida-based renter of light industrial equipment. He was in and out of E-cruiter, a maker of software for Internet-based recruiting based in Ottawa; Zixit, an Internet security firm; Tut Systems, whose business revolves around high-speed data access over copper wires; and Corel Corporation, an Ottawa-based software maker.
Now, your classic Warren Buffet type would tend to frown on this record, because the senator is not behaving like an investor at all, but like a speculator. There's a pretty good reason that all the personal finance magazines advise individuals against day-trading, which is that most people (particularly those who happen to have full time jobs, in the Senate or elsewhere) never make any money this way. Buy and hold really does tend to be a good starting point for an individual's investing philosophy.
It's also a near certainty that Torricelli was buying and selling stuff without really knowing the companies, another trait scorned by the Buffet crowd. Consider Torricelli's dabbling in Corel, whose price over the past year has been as high as the mid $40s. Torricelli bought on Dec. 15, when the stock opened at $25.19--just days after reaching an intraday high of $44.50 on December 9. It looks as though he sold, then turned around and bought again, on Dec. 16. That day Corel closed at $23.88. The disclosure form lists five more sales of Corel shares between December 17 and December 23,when it closed at $16.56. Corel's most famous product is WordPerfect, and the company was apparently trying to reposition itself as a Linux play--Linux-related shares were on fire last December--but really Corel was a mindless day-trader play whose fans were briefly referred to on CNBC as "Corelians." More recently, the company issued a statement noting that its continued operation "would be in substantial doubt" if it can't round up some new financing. It closed today at $3.75.
My guess is that Sen. Torricelli was not well-informed about Corel when he bought it, and that he has not paid attention to the company since. So he probably missed the press release seeking plaintiffs for a proposed class-action lawsuit alleging that Corel misled shareholders about its fourth-quarter 1999 results. But since he bought his shares between Dec. 9 and Dec. 21, he would in fact be eligible to join in. If he's interested, he should contact the Philadelphia offices of Weinstein Kitchenoff Scarlato & Goldman. And if you get any money out of this, Senator, consider an index fund.