Alpha male investing – Stanley Richards is preparing a long-term financial pland – Brief Article
Carmen L. Brown
Aggressive stock-picker on the prowl for less risky financial plan
Stanley Richards may have been a latecomer to investing, but he’s made up for lost time by aggressively buying and selling stocks such as Intel (Nasdaq: INTC) and Dell Computer (Nasdaq: DELL). Richards, 38, is a bus operator and entertainment promoter in Washington, D.C. Now that he’s planning to marry his fiancee, Chereace Spriggs, a systems engineer, he’s reexamined his lone wolf style of investing and is preparing a long-term financial plan.
Richards began working flesh out of high school, when, at 19, he landed a job as a fingerprint examiner with the Federal Bureau of Investigation. For eight years, he maintained a traditional passbook savings account with Chevy Chase Bank, saving $3,000.
In May 1989, Richards became a bus operator, and began earning $29,000, up from the $19,000 he made at the FBI. In 1993, he started contributing $50 per week to his retirement plan, increasing the amount gradually over the years to the current $100 he contributes per week.
At the same time, he got together with two childhood friends and formed Positive Black Men Coalition Inc., an entertainment business. Between dance moves at a show headlined by singer Howard Hewitt at the Grand Hyatt in December 1998, Richards spoke with a financial advisor and his life changed. “He spoke to me about the stock market and I went to see him the next week,” Richards recalls.
Paying off $4,000 in debts by January 1999, Richards turned his sights on investing in the stock market. By February 1999, he had invested more than $6,000 in stocks, and became an aggressive speculative trader, buying and selling stocks, sometimes within weeks of completing a transaction.
He won some and lost some. Richards bought 20 shares of Intel at a cost of $2,873.67, which he sold in April at a $306.47 loss. He sold 20 shares of First Union (NYSE: FTU) and 60 shares of Dell, both at losses. Richards decided to hold on to his 20 shares of Cisco Systems (Nasdaq: CSCO), which he bought for $2,046.28, or $102.31 per share. But when the firm had a 2-for-1 stock split, he sold his shares for a $611 profit.
Other companies he’s rapidly bought and sold include Internet Initiative Japan Inc. (Nasdaq: IIJI) and Global TeleSystems Group (NYSE: GTS).
Engaged to be married in August 2000, Richards has finally acquiesced to his fiancee’s wishes that they both sit down and map out a long-term strategy. “She’s more conservative in her approach,” says Richards. He’s committed to ironing out the financial plan that he has shunned until now.
Stanley Richards and Chereace Spriggs
Gross income: $61,000 per year
Credit Cards $4,000
Car payments: $637 per month
Household expenses $1,100 per month
FINANCIAL EXPERT:. Wakeen Edmonds, Financial Advisor, Morgan Stanley Dean Witter, Washington, D.C.
His Strategy: Wakeen Edmonds sees nothing wrong with trading stocks, but he agrees that with an impending marriage, Richards would be better off if he and his bride-to-be hammered out a financial plan. He believes Richards should diversify his assets, plan for retirement, make provisions for his son, Khalon, 8, and stash away money in an emergency fund.
* Establish a Cash Reserve: Richards’ cash reserve is dry, so Edmonds suggests that he set up an emergency fund of up to three months’ salary in case of disability.
* Establish Education Fund: Edmonds believes that for 2000, Richards should contribute the maximum of $500 toward an Education IRA fund for his son.
* Set Up a Roth IRA: Richards should immediately begin to contribute the maximum $2,000 per year to a Roth IRA or $4,000 to a joint IRA once he and Spriggs get married.
* Diversify Holdings: Richards should diversify his portfolio using an asset allocation model of 70% stocks, 10% cash and 20% fixed income, especially investing in municipal bonds because they are taxfree. Instead of relying on technology stocks, Edmonds suggests that Richards also buy consumer cyclical, energy and financial stocks.
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