The Palm Beach Post from West Palm Beach, Florida on March 26, 1998 · Page 50
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The Palm Beach Post from West Palm Beach, Florida · Page 50

West Palm Beach, Florida
Issue Date:
Thursday, March 26, 1998
Page 50
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w W W V W V "Wl '' 80 ... , THE PALM BEACH POST THURSDAY, MARCH 26, 1998 . T ii si r tr r z.Vv ... j - ii u n u i -v t4a Ine Money fool Our Mission: To Inform, to Amuse, and to Help You Make Money The Lock-up Period true that when a company raisin Wgoes to the pu : 'goes to the public and first issues shares Kids and Investing public, its insiders can't sell their Follow Your Beliefs Early in 1997, my colleagues and I were impressed with the software of Citrix Systems Inc. We were testing it at work, and it looked promising. A rumor surfaced that Microsoft was going to develop a competing software product and potentially run It might be too late to get your kids into that prestigious kindergarten, but you can still give them a great edge in life by introducing them to investing when they're young. With time on their side, they're positioned to reap the Citrix out of business. Citrix's stock price fell sharply, but we 2 Follow the companies together. Scan newspapers and magazines for stories about the businesses. If McDonald's is promoting 55 cent burgers, watch to see if this will be a good move that brings in more sales, or a bad one that decreases total profits. Note how news affects stock were skeptical, thinking that it would take Microsoft too long 1 to develop and market its own product. I bought in around greatest benefit from the magic of $7.75 per share (split-adjusted), and my broker thought I was crazy. It's now trading in the $40s. I learned that you need to stick to your beliefs when you believe in a good product that you know something about. Citrix has signed a marketing agreement with Microsoft, and I think the future looks good. Greg Dehne, Bismarck, N.D. The Fool Responds: Bravo. Researching and investing in companies that you're familiar with is very Foolish. compounded growth. Before plunking actual money into stocks, though, play and experiment together. Here are prices. 3) Eventually, help your child actually invest money. You can open a joint brokerage account, with you acting as custodian. Or informally some suggested activities: 1) Build a mock portfo j1 J "sell" some of your own shares to your child. If you own some lio. Have your kids make a list of companies that interest Do you have an embarrassing lesson learned the hard way? Boil it down to 100 words (or less) and send it to The Motley Fool co My Dumbest Investment. Got one that worked? Submit to My Smartest Investment. If we print yours, you'll win a Fool's cap! shares for a certain penod of time? Why is this? S.G., Tampa, Fla. A This is called the lock-up period. It typically runs for 90 to 360 days and offers outside investors some measure of protection. If the newly public firm has some skeletons in its closet, those insiders who know about them can't act on them, quickly selling their shares before the public learns the bad news. Some companies set extra long lock-up periods to show their faith in the company and inspire confidence in public shareholders. QWhat exactly do companies do with their earnings? AM., Salt Lake City A Imagine that the NHL Demolition Co. (ticker: PUCK), specializing in property destruction, earns $15 million on sales of $120 million this year. There are four main things it can do with that moolah: Pay out all or some of its profits to shareholders as a cash dividend. Repurchase some of its own shares on the open market (This boosts the value of the remaining shares, as the company's worth ends up divided among fewer shares.) Plow that money into its ongoing operations, renting more property to destroy or hiring more players. Invest in other business ventures, perhaps buying a smaller demolition company or a related company, like a recycling enterprise. A publicly traded company's main priority should be to build value for shareholders. To do that, it must determine which strategies will generate the biggest bang for the puck, er, buck. shares of PepsiCo Inc., you can sell two shares to your child at its current price. If you're about to buy 100 shares of Exxon Corp. and your child wants to buy a share or two herself, you can buy 101 or 102 shares. (Yes, really. You don't have to buy in "round lots" of 100.) Once your child turns 18, she can open her own brokerage account, and you can transfer her shares into it Get your kids started today and they might end up helping pay for their own college tuition. Name That Company them. At home, in their classrooms, at the mall and on TV, they'll find candidates such as Ben & Jerry's Homemade Inc., Nike Inc., Broderbund Software Inc. and Gap Inc. Have them list 10 to 20 companies on a sheet of paper, with ticker symbols, current stock prices and today's date. Every day or week, have them record the latest prices. Calculate the gains or losses regularly. Such short-term stock price movements aren't terribly meaningful, but they can help a child understand how the market works. I WlKM til My founder dropped out of college with a basic plan, and it didn't take him long to excel. (You might find him playing monopoly or eating pie.) My revenues have grown more than 2,000 percent in the past 10 years, and my stock price has skyrocketed more than 21,000 percent since my initial public offering in 1986. My market value, at roughly $200 billion, is second in the ':( 7 United States only to General Electric. I sell Bookshelves and have had high Last Week's Trivia Answer My founder gave my main product away as a freebie when he was selling soap in Chicago in the 1800s. The ballpark weight of a single unit of this product is about 3 grams. Early versions of it around the world have been made from resin, paraffin and leaves, but today I mainly use a form of latex called chicle. The product helps keep some people alert and has been supplied to American soldiers for most of this century. Who am I? (Answer :V W hopes for my Sidewalk business. If you look out the windows of my corporate office, youll often see rain. Who am I? : Got a question for the Fool? Send it in see Write to Us Know the answer? Send it to us with Wm. Wngley Jr. Co.) Write to Us! Send questions for Ask the Fool, Dumbest (or Smartest) Investments (up to 100 words), and your Trivia entries to or via regular mail co The Palm Beach Post, P.O. Box 24696, West Palm Beach, FL 33416. 0 Foolish Trivia on the top and you'll be entered into a drawing for a nifty prize! Don't know the answer? See next week's column. attn: The Motley Fool. We want to hear from you! Copyright 1998 The Motley FoolDistributed by Universal Press Syndicate Paid Man th ly IRA, Qualified r i mm Asset Based E APR Fixed Income II III II.. 1 I I i Refinance Purchase Residential Commercial Home Equity Loans to 1 25 (NO OUT OF POCKET COSTS) Attention Homeowners No Credit No Income Verification f M'JVl'l i V1'T T" ' f!iJrli,t I'm . Financing up to 105 CLTV TT WjV-X?fk . Deconsolidation . A Consjdered XfiWJf0 Jumbo Loans Stop Foreclosures iTfffWTfi Advantage n inding AsLzjK 3 Corp of the Palm Beaches V T. fOw"i "nf (561)882-4440 ZHMSk ' . 5 Year Note 12.00 1 Year Note 9.50 $250,000 Call A Representative Today. js 800-989-7891 A 954-202-0906 Ft. 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