Newport-Mesa investors ride market’s ups and downs

Paul Clinton

NEWPORT-MESA -- While the rest of the stock-picking world crashed and

burned last year, the Black Market Investment Group soared.

Members of the club -- who are all employees at a Santa Ana Heights

engineering firm -- navigated the choppy waters of the Nasdaq Composite,

seeing their portfolio gain a stunning 27% while the tech-weighted index

shed 39%.

With 2001 beginning to look much like its predecessor -- the Nasdaq

lost 159 points Friday alone -- club members said they would keep

practicing their unemotional, research-driven approach to buying and

selling on Wall Street.

It’s all rooted in the club’s 1995 origins, when members settled on

the Black Monday name -- a reference to the Oct. 1987 crash. It is a

constant reminder of the impermanence of bull markets.

“We started the club during one of the most exciting times in the

stock market,” said Carl Miller, the club’s acting president. “It reminds

us that what goes up, must come down.”

Miller, who lives in Costa Mesa, said the club sold most of its

positions in Cisco Systems Inc., Nokia Corp. and drug-delivery giant

Biovail Corp. before the market went into its end-of-the-year tailspin.

Cashing out of the market in downturns is also a practice preached by

radio talk show host and Newport Heights resident Doug Fabian.

A self-proclaimed “maverick” investor, Fabian advises his listeners to

use stop-loss orders -- a sell order triggered when a stock falls to a

set price.

That way, investors don’t ride a stock down to the depths, Fabian’s

investment advisor Ed Foster said.

“We are recommending to people to be 100% in cash right now,” Foster

said.

Foster and the Black Monday members said investors should brace for

more volatility in the market, despite the Nasdaq’s 14% gain Wednesday,

which Foster attributed to short-sell covering.

“People’s attitudes are still ‘tech is the place to be,”’ Foster said

about callers to Fabian’s Saturday morning show on KLSX-FM (97.1). “But

there’s still a lot of downside risk.”

Investors can learn about the tax consequences of selling a stock from

Costa Mesa-based Sell Signal. The investment firm, founded in 1999,

launched a Web site -- https://www.sellsignal.com -- to educate investors

about when to buy, sell and hold a stock.

Sell Signal co-founder Rich Finkelman could not be reached for

comment.

Researching and picking stocks can be a rigorous process, Black Monday

members said. By pooling their knowledge and resources -- they each chip

in about $50 a month -- the club members find common ground before buying

anything.

“We’re aggressive,” Black Monday member Kathy Spain said. “But we have

to find something that appeals to everyone before we jump in.”