UNCLE ED'S LEGACYSeptember 11, 2008 At some time in our lives, we all have had illusions of striking it rich. If not the lottery, perhaps cleaning up on the stock market, or making big money on a real estate deal. A few weeks ago, while rummaging through an old box of stuff, I came across a stock certificate for 25 shares of General Alloys. What the heck was General Alloys, and why did I own 25 shares of this company, I thought? Immediately, I’m thinking, “ahah” a gold mine. Purchased probably 30 years ago, this stock could be worth millions, a huge windfall, gigantic riches, luxurious retirement, tuition free college educations for the grandchildren. Memory returned. General Alloys was a mid-west industrial company captained by my Uncle Ed, chief executive officer. Returning from the US Navy after WWII, Uncle Ed used his GI Bill to attend evening college classes while working a day job to support his family. Attaining an industrial engineering degree, he quickly rose through various company ranks in senior management positions. His CEO appointment at General Alloys came along sometime in the mid 1970s, if memory serves. Just to satisfy the SEC that there was no collusion involved, passing along insider trader information, I never received a clandestine 3 a.m. call from Uncle Ed to hear him say, “Hay nephew,” glancing left, glancing right, “wanna make a few quick bucks? Buy General Alloys.” My thoughts instead at the time were, “he’s a very successful captain of industry, why not invest a few bucks in his company.”Total investment, I can’t remember. It couldn’t have been much. In the mid 70s, with a non-working, stay-at-home wife caring for three small children, and a newspaper reporter’s meager wage, any investment, even $25, took careful consideration. Nevertheless, here it is 2008, and I have this certificate for 25 shares of General Alloys. A quick search on the internet uncovered a company in Massachusetts dealing in scrap metal. That wasn’t it, because I knew that the General Alloys, of which I was part owner, manufactured industrial products either near Chicago or in somewhere in Michigan. I took the stock certificate to Emily Yent at John McBroom’s office of Edward Jones, a close neighbor. “Never heard of it,” Emily responded, “but we can check to see if they are still in business.” Through attorneys general offices of several states, Emily inquired. Weeks went by, and I had forgotten about it again, until Emily came in one day and said there was an answer. General Alloys, as we knew it, was history. The stock was worthless.Upon the rocks of golden opportunity, my hopes of instant wealth were dashed. Stock market experts will tell you it’s not wise to invest all your stocks in one company. Diversify. To minimize risk, your stock portfolio should have 25 to 30 investments, that way the over performers will offset the under performers. Hopefully. Since Uncle Ed was involved in only one company of my investments, my one-stock portfolio was high risk. Witness the results -- worthless. Gone were the dreams of exotic retirement, extensive travel to foreign lands, penthouse overlooking Central Park, gulfside condo at St. George, two-seater highly polished red BMW convertible with genuine tan leather seats, 0-60 in 3.45 seconds. With this financial mystery resolved, we went instead to Home Depot and purchased a new patio set for the back deck. Not a bad deal. Half price on a seasonal closeout. |
