Daily Breeze, Jan. 4, 2002 STOCK BROKE(R) Compounding on bad investment advice yields 17 cent check -- and reality check BY COREY LEVITAN I can guarantee to make you a millionaire. Just be a billionaire to start with and take my investment advice. I bought my first stock three years ago, after a friend came to me with an irresistible offer. "Dude, I have this insider tip," Jamie said. The extent of my knowledge about stocks comes from being a stock boy at a supermarket when I was 16. I remember once being asked what I thought of blue chips by my New York college friends, who entered the world of high finance and Porsches just as I entered the world of journalism and subway tokens. "Blue chips are fine," I said. "I can't taste a difference between them and the yellow ones." But I knew enough to know that insider tips are illegal. And illegal stuff is usually cool. "What's the tip?" I asked Jamie. Jamie wasn't one of my high-finance New York friends. They had long since stopped inviting me out during my visits home. I wasn't quite sure what Jamie did for a living, other than hanging on the L.A. rock scene and sponging off rich family members. Yet he was in possession of sufficient quantities of immorality and shady connections for me to believe his claim. "You're gonna have to promise not to tell anyone," Jamie said. This was the final proof I needed. Why would he be warned not to pass on a tip if it wasn't genuine? Jamie advised me to buy Grand Union, an East Coast supermarket chain that something good was about to happen to. He couldn't explain exactly what. "Dude, if I had 10 grand, I would put it in Grand Union right away," he urged. Liquidity was a problem for me, too. At the time I owed 10 grand each on a car and credit cards. Homeless people were worth $20,000 more than me. I had more of a right to THEIR spare change. But this was a sure thing. So I maxed out my one nonmaxed-out credit card by taking a cash advance for $550. Extensive research led me to DLJ Direct, the brokerage house that best met my most important requirement: accepting me. Every other brokerage required a minimum of a few thousand to open an account. I laid out another $16 to Fed-Ex the cash. Every day for the next few weeks, I checked the stock symbol GUCO to see how much money I earned, hoping the huge profit margin wouldn't cause the Securities and Exchange Commission to drag me out of my office like Charlie Sheen at the end of "Wall Street." One day, I read that GUCO's stock split. This must have been the event Jamie had prior knowledge of. Would it mean that I now owned twice as much of the stock? Instead of rising, however, GUCO plummeted faster than Franz Klammer at the 1976 Winter Olympics. My stock was soon worth 17 cents -- not each share, but ALL TOGETHER. Eventually, Grand Union filed for Chapter 11 and I felt like following suit. "That was a stupid investment," said my new advisor, Craig, a cousin of a close friend. Craig explained that Grand Union was what was called a penny stock, and this Jamie guy was a big idiot for recommending it. What I needed was to get into the technology sector, where growth had an unlimited ceiling. He suggested Compaq, the rock-solid computer company. "Dude, if I had $10 grand, I would put it right there." It didn't occur to me to question why my stock experts never seemed to have their own money to invest. Also, were stock experts supposed to say "dude" before every sentence? This time I enrolled in my credit union at work to take out a loan. In Jan. 1999, I purchased $2,500 of CPQ. If I had tried, using the most advanced tools of prediction science, to calculate the precise worst time to buy CPQ, I couldn't have nailed it closer than I did. I bought the stock for its all-time high price of $47 per share. Three months later it was down to $23. (It now hovers below $10.) Two shareholders even tried suing Compaq over the precariousness of the downturn. That was it. From now on I was sticking with sounder investments, such as pyramid schemes, the Triple Exacta at the Hollywood Racetrack, or bait-and-tackle shops in the Mojave Desert. No more stock advice. "You're right, you shouldn't take any more stock advice from your friends," said my third advisor, Kathy. "They put you into investments that were too speculative." Kathy was actually an investment analyst at DLJ Direct, so she knew what she was talking about. Or maybe she interviewed for a job there once as a receptionist, I couldn't remember. Nevertheless, she was correct about my previous investments. More importantly, she was cute as hell. So I listened. "You need to invest in something that will always grow, no matter the economic climate, even if it's just a little at a time," Kathy said. "Something like Sony." I was desperate for a sure thing at this point. Like a crazed gambler, I not only wanted a return on THIS investment, I needed to reclaim everything I lost on my others. I bought just under $1000 of Sony stock at $120 per share last year. It was not long before it plummeted to $40 per share. I checked my body to see if an arm and a leg hadn't suddenly detached. All three of my advisors had the same response after crossing the shadowy threshold into former advisors: "It's only a short-term loss. Just leave the money be and it'll rebound. Stocks always go up." I tried leaving the money be. But this summer, an emergency came up. My friend Roy was about to travel to the Greek Islands without me. So I kissed my stakes in Sony and Compaq good-bye. In the interest of saving for my future, however, I didn't touch my 17 cents of Grand Union. Given enough time and luck, perhaps one day my $550 investment would rocket back up to $1 in value. Earlier this year, I received a notice from DLJ Direct. Along with their name change, to CSFB Direct, they had a new policy. Beginning in 2002, a minimum balance requirement of $10,000 was required of its customers. The charge for leaving my 17 cents in the account would now be $15 per quarter. This would be in addition to the $10 I was still paying each month on interest from my original cash advance. In a few years, my initial $550 investment in Grand Union would be worth, oh, another $20,000 in debt. It gets better. To sell my 17 cents in Grand Union stock so I could close the account, I was charged a $20 transaction fee. It's a good thing my 401K is managed by someone else.