At age 13, David Ryan bought his first stock in the now-defunct candy company that used to make Bit-O-Honey and Chunky bars. Since then, the 27-year-old portfolio manager at Los Angeles-based William O'Neil & Co. has come into even sweeter deals.
Trading the same account that won him first place two years ago, Ryan just took another first in the U.S. Trading Championship, two-year stocks category, by turning his original $43,000 investment into $295,000, a gain of 578%. Ryan reported that same account was up another 90% after the first seven weeks of this year.
"Contrary to what people say--buy low and sell high--I buy high and sell even higher," said Ryan, adding that he concentrates on "companies that have new products, niches in an industry."
The U.S. Trading Championship is the creation of Norm Zadeh, a Marina del Rey mathematician who decided that there ought to be a forum for investors to substantiate their claims of huge returns on investment. "It used to take a long time for people to show what they could do in the market . . . now they can be recognized in a year," he said.
The contest, now in its fifth year, covers stocks, options, futures and option writing for one-year, two-year and four-month periods. It's open to any investor who can come up with the $195 entry fee.
"The only prize," Zadeh said, "is the recognition (winners) get." Winning, however, can be convertible into monetary value," Zadeh said, claiming that "20,000 to 30,000 people who follow the contest utilize contestants as brokers."
For instance, after winning his first championship two years ago, Ryan was promoted to vice president of O'Neil, which publishes Investor's Daily. And his latest victory "might have had some kind of effect" on a recent salary raise.
Another Southern Californian, Cal State Los Angeles professor Bill Baker, took first in the options and option-writing divisions by chalking up gains of 316% for both categories in one year. Baker's strategy? He calculated mathematical probabilities for highs and lows on the S&P 500 index instead of following market trends.
"I entered to prove I was the best there is," said Baker, who is a licensed investment adviser. Winning also helped expand the mostly blue-collar clientele, he said.
Winner of the one-year stocks category was Robert Gunther, a broker with L. F. Rothschild, Unterberg, Towbin in New York, with a 223.9% gain. Dale Stetina, a two-time member of the Olympic bicycling team, won the futures category by increasing his account to $86,335 from $7,178, a 1,102.8% gain. Stetina works for Managed Account Corp. in Lakewood, Colo.
Zadeh noted that contest participants, totaling 1,763 worldwide since it began, are changing, and that fewer amateurs are taking the plunge.
"When we first started, we had milkmen and Greek immigrants (participating). Now that the contest has become better known, it seems that the (professional level) of the contestants is better.
"Very few people make money in the stock market, just like very few people make money in Vegas," Zadeh said. Only 22% of the contestants end up reporting a profit, he said.
"The market is fraught with danger, and people have to be sophisticated to make money. It's like someone in kindergarten trying to compete with a Ph.D."