08/24/99

48 Hours: A Web Editor Goes Day Trading

Swimming with the Sharks (Page 3 of 3)

That next Friday and Monday, I noticed shares of a little-known software company called Metrowerks (MTWK: NASDAQ) jump from less than 4 to 5. I had been watching Metrowerks, and saw about three times as many shares as usual were changing hands. I rationalized what I did next in several ways:

1. I LIKE Metrowerks software products. CodeWarrior is an outstanding and popular developers' platform
2. The company recently signed a deal that will make its software a primary development platform for Nintendo 64 games. It had also ported its toolset to Linux and has a version for that nerdiest of status symbols, the Palm Pilot.
3. The stock had remained relatively stable for months and was suddenly showing signs of life.
4. I would be willing to stick with them for the long term, for all my $1,084 worth (Hollywood, please remember to add those zeros here.)

But mostly, I think I did what I did next for the same reason a gambler impulsively pushes chips onto the table. I wanted the action.

I clicked myself over to Etrade at about 1 p.m. Tuesday, logged in and examined my $1,084. I mentally kissed most of it goodbye, made a few keystrokes that told Etrade to go get me 180 shares of Metrowerks at whatever price was current, and clicked "Yes."

They don't really give you time for second thoughts. Almost instantly, my order was confirmed. I now owned 180 shares of Metrowerks, purchased at 5 1/16 per share -- $911.25, all told, plus $20 for Etrade ... leaving me about $144 in what I was now calling the Jeff Schult Monopoly Money Fund.

Metrowerks stock immediately started to sink like a rock, of course. I watched with some fascination as my investment disappeared, in increments of $20 or $30 every 20 minutes. By 4 p.m. closing time, the stock was down to just above 4 -- I'd lost 15 percent, about $100, in three hours. I wondered what Brad Pitt would have done, then shrugged and forgot about it. Easy come, easy go.

Hah!

Overnight, I dreamed that Metrowerks had been forced into bankruptcy and that the company's employees had been sold at auction into slavery. They were separated from their families and led away in chains to work on an NT server farm in Idaho. I awoke wondering if I really had the stomach for capitalism.

That day, Metrowerks regained all its losses from the previous day. By 4 p.m., I was *exactly* back where I had started, 27 hours previously. I congratulated myself on my steely nerves in waiting the downturn out. Others, far less fortunate than I, had no doubt bailed and lost literally hundreds of dollars. I make a mental note about remembering to add zeros to the amounts when I write the eventual screenplay.

I slept soundly Wednesday night. My $1,084, less $20 for Etrade, was intact.

Thursday morning - what the heck is going on? Metrowerks opens the day at 6 and I am suddenly about $170 ahead. But I can't get an actual quote other than that which was available at the opening bell, if, in fact, there is an opening bell for the NASDAQ. I suddenly realize I have no idea what NASDAQ even stands for - the "D" is probably for Dummies, I decide.

Sometime after 11, there is another quote. Metrowerks has inched up some more. And there is a news story. Metrowerks is being bought by Motorola in a cash-for-stock deal at $6.25 a share. A mere 48 hours after entering the market, my exit strategy is clear. My Etrade account is at $1,230 - I can cash out ahead about $150, less another $20 for Etrade, or wait for Motorola to tender me their offer for my shares in a week or two, and make a little more.

I contemplate my next move - perhaps it's time to take a break from "financial instruments." Working on the screenplay looks pretty good.

And so does my day job.

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