Cancer scares the bejeebers out of me. I’ve had a few friends who have had a loved one diagnosed with cancer, and we’ve had two cancer scares in my wife’s and my families. One has so far turned out just to be a scare. The other one has turned out to be real.
So I guess this story grabbed me a little bit more.
The Wall Street Journal brings us the story of Charles Wolf. Currently 49, Wolf and his family had been quite successful financially all along, with Wolf working as a chemical engineer and his wife as a project manager, both for the same company. By the time Wolf turned 43, or right around then, they had already accumulated a portfolio of somewhere around $1-1.5 million. The article’s not quite clear about that starting point; and it doesn’t go into how the Wolfs got to that point. But it seems fair to think that Wolf and his wife made healthy salaries and must have been reasonably diligent savers and investors. The article does mention that Wolf was managing their stock portfolio himself up until about 2001, at which time he found its performance lacking and his time limited. So he turned it over to Merrill Lynch.
In 2002, Wolf developed brain cancer. Sadly, doctors think his job that may have brought him that healthy salary may have contributed—as it at one point entailed Wolf helping dismantle a weapons facility and may have included exposure to plutonium.
The brain cancer affects Wolf’s ability to communicate and makes it “almost impossible for him to read.” The median life expectancy is 14½ months—based on which he would have passed away in 2003 or 2004. He has been undergoing regular chemotherapy for these past six years and had to push through infections, blood transfusions, drug reactions, disappearing bone marrow, and other ordeals. Obviously, he has stopped working as an engineer.
Yet in late 2003, he decided to take back management of his portfolio. Though he can’t read normally, he can make out numbers and charts and can watch television such as investment shows. He has had short-term memory and similar problems, that initially caused him to do things like type in the wrong stock symbol, forget that he had already bought a stock, or get 3 shares instead of 300. So he developed elaborate systems and processes to keep track of things and reduce errors. The article reports that doing any trading takes him hours.
Since Wolf took over his portfolio, the Dow Jones Industrial Average is up about 26%—while Wolf is up about 100%. In less than five years, Wolf roughly doubled his family’s portfolio, to a value of more than $3 million.
How did he do it? Here are a few tidbits cobbled together from different parts of the article:
- Wolf has been careful to diversify.
- As part of diversification, Wolf has been careful to rebalance. If one stock in his portfolio has reached a value over $70,000, he has cut it back. For reference, $70,000 is somewhere around 2.3%-4.6% of his overall portfolio.
- If a stock has not grown (though it’s not clear for how long or under what criteria), Wolf has cut his losses and sold.
- Based on his observations, Wolf finds that stocks move the most at the open and close of the market, so that is when he likes to make his trades—“selling high when stocks are rising and buying low when they are falling.”
- Wolf likes to buy stocks that are down and that he thinks will rebound, “preferably with a high dividend yield and a low price-to-earnings ratio.”
- Wolf often tracks a stock’s performance for weeks before making any decisions.
- Wolf often wades slowly into a stock, building up a position gradually (as opposed to buying a lot in one trade).
As Wolf is suffering a cancer recurrence, Wolf is even trying to account for his availability to monitor the portfolio. He’s doing some restructuring and pulling some money out of big gainers that he thinks will start going down in the time to come—“so his wife wouldn’t have to make any major changes if his cancer prevented him from trading.”
The article concluded with a quote from Wolf: “I could be dead before my next birthday. But that’s not the way I do things.”
For the full read, check out the story of Charles Wolf in the June 14-15, 2008 weekend edition of The Wall Street Journal. (The link takes you to the lead-in to the story but requires you to be a subscriber to read it online. You can probably find the paper in the library or elsewhere though!)