Discount Broker Blues part 3 by Dan Weinberg
The conclusion to Weinberg's experiences as a novice trader learning how to play the game the hard way.
PURCHASE AND PANIC (PART TWO)
Merger Mania is another form of Takeover Mania, but my example here is a wee bit different. As with
Storer Communications, this time I thought I had an absolutely certain winner . . . (Are you starting to
hear the melody of "The Discount Broker Blues" a little more clearly?)
On January 31, I bought 100 shares of American Hospital Supply at the relatively low price of 315/8. The
company manufactures and distributes hospital and laboratory supplies and equipment, and wasóand
still isórated A + by Standard & Poor's. I don't recall where I got the idea to buy the stock, but by this
time, I had become more proficient in researching and sizing up the companies I read about on the
business pages of the newspapers. American Hospital Supply (AHS) has paid a nice 3.7 percent dividend
and had a relatively low Price-to-Earnings ratio (10), both good signs. In addition, it had chalked up
steady annual earnings increases since at least 1980. I felt confident that AHS would help make up for
some of my earlier losses.