Blog : Penny Stock Blog Introduces Ed Zwirn

by Peter Leeds on February 27th, 2013

I want to personally welcome and introduce you to Ed Zwirn.  He joins the Peter Leeds penny stock analysis team, and you will have the luxury of seeing some of his opinions on penny stock, stock market events, and discussion here.  As always, his efforts, while they may be insightful, entertaining, or creative, are always geared towards helping you make the most out of your penny stock investments.

Also, make sure to check out our new You Tube penny stock video.

The Beefsteak Mines

A penny stock blog by Ed Zwirn

You could call it mind-numbing work, and you'd be right. My first job on Wall Street consisted of preparing so-called journal entries, the paper instructions to other, similarly benumbed, clerks at Merrill Lynch who would key in our instructions and transfer specified sums from one ledger account to another. We learned very little in the process about the underlying margin transactions and the money that was being made or lost by customers as we pushed paper.

Yet the work had its perqs: For one thing, I managed to attend any class that the company offered: Although they seemed to me only useful to me to the extent that they enabled me to avoid performing real 'work' for mother Merrill, I still remember at least some of the information they imparted to me about things like margins, options and investment strategies.

Then there was the computer: Hard as it may be to imagine, or remember, at a distance of more than 30 years, there was a time when universal access to information was more a subject of science fiction than accomplished fact. But at the time, there was a definite status symbol aspect back then to be able to instantly access the Dow Jones Industrial Average and trading volumes and watch the prices of individual stocks go up and down. I remember how my father used to call me up at work just to get this kind of information, even though he had no investments in the market, if anything else to reassure himself that his hippie son had made good. It must have been the case, because who else but his son could quote the DJIA in the middle of the day, without waiting for the evening news?

Of course, such information often comes at a cost: My friend Henry (with whom I had to share the precious computer terminal) and I, not content with sitting on the sidelines while there was money to be made, decided to invest. Since we had relatively little money to drop on a stock, we wound up purchasing a penny (or cheap, at any rate) stock.

As I recall, the Lion Mines, which traded on the Vancouver exchange, was going for under $1 a share when we took the plunge. To us, the logic seemed inescapable. It was 1981, and gold prices had recently come off of recent highs, but this was just the calm before the storm. The world was going to hell in a proverbial handbasket, we reasoned, and soon enough investors would flock back to gold, and 'our' mine, which was a marginally productive gold extractor, back to unparalleled prosperity, making us titans of Wall Street in the process.

Henry and I took as our role model the character of Egbert Souse (accent over the "e"), played by the drunken comic W. C. Fields in 1940's "The Bank Dick." Souse, having been hired to guard the Lompoc Bank, had persuaded his daughter's fiancee, a Lompoc teller, to steal $500 from the bank so he could buy stock in "The Beefsteak Mines." There would be "beer flowing through the arboreal dell," I recall the Fields character telling his future son-in-law, once his stock scored.

Henry and I would come back from our drug- and alcohol-fueled lunches and immediately ask each other how "Beefsteak" was doing, inspired by the comedic example of this ne'er do well getting rich through no particular merit of his own. We each had our own vision of this arboreal dell, and spent as much time as we could punching up the "Beefsteak" ticker, imagining we were already rich as we tallied up our paper gains, watching out stock rise some 40% in a matter of days.

Then, coming back from one particularly drunken lunch, we came up against a sobering experience: "Beefsteak" had disappeared, along with our arboreal dell. We had lost all our money.

Looking back on it, we should have known better. We bought a stock which had been in its dying throes (investors who had bought "Beefsteak" five years before us had in fact scored impressively, as I now know), based upon a market perception (the inevitable upward progression of gold prices) that would have fallen apart had we done the slightest research.

But I have done some research since then. Writing about business and finance topics for outlets such as The Wall Street Journal, Institutional Investor and CFO Magazine, it's fair to say that I have much more of a grounding not only in the theoretical aspects of how our economy runs, but also in the practical application of the stuff those instructors at Merrill Lynch had tried to teach me, if only I had been paying attention. It is in this spirit that I look forward to my collaboration with Peter as we attempt to guide investors through the speculative world of the penny stock.