Investments Bring Prize as Well as Profit

As hippies in a Berkeley commune in the late 1960s, Byron Mikalson and Lewis Soloff made and sold large, multicolored candles. They later went separately into such enterprises as stained-glass belt buckles and health burgers. Lately, the pair joined forces again, trading stocks and publishing a market letter, the Insighter.

The letter, which describes stocks and makes recommendations, is marginally profitable, but in stock trading, the pair have struck gold. Mikalson and Soloff turned a recent $28,296 investment into $40,794, a performance that has earned them second place in the stock trading division of the most recent four-month U.S. Trading Championships.

The contest is operated by Norm Zadeh, a Marina del Rey securities expert, sports handicapper and former university instructor.

“Their performance is the best of any market-letter writers in USTC history,” said Zadeh, who established the contest in February, 1983.

The competition has categories for stocks, options, futures and option writing. Using their own money or that of their clients, brokers, private investors and investment-letter writers compete in four-month and yearlong contests.

Soloff, who lives in San Pedro and owns his own surveying firm, and Mikalson, a civilian Navy employee in San Diego, also are currently second in the yearlong contest. Their secret: They look for stocks that are out of favor but are beginning to show strength.

Other Southern California winners in the contest ended April 30 were Bill Baker, a professor at Cal State Los Angeles, first in option writing, and Ira Gorman, owner of Los Angeles-based Gorman Commodities, first in options.

First place in the stock competition was captured by an Arlington, Va., broker, while first in the futures competition went to the treasurer of a New York savings bank.

Baker achieved his 154% gain by selling puts and calls on the Standard & Poor’s 500 index; Gorman parlayed a $17,625 investment into $116,166 by buying options on wheat futures before and after the nuclear accident at Chernobyl, which is in the center of the Soviet Union’s wheat-growing area.

There are no trophies, plaques, ceremonies or calls from President Reagan for the winners, but they typically do get a tangible reward--additional business that comes with certifiable success.

David Ryan, an analyst and portfolio manager with Los Angeles-based William O’Neil & Co., was made a vice president and given a salary raise after winning the 1985 stock competition. (O’Neil is an investment advisory concern and publisher of Investor’s Daily.)

It was the absence of any method for proving a broker’s ability that prompted Zadeh to inaugurate the championships, which cost him $25,000 to set up and have drawn about 1,598 contestants thus far, including an emergency room doctor who was top overall trader in a four-month contest in 1984 and a service station attendant who dashed home and started trading after a night pumping gasoline. Most contestants are professional traders, however.

“I got tired of hearing the same opinions from the same experts,” said Zadeh, who regards some of the prominent brokers and financial headliners with great disdain. “I think the contest ultimately will place a premium on competency in the brokerage industry.

In years past, and to some extent now, the emphasis has been on how much money the broker generates in commissions and not how much money he makes for a client. Many brokers have misled people for years, and most of what they say on TV is baloney.”

Entrants pay a $195 fee, and Zadeh says he carefully checks the figures submitted by contestants and has caught one cheater.

“Can you imagine the story if we reported (that a winner) was up 1,000% if he in fact (lost money for) all his clients?”