What Can You Do With $1,000?

Kiplinger's Personal Finance Magazine, July, 1999 by Robert Frick

A grand isn't what it used to be. But sometimes you can come out ahead by thinking small.

These days, when just getting the hood ornament replaced on your Rolls-Royce Silver Dawn runs you nearly a grand, you may question how potent $1,000 is anymore. Unless you happen to invest in the next Microsoft while it's still a penny stock or buy $1,000 worth of freeze-dried food and society really does collapse from Y2K gremlins (allowing you to trade a packet of dehydrated chicken cashew curry for your neighbor's new HDTV), $1,000 may not seem like much. Bookies even refer to a $1,000 bet as a "dime."

But we suggest that dropping a dime judiciously can still bring a big bang for the buck. The trick is to find a category where $1,000 has some leverage--whether it's an investment in your career, an investment for profit or even something that's likely to bring you a great deal of satisfaction or pleasure.

1 YOUR PIECE OF THE ACTION

NOWHERE IS THE EXPRESSION "it takes money to make money" more true than in the exclusive world of initial public offerings. When a talked-about, fast-growing company first sells its stock to the public, typically the only people who get a piece of the deal are those who already have plenty of money--such as the biggest clients of top investment-banking giants Goldman Sachs, J.P. Morgan and BT Alex. Brown. And IPOs are particularly attractive in today's market, where they are likely to skyrocket in price.

Democracy is slow in coming to the IPO market, but at least you have a chance at a sliver of an IPO through online broker Wit Capital (www. witcapital.com). In the past year Wit has made strides in tapping into the best deals of some of the above-mentioned investment bankers (generally IPOs are sold through a syndicate of several underwriters). Because many IPOs sell for about $10 a share and you must order in 100-share blocks, you can get in on an IPO for $1,000--which happens to be the minimum account size at Wit anyway.

One caveat: To take part in an IPO through Wit, you will need some patience and an itchy trigger finger. About 20% to 25% of clients asking for IPO shares receive them, and they are doled out on a first-come, first-served basis, says Wit's Susan Berkowitz. Wit Capital itself is going public, and in its prospectus it admits encountering customer frustration in getting in on the action. Clients are notified via e-mail when Wit gets a piece of an IPO deal, and you must be quick to put in an offer if you want to have a hope of buying shares. Wit says that generally you must respond within a few hours after getting notice and that all offerings are gone within a day.

Because the IPO market is torrid right now, Wit has had a piece of some very profitable offerings. In April, for example, semiconductor maker PLX Technologies went public at $9 per share; it quickly jumped to $16. In February, Internet company Healtheon went public at $8 per share; it recently traded for $42.

Because most IPOs go public at between $10 and $20 a share, you'll increase your chances of getting a Wit offering if you open an account with $2,000 or open a joint account and split the $2,000 with a friend. You should also be aware that Wit has a 60-day "flipping" rule, which means that if you sell an IPO before the stock has traded for 60 days, your chances of getting in on future deals diminish.

2 YOUR INNING WITH A BIG HITTER

THE DEATH OF JOE DIMAGGIO EARLIER THIS YEAR FOCUSED America's attention on what many consider to be the golden age of baseball. The 1950s were bursting with postwar prosperity, and the national pastime was a precious treasure best enjoyed from the bleachers with the smell of roasted peanuts in the air. The boys of summer in the 1950s were a real mania, says Tom Mortenson, editor of the Sports Collectors Digest.

The era is precious in another important way. Unlike today, when the baseball-card market is awash in cards printed by a slew of printers in a variety of special finishes, back in the fifties just a couple of companies produced the cards. This lack of supply, coupled with high demand from men in their late forties and fifties who grew up during the era, is driving up prices. "It's a very important time among a lot of investors who have the funds to buy these things," says Clay Hill, a card dealer with SportsCards Plus, of Laguna Niguel, Cal.

But whose card should you buy? The dealers and collectors we spoke with recommend Ted Williams, the Red Sox player nicknamed the Splendid Splinter. Williams, the last player to bat over .400 in a season, is arguably the greatest natural hitter of all time--especially because many of his statistics were crimped by five years of military service during the prime of his career. Luckily, Williams was an iron man, hitting .388 at age 39 to become the oldest player to win the American League batting title.

If you are new to the world of baseball-card collecting, the key word is condition. We're not talking dog-eared or not dog-eared. Today many cards are graded on a 1-to-10 scale by independent, third-party grading services, which often encase the card in a special holder or "slab." Cards that receive top grades can triple in price. While still a controversial part of the sports-card business, experts agree that buying a graded card involves less risk than buying a nongraded card--though the big score is in finding an ungraded card cheap and then having it receive an 8, 9 or 10 grade through a grading service, such as industry leader Professional Sports Authenticator (www .psacard.com).