Mikulski shows why one keeps the day job

MARYLAND Sen. Barbara A. Mikulski thinks of herself as a scrappy everywoman who has shared the problems of the average schlub, and in one way she is right: She made some really dumb investment decisions the past few years.

Did you think you were alone in buying technology stocks at their peak and bailing out of stocks just before they rallied last fall?


Read on. Misery loves company, and you will find plenty of both in the portfolio of Maryland's Democratic junior senator. Let's hope she minds the affairs of the republic more skillfully than she times the market.

"What I'm seeing here is someone who is rear-view mirror investing," said David Berman, a Timonium financial planner who at my request examined Mikulski's money as revealed in federal filings. "She is responding to trends she is seeing, but by the time she sees those trends they have already played themselves out for the most part."


The senator, who has been in and out of about two dozen stock mutual funds the past decade, owned too many funds and too many risky, specialized funds, Berman said, and she hurt herself by frequently switching investments.

Her latest bungle came Oct. 14, when she dumped stocks in a big way, according to recently available disclosures.

Yikes! That was five days after the S&P; 500 stock index hit a five-year low of 776.76 and began a brave rally.

Fleeing into Ginnie Mae bonds and other conservative positions, Mikulski withdrew between $1,000 and $15,000 from each of five funds: T. Rowe Price's Mid-Cap Value, Capital Appreciation and Small-Cap Value funds; and Dodge & Cox's Stock and Balanced funds.

All of those investments have soared by double-digit percentages since the senator unloaded. The T. Rowe Price Small-Cap Value Fund has produced a total return of 27 percent.

Mikulski, who apparently still owned some stocks at year's end, did not respond to my request for an interview about her adventures.

But her bad timing on last fall's rally must have been painful for somebody who, while keeping a large chunk of money in an insured savings and loan and other conservative places, was very active in stocks during the 1990s bubble. Her experiences have probably reinforced her dislike of proposals to allow Social Security money in the stock market.

As early as 1995, Mikulski, who listed assets worth $174,000 to $660,000 on her most recent forms, had at least $15,000 in the Robertson Stephens Contrarian Fund, Warburg Pincus Growth and Income Fund and other stock ventures. She probably made some decent money before racking up losses.


She began to get more aggressive, buying the Rydex Nova fund, which used derivatives to try to amplify increases in the S&P; 500 stock index, and the Rydex Ursa fund, which did well when the S&P; 500 fell. She was in and out of both during 1998 with $15,000 to $50,000 as she tried to time the market.

Mikulski owned other stock funds in 1998 - T. Rowe Price's Small-Cap Value and International Stock funds, for example - but nothing too outlandish.

The Nasdaq sirens, however, were singing loud and sweet. The Internet and telecommunications manias had driven the Nasdaq stock index past 2,000 at the end of that year, and Mikulski or her financial advisers - her office wouldn't say who - sought a piece of the action.

In 1999, she started trading in and out of the Rydex OTC Fund, which matched the volatile Nasdaq 100, and the Rydex Arktos Fund, designed to do the opposite of the Nasdaq 100.

Thinking the Nasdaq might fall, she spent $1,000 to $15,000 on the Arktos Fund on Oct. 20, 1999. Bad idea. The Nasdaq continued to skyrocket. Mikulski lost 11 percent of her money on that bet before she exited three weeks later and apparently decided that tech stocks went only one direction: up.

So she climbed on the tech train.


She sold some of her boring money-market and bond funds. She added to her Rydex OTC Fund. She added to her T. Rowe Price Science & Technology Fund. She bought the Invesco Telecommunications Fund, placing $1,000 to $15,000 into each one.

She also put a substantial sum - $15,000 to $50,000 - into a more-conservative stock fund.

It was March 24, 2000.

Oops! That was two weeks after the Nasdaq and the S&P; 500 peaked and the start of a long, bad plunge for stocks, especially technology outfits. Before she heaved her tech funds that year, Mikulski had lost between 30 percent and 40 percent in each one.

Many of us have been there, Your Honorableness. The market loves to fall with you and rise without you. This columnist turned a $15,000 IRA into a $35,000 IRA and then into a $6,000 IRA by betting on business-to-business Internet stocks.

But the case of the suffering senator is a new reminder of the investing verities. Do follow Mikulski's example by putting only a fraction of your assets in stocks if you're going to bet aggressively on the market. But when you plunge, don't be a timer. Don't chase hot funds, don't own too many, and don't keep changing your mind.


We're crying with you, Senator.