Who doesn’t know Kenny G?
He’s one of the best-selling music artists of all time, perhaps even the No. 1 instrumentalist, having sold more than 75 million records worldwide.
He’s a master saxophonist and player of smooth jazz, the type of music you play to set the mood for a romantic evening. In China, his hit tune Going Home is played by business establishments from shopping malls to train stations to tell everyone they are closing for the night.
But these days, something else takes much of the time and attention of the 58-year-old Grammy Award winner.
Kenny G, whose real name is Kenneth Bruce Gorelick, spends his mornings in front of his computer screen to monitor his stocks. He’s got about 30 companies in his portfolio.
Over the last decade, he has earned about as much money from stock trading as from music, Gorelick tells Reuters.
“Most people in the music business don’t make as much money as we used to,” he laments. And that’s because digital music, along with online piracy, has eroded much of the money-making potential of music.
“You have your 1 percent of Beyonce and U2, who are playing stadiums, who are going to make tons of money. I’m going to put myself in the normal category of a music person who has been successful.”
Gorelick, who holds a degree in accounting from the University of Washington, picked up the stock trading habit in the early 1990s. An uncle introduced him to Howard Schultz, the CEO of Starbucks, before the Seattle-based coffee chain went public and convinced him to buy a stake.
Since their trading debut, the shares have risen more than 12,000 percent.
Picking stock winners is not easy, though. Only 30 percent of professional fund managers outperformed the benchmark Standard & Poor’s 500 index over the last decade, data from Lipper, a Thomson Reuters company, shows.
Gorelick keeps his assets in two accounts: one for his own trading and another managed by Todd Morgan, a founder of Los Angeles-based firm Bel Air Investment Advisors.
“I have a good batting average but I’m definitely not perfect,” Gorelick says of his stock trading performance.
He looks for companies with great growth potential. Once he comes across such a company, he watches its performance for a while, reads analyst reports and related literature, and then decides when to buy, which is usually on a dip.
One of his biggest recent winners was a stake in Potash Corp. of Saskatchewan Inc., a fertilizer exporting giant. Upon the advice of a Canadian friend, he watched the stock for two months, and bought a significant stake when it declined to a split-adjusted US$30 per share in 2010.
The shares surged to a split-adjusted US$62 per share the following year as the company fended off hostile takeover bids. Gorelick sold at US$60 and below. “I made a lot of money on that stock,” he says.
Another friend recommended that he buy a stake in biotechnology firm Dendreon Corp. Gorelick began buying shares around US$35 in early 2011. But the stock started going downhill after the company announced disappointing sales of a prostate cancer vaccine. He unloaded his stake at less than US$5 a share. It now trades at less than US$2 per share.
“I don’t listen to tips from friends as much anymore,” Gorelick jokes.
He says he still keeps “a fair amount” of his original shares in Starbucks and watches the stock price every day. Yet he tries not to get caught up every time there’s a big movement in the counter.
“I can get emotional in my music, and try to make more sense when it comes to trading,” he says.
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