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If Craig Forgrave didn't exist, he's just the sort of likeable, colourful character the 50-year-old engineer, screenwriter and novelist would invent.Mr. Forgrave studied engineering at the University of Waterloo in Ontario and worked in Calgary before he and his wife settled in Victoria, where he was employed as a college business instructor. That led to a very brief sojourn teaching in Abu Dhabi, as they landed in the country the day Saddam Hussein invaded Kuwait. ''That's when I found out what freedom is,'' he said.

It was only when they tried to leave that he realized that wasn't an option, given his worker's visa. He quit, the couple went to the airport and asked for "the next plane out of here," and 24 hours later, they were on a topless beach in Greece.

They'd liquidated everything for their move to the Middle East, and decided what they really wanted to try was writing. Mr. Forgrave had already had a go at playwriting, having won first place in the National Playwriting Competition, so they decided to try screenplays, living a couple of years in Los Angeles.

With numerous nibbles, but no big bites, they moved back to Victoria, and Mr. Forgrave returned to the working world as a project manager at IBM Canada Ltd. But the writing urge never left, and he soon took a two-year leave of absence in which he wrote his first novel, Devil Jazz. The book, published in New York last year, features Adolf Hitler, Marilyn Monroe and Vincent van Gogh, "Three rotten souls after the last bastions of purity: the youth, the chaste, and the starving artists." Meanwhile, Jesus, in the form of a confused homeless man, is working against evil with disciples Matthew, Mark, Luke, John, Paul, George and Ringo. Mr. Forgrave is now at work on a second book, the adventures of a child and his dog who discover an alternate universe, titled Albert and Einstein and The Theory of Everything.

How he does it

As he approaches retirement age, he says, "My hopping around has left me without a secure pension so my portfolio is my pension and I am getting more conservative now, searching for quality, less risk and more diversification."

A third of Mr. Forgrave's portfolio is in exchange-traded funds, or ETFs. ETFs are half mutual fund, half stocks. Like index mutual funds, they track various stock market indexes and give investors a comparable return. They trade as stocks, and can be bought and sold any time the market is open, along with the usual commissions.

"They're broad-based so you don't get blindsided by the movements of individual stocks," he says. Most important, he points out that historically the market has risen over time, but staying invested can be tough to do if you only hold individual stocks. "People tend not to buy and sell at the right time," he says. "And ETFs help me to stay invested." He owns ETFs that track the Nasdaq (QQQQ-Nasdaq), the S&P 500 (iUnits S&P 500 RSP, XSP-TSX,) as well as the Canadian market through iUnits S&P/TSX 60 (XIU-TSX).

For his individual stock picking, he begins with fundamentals, identifying the most attractive sectors and companies based on growth, profits, sales and earnings history, along with cash flow, before turning to technical analysis to select his buy and sell points.

"I like to buy at a discount to the market and sell when they have run up past their fundamentals," he says. He also tries to discipline himself into selling if a stock drops more than 15 per cent. "Usually if it drops more than that, I didn't find the proper buy point."

Mr. Forgrave also agrees that people know good companies when they see them. When he moved to California in the mid-nineties, he was impressed by a number of retailers that hadn't yet moved into Canada, names like Best Buy, Target and Home Depot. Currently, he owns a number of big-name tech companies, including Cisco Systems Inc. (CSCO-Nasdaq), and International Business Machines Corp. (IBM-NYSE), calling them both "well-run."

Another holding is Time Warner Inc. (TWX-NYSE). "Content is king and I think the company is undervalued," he says. For the same reason, he also holds Bombardier Inc. (BBD.SV.B-TSX). "Prices often go to extremes," he says. "Nortel was never worth $120, or just 70 cents."

He also likes to have a bit of fun, the major principle behind his website, movieloversmoneyguide.com. Here you'll learn how to use Monty Python's Search for the Holy Grail to set goals, as well as manage risk like the heroes from The Great Escape. "They only needed one tunnel but they dug three because you have to have alternatives." The site also let's you track his BOB, or Box Office Barometer, a sentiment indicator that ties movie-going to the Dow Jones industrial average. If people spend money on action movies, he notes, the markets go up. "And if they spend it on comedies or (gasp) romance movies, the markets go down . . . sometimes."

Best move

Mr. Forgrave credits holding index funds for helping preserve his capital when the nineties stock boom imploded. "When things were the darkest and stocks going down, I'd think, 'Okay, I've still got some money and those investments aren't going to zero.' " Worst move

With his engineering training, Mr. Forgrave followed the birth of the Internet with interest, including a company called UUNet, the "backbone" of the Internet. After UUNet was bought by WorldCom, he invested in the acquirer at between $30 (U.S.) and $40 in the late nineties. "I just held on to it. It drops and you hold because you're an optimist, and then it drops further, and you think 'Why sell?' Obviously, the WorldCom trade was one case where I thought the fundamentals had value -- but the fundamentals were not to be trusted and the company imploded under inflated earnings and hidden debt."

Advice

"Nobody cares as much about your money as you do, so you've got to be the one to make the decisions."

tony.martin1@sympatico.ca

The investor: Craig Forgrave, 50

Occupation: Novelist, screenwriter, engineer.

Investment personality: Part buy-and-hold, part fun-seeker.

Portfolio: QQQQs, SPDRs, iUnits S&P 500 RSP, iUnits S&P/TSX 60, IBM, Cisco, Siebel Systems, Bombardier, Time Warner, Yahoo!

Portfolio size: Six figures.

Rate of return: "Between 10 and 12 per cent a year."

Quote:

-"My hopping around has left me without a secure pension so my portfolio is my pension and I am getting more conservative now, searching for quality, less risk and more diversification."

-"Nobody cares as much about your money as you do, so you've got to be the one to make the decisions."