Last week’s question and answer

I’m a privately held company based in Wisconsin, founded in 1876 by a retired minister. He created a hosiery company to offer a better alternative for lumberjacks whose crude wool socks were giving them blisters and infections. I introduced an innovative kind of underwear in 1934 — the “brief” — that remains highly popular today. My briefs were given my name, a word that evoked athletic supporters and conveyed the brief’s “masculine support” capability. In 1982, I introduced my first complete line of women’s intimate apparel. It became my most successful venture since the brief. Who am I?

Answer: Jockey International

Ready for terror

Body armor company DHB Industries (AMEX: DHB), profiled by Fool co-founder Tom Gardner several months ago in our Motley Fool Hidden Gems newsletter (www.hiddengems.fool.com), recently reported a revenue increase of 52 percent. Net income is up 91 percent year over year, and the order backlog is up 83 percent from last quarter. Not bad.

The company is using its strong cash flow to reduce debt. It’s also introducing new products, such as the ballistic blanket. While it lacks the diversification of competitors Ceradyn (Nasdaq: CRDN) and Armor Holdings (NYSE: AH), it’s gaining market share and has an excellent reputation.

But in the latest quarter, 80 percent of shipments were to the military and 5 percent were to federal agencies such as the FBI. It’s dangerous to have too much of your income based on just a few customers. If you lose one or more, you can be in big trouble. War has driven a lot of sales DHB’s way. Just as Taser (Nasdaq: TASR) has taken a foothold and grown quickly, DHB has a similar opportunity — and one internationally, too. Those opportunities could make 2005 a winner also.

While giants such as General Dynamics (NYSE: GD) and Raytheon (NYSE: RTN) may appeal to investors looking for a conservative investment in defense, DHB also is worth considering, especially if its price drops to more attractive levels, such as below $12 or $10.

Self-employment

Want to go into business for yourself? Think twice — or thrice — because it’s risky. Still, the potential rewards are great. If you’re thinking of doing it, here are some tips:

• Spendthrifts and tightwads should forget about it. Spendthrifts will burn up funds faster than they come in on unnecessary stuff. Tightwads won’t spend enough. Insurance, licenses, supplies and other overhead items are expensive but necessary.
• Estimate how much it will cost before starting. Then double that amount. Try to keep a source of income as you start, perhaps working a part-time job. This can keep you from borrowing too much money.
• If you want to be taken seriously, do it right. Get the licenses you need. Get insurance. Pay taxes on your earnings.
• Be tax-smart. Know, for example, that you may be able to deduct some or all of your medical and qualified long-term care insurance costs.
• Consider being incorporated. It offers tax advantages and some liability. Don’t be afraid to get professional consultations. You may save money in the short term by being your own accountant or lawyer, but the mistakes you make may cost you a lot more later. Professionals may even save you a bundle immediately.
• Look before you leap. Businesses that are easy to get into will have a lot of competition. Choose a business that has proven it can make money.
• Be wary of multi-level marketing enterprises. It can be extremely difficult if your living depends on your recruiting others to join you. Learn more at www.vandruff.com/mlm.html and www.ftc.gov/bcp/conline/pubs/alerts/lotionalrt.htm.
• Read up, and talk to other self-employed folks. Get guidance at www.sba.gov, www.entrepreneur.com, www.irs.gov/businesses/small and www.business.gov.
• Do what you know and what you’re good at. Chances are you’ll do a good job and will bring in business. It’s best not to open a restaurant if you’ve never worked in that business.

If you do go into business for yourself, expect a real challenge. It can be well worth it, though.

Money from lots

Twelve years ago, my wife and I were sitting in a coffee shop in Cripple Creek, Colo., and overheard some locals talking about gambling on local real estate. When we returned home, we told my brother and his wife what we’d heard. The four of us invested $5,000 on five lots. A year later we sold those lots for $75,000. We also agreed to hold a 15-year mortgage at 10 percent, which would bring the repayment amount to nearly $115,000. Each couple’s investment of $2,500 will net them approximately $55,000 when all is said and done. Not bad for the price of two cups of coffee and being at the right spot at the right time. — Anthony J. Trivelli Jr., Townville, S.C.

The Fool Responds: Real estate has been a terrific investment for many people. Still, you should know what you’re doing and realize that even real estate investments can implode — particularly if you invest in the wrong place or at the wrong time. Consider reading “Investing in Real Estate” by Andrew McLean and Gary Eldred (Wiley, $20) or “Real Estate Investing From A to Z” by William Pivar (McGraw-Hill, $20).

Our friend, the SEC

What does the Securities and Exchange Commission (SEC) actually do? — K.D., Amarillo, Texas

You’ll find lots of information on the SEC at its Web site, www.sec.gov. In its own words, the SEC’s primary mission “is to protect investors and maintain the integrity of the securities markets.” It goes on to explain: “The laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: All investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it. To achieve this, the SEC requires public companies to disclose meaningful financial and other information to the public, which provides a common pool of knowledge for all investors to use to judge for themselves if a company’s securities are a good investment.”

Of course, as Enron and others have painfully reminded us, companies are not always straightforward or accurate in the information they disclose. The SEC, therefore, brings charges against many companies and individuals for breaking securities laws — typically more than 400 per year.

What’s the “closing tick”? — N.N., Richmond, Va.

It measures the buying vs. selling activity for the very last trades of the day.

To calculate it, take the number of stocks that ended on an uptick (i.e., their last trade occurred at a price higher than the previous one) and subtract the number that ended on a downtick.