Editor's Note: This is the second of a three-part series on day trading by our technician, Gary B. Smith. If you missed part one, click here. In part two, Gary interviews day trader and author Jeff Cooper.
* * * * *
If you've read Investor's Business Daily, you've seen the ads: "I Make a Great Living Trading the Stock Market ... And So Can You!" And then there's some enticing copy, a chart with the perfect buy signal and the all-important order form. The kind of ad everyone scoffs at. Also, the kind of ad everyone reads.
Let's face it, we've all been around long enough to know there's no magic bullet in this trading business. And who the hell is Jeff Cooper anyway? More importantly, how dumb does he think we are to spend money on his books, which we know are only going to make one person rich: him!
Well, I'll admit it: I read the ads. And you're right, most of the time the information is worthless. Someone is offering their "secrets" for a special low price of $199.99. They have it all figured out, but instead of making gazillions for themselves, they'll sell it to you on the cheap. Right.
With such cynicism in hand, I must have skimmed by Jeff Cooper's ads a thousand times. Then one day (who knows, maybe it was a slow one) my eye caught on the chart he has of MU, and I thought, "Hey, wait a second, that's a pattern I look for." So with that flimsy premise -- combined with my quest for improvement -- I ordered up all of Cooper's books. (The guys who put these ads together live for people like me!)
If I can overview Jeff's style, I'd have to say it's a combination of momentum investing and pattern recognition. In short, Jeff scans thousands of charts each night. The first thing he looks for are patterns that give a strong signal as to the short-term direction of the trend. As an example, I've included a chart of APC (click here for last week's column) to protect his profits, not hitting many home runs, but scratching out a lot of singles. And I mean a LOT of singles.
Is he successful? I had the chance to talk with Jeff in December from his home in Bel Air, Calif., where he trades for his own account. Jeff's books include both Hit and Run Trading, and The 5 Day Momentum Method. In addition, he also edits a biweekly newsletter, the Hit and Run Traders Report. He was just finalizing plans for a new home he's building in Malibu. Here's the highlights of our discussion.
Jeff, I'll start with an easy one: How old are you and how long have you been trading? I'm 48 and I've been trading since 1981.
Can you give me a little background as to how you got started? I had no techniques initially. To me, the old bromide of buy low/sell high made enough sense. I assumed stocks that were down a lot were good buys and stocks that had run up a great deal were good shorts. Well, you can guess what happened: I ended up getting killed with that approach.
Well, you're successful now, so you must have been a quick study. Actually, my development was slow and tortuous. It was the old baptism by fire for me, but I learned from my mistakes. The crash of '87, as an example, was a seismic event. I wasn't hurt financially as much as I was intellectually and emotionally. Up to that point, I really thought I understood the markets. After that, I knew my whole modus operandi would have to change.
I know that subsequent to '87, you've been quite successful. How, then, did your philosophy change? After that crash, I wanted to be as risk-adverse as possible in both price and time. To do that, I needed tight stops and a short-term approach. By doing this, I felt I'd have a lot more control and comfort. It was true then, and it's true now: The longer stocks are held, the more things can go wrong. As a day trader, I could take bites out of short-term trends, limit my risk and still earn interest on my account in T-bills. (Note: Most brokerage accounts do not have intraday margin charges, that is, interest charges on borrowed money. Therefore, Jeff can trade with twice the amount of capital he has in his account, and as long as he is flat at the end of the day, he is assessed no margin charges.)
Okay, I can certainly understand that short-term is safer than long-term. Once you made this decision, though, what did you base your strategy on? That old bromide: The trend is your friend. As trite as it sounds, it is important to understand how true it really is.
Great, we all know that old saw, but how do you take advantage of it? It's interesting, because what I learned is that surprises almost always happen in the direction of the trend. I would scroll though chart after chart covering the action with an index card and moving it across the computer screen asking myself "what would you do here?" Many of the patterns I created were the result of being wrong or missing a move.
So, basically you were looking for identifiable patterns you could rely upon consistently? Yes, I wanted to identify subtle nuances in the charts that would be clues to the stock exploding or the trend continuing or reversing. In short, I wanted to ingrain an image in my head so I could react quickly rather than analyze a lot of indicators. Analyzing a trading situation in the heat of the battle is not a luxury short-term traders are afforded. A professional trader must react to his setups and think about it later.
Okay, let me ask a few questions about your day-to-day routine. First off, how much preparation do you do for each trading day? I spend about three hours in preparation for the next day.
And as a result of that, how many trades do you generally do? I typically take six to 12 trades a day on average.
So, a fair amount of trades each day. How many positions do you have open at any one time? Not more than five or six. I find it difficult to manage any more than that.
Okay, tell me how you get your orders in. I assume you use some state-of-the-art hardware/software combination? Actually, I look at a lot of computer screens each day, but I still phone my orders in.
And what kind of commissions do you pay? My cost is 3 cents per share. Anything more than 10 cents per share, and my system wouldn't work.
You mentioned watching the computer. Are you in front of it from opening to close? Generally, I do watch the screen all day, and I never leave the monitor if I have a trade on. If I absolutely have to leave, I'll put a protective stop in place.
What about when all your trades are done and you have no positions open? I'll still keep watching. Even if I have nothing going, I'm always observing the behavior of the market and certain stocks.
All right, regarding your software, what kinds of packages do you use? I use AIQ and Supercharts for analysis and Track Data for my quotes.
Jeff, regarding the size of your trades, do you find it easy to get in and out of the market with, what must be fairly large positions? Not really. Even though I've been doing this awhile, I still trade 500- to 2,000-share lots. With that size I'm not going to hit a lot of home runs, but that's not really what I'm after. I'm more interested in being a contact hitter, just getting a lot of singles each day.
Well that begs the question, then: In terms of points, what would you say has been your best week ever? My best week -- I'm guessing -- is about 25 or 30 points.
At 1,000-share lots on average, that's not too shabby. On average, though, what do you think you net a week? I generally shoot for about 10 points per week. Sometimes I'm a little short of that, sometimes a bit better. But, on average, that's what I do.
Any losing periods? Yes, I've had some losing weeks, but fortunately very few losing months over the years.
With your success then, do you ever worry about losing your touch? I used to worry about losing my touch, but being prepared for the day and knowing how to scratch a trade and take small losses helps to diffuse the fear. Also I find that strings of winning trades builds more than profits -- it builds emotional capital! In short, I really like ringing the cash register.
I notice in your fax service, you stick primarily to NYSE stocks versus the Nasdaq stocks. Any reason? Some Nasdaq stocks trade differently than NYSE stocks due to the spreads or because of the SOES traders. It's really a different kind of trading with the many market makers versus one specialist per stock on the Big Board. That being said, I will trade some of the more liquid OTC stocks like CSCO and MSFT.
But with just the NYSE stocks, aren't you giving up a lot in terms of point movement? Not really. Each day on my fax service, I generate at least a dozen NYSE candidates that are just as volatile as many of the OTC stocks.
One thing I find interesting about your approach is that you go short about as often as you go long. Absolutely. One thing I really believe in, and I state this regularly in my book and newsletters, is that buy-and-hold only works in a rising market. In fact, the only people who make money in a down market are those who short stocks. Because prices drop faster than they rise, my biggest trading months have come when the market has significantly dropped.
Jeff, you mentioned earlier that sometimes you have nothing going, and that reminded me: Do you adhere to the day trader's credo of always going home flat? I generally do, although I will carry positions overnight if they close strongly in my favor. That way, some of the risk is eliminated, and to compensate, I've had some nice gains by doing this.
Let's switch gears for a second. Why aren't most people as successful at trading as you are? A number of reasons. They're in the wrong stocks. They don't know how to take losses. Either they have poor money management or they have no exit strategies such as trailing stops.
Funny, you never mentioned the one thing most traders focus on: entry techniques, that is, when to initiate a trade, either long or short. Right, in my experience money management is the most important part of trading. When I learned to scratch a trade for an eighth or quarter-point loss I became more profitable.
Okay, I have to ask about your books. If you're raking in the dough, why take the time to write? I was approached with the idea to write the book and it seemed like a good idea at the time. I think everyone wants to leave their mark and selfishly I knew it would force me to focus more on my trading and get myself to a new level.
I agree. I know that writing about trading has improved my own returns. On the subject of books, any that you found helpful? Reminiscences of a Stock Operator, W.D. Gann's How to Make Profits in Commodities, O'Neil's How To Make Money in Stocks. Larry Connor's Investment Secrets of a Hedge Fund Manager. Nature of Risk, by Justin Mamis. All those were helpful at some point.
All right, three final questions. Why do you think you've achieved more than the average trader? I'm really not sure. I'd have to say I'm obsessed with trading and enjoy it. I must say, though, that it only began to be fun when I adopted a clear plan of attack each day, and that, of course, is what my books are all about.
Can anyone who enjoys trading, then, be a great trader? Anyone that wants to work hard and is not afraid of being wrong can become a good trader. The truth is, to be a great trader you have to be more concerned about making money than being right.
Okay, final question: How does someone new to trading get started? How to get started? Focus, focus, focus. Select a list of stocks and become familiar with their behavior. Strive for consistency. Repeat the same plan of attack day after day, week after week. The real holy grail is discipline.
Thanks for your time, Jeff. It's been a pleasure. Thank you, I enjoyed it.
* * * * *
Maybe I shouldn't have been surprised, but I was: Jeff has no secrets. Yes, he's identified some chart patterns that work for him, but it's really the fundamental stuff -- money management, hard work, discipline -- that make Jeff a great trader. He's identified a methodology that works for him, and he simply shows up each day and executes.
Ironically, in this day and age, he still phones in his orders and trades the same 500- to 2,000-share lot size. He could probably wring an even higher return from his capital, but he's satisfied hitting single after single, year after year. It's hard not to be impressed.
I've now read all Jeff's books and am trying his fax service for a few months. If you're interested, all of Jeff's works, and some of the other books Jeff mentioned, are available at http://www.mgordonpub.com. Next week: I traded the Cooper way for one month. Tune in to see if this stuff works!
Smokin' Joe Not to be confused with Warren Buffett, Tokyo Joe Park is the leader of a new breed of online stock gurus who are moving stocks and claiming scorching returns. Can what he does be legal? (MONEY Magazine) By Peter Carbonara April 1, 1999
(MONEY Magazine) – While CNBC rattles on in the background, Joe Park sits at a small desk in his Manhattan living room in front of three computer screens. A stack of how-to trading books collects dust on a shelf behind him, and a pack of Marlboros is within easy reach. One computer screen displays the give-and-take in an online financial chat room. Another shows Nasdaq Level Two quotes, the up-to-the-second prices being bid and asked by marketmakers like Merrill Lynch and J.P. Morgan. A window on yet another screen shows an online brokerage account that on this rainy December day looks to contain about $700,000.
So how's business? More from Money Magazine 4 fall travel bargains Late-start, self-employed - what's the retirement plan? First Data cuts Western Union loose Best Places to Live Current Issue Subscribe to Money
It's tremendous," says Park. "So far I'm up 6,400% [for 1998]--6,400 bloody percent!"
Talking quickly and loudly, Park, a wiry 40-year-old South Korean immigrant and former owner of four Manhattan burrito restaurants, offers a recipe he believes any investor can use to make money fast--like right now--in the current bull market. First, put about half your money into something nice, safe and boring. Then take the rest and buy stocks that have fallen well off their highs, particularly thinly capitalized issues that have the potential to move quickly. When they do move, sell. Immediately. Don't hold out for a huge score. Pocket a gain of a quarter point or even a sixteenth of a point. Repeat as necessary until rich.
An astute trader who times his moves correctly, says Park, can make money moving in and out of a single stock all day. "Let's look at COOL," he says, pulling up figures and charts on Cyberian Outpost, a company that sells computers and software over the Internet. "This stock has traded between $25.25 and $27 today. By being smart on a thousand shares, just going for one-quarter of a point, you can make $250 in a matter of five minutes. Let's say if you did it 10 times and screwed up three times but were successful seven times, that's what? Seventeen hundred and fifty dollars to take home.... That's what anybody can learn."
This is not traditional Warren Buffett buy-and-hold investing. "This is speculation," says Park. "We're not talking about investment; we're talking about moving on--hit and run. You will not get 6,000% return--as I have done--buying AT&T. It was down at $60 in July and August. If I had bought then and sat on the bloody thing until now, I would not have gained anything. That sucks, you know? Why bother?"
Joe Park is a day-trader, but he's not just one of the thousands of market obsessives out there trying--and usually failing--to make a living buying and selling stocks via their PCs. In fact, as "Tokyo Joe" or "TokyoMex," Park is arguably the most influential online market analyst and stock picker in the country. More than 800 investors around the world, most of whom pay him $100 a month--making his take more than $70,000 a month--are members of his Societe Anonyme, which entitles them to receive a daily barrage of stock tips and trading advice via e-mail. These members also get the password to a private online chat room, where Park holds forth throughout the trading day. In addition, Park has attracted the largest following of all the cyber-gurus who post tips and analyses on Silicon Investor (www.techstocks.com), a popular financial Website with about 100,000 subscribers. On top of that, Park claims that something like 200,000 people a day visit his own Website (www.tokyojoe.com), where he posts his tips for free--albeit after first sending them out to paying customers. All of this has given Joe Park serious mojo in the market.
Last Dec. 11, for instance, Scott Kessler, an equity analyst at Standard & Poor's in New York City, saw one of the stocks that he follows do some odd things. The shares of FileNET Corp., which makes document management software, jumped about three points to $11 a share, and volume rose to about 3.5 million, more than twice its recent daily average. FileNET, which had been in free-fall since last summer, was bouncing back--for no apparent reason. Then Kessler took a look at Silicon Investor and saw the hand of Tokyo Joe. Park had announced that he liked the stock over the short term (the very short term) and expected it to go higher. And that, says Kessler, was enough to make the stock dance.
The rise of Tokyo Joe represents either a) the coming of age of the Internet as a force in investing, b) the ultimate democratization of the market for financial advice, c) "irrational exuberance" in full hysterical flower, d) the pumping and dumping of highly chancy stocks or e) all of the above. Whatever it is, Tokyo Joe's act has got the attention of companies, online investors, Wall Street analysts, Web message-board operators and almost certainly the Securities and Exchange Commission (although John Stark, the chief of the SEC's recently created online enforcement unit, declines to discuss Park). Admired and reviled online in about equal measure, Tokyo Joe--extremely shrewd, occasionally charming, frequently arrogant and invariably profane--is a kind of Matt Drudge for investors, the most influential of a small but growing counter-establishment of Internet stock gurus.
KEYWORD: FOOL
Most of these gurus, including Park, have followed a similar trajectory to Internet stardom. First they're just investors who like to discuss the market via online message boards and chat rooms; then a virtual congregation forms around them as they become stock prophets whose wisdom is eagerly sought by the anxious and the avaricious; then one morning they wake up and ask themselves, "Why give these people advice for free when I can charge for it?"
Many day-traders--notwithstanding their frequent claims of independent thinking and manly self-reliance--are happy to take guidance wherever they can get it, and an online industry has grown up to feed that hunger. The most polished and professional-looking of these operations is Pristine (www.pristine.com), a White Plains, N.Y. outfit--half online tip service, half finishing school for would-be day-traders--that was launched four years ago by partners Oliver Velez and Greg Capra, who've recently had preliminary conversations about joining forces with Tokyo Joe.
Numerous other smaller entrepreneurs run electronic cottage businesses out of their homes. Among the more reputable and influential is Barbara Simon, a 38-year-old graphic designer in Boca Raton, Fla. who began posting on Silicon Investor a few years ago under the handle Jenna. Simon then launched a Website (www.marketgems.com) and subscription e-mail tips service. Many of the online gurus have surprising influence, particularly on volatile technology issues. "Once you get a following," says Pristine's Oliver Velez, "it takes no special skill to move a stock." For breadth of influence, though--not to mention sheer audacity and salesmanship--Park is the reigning king, the current numero uno.
The origin of "Tokyo Joe," as told by Joe Park, goes something like this: Raised in Seoul, South Korea, he was a smart but wild kid who soon discovered he had a taste for travel and the good life. As a teenager, he ran away to see Mexico. After a series of adventures there, including a few days spent in a squalid jail for entering the country illegally, he returned home to get a law degree. He held a series of corporate jobs in Korea, Europe and Japan before experiencing a descent into yuppie hell: plenty of success, money and 1980s-style excess accompanied by nagging attacks of "Who am I?" and "What does it all mean?" Following a tearful epiphany in a Buddhist temple, he decided to start over. He married and brought his wife to the U.S., landing in Seattle, where he crashed and burned trying to make it selling condominiums before eventually working in a gas station. Then the Parks migrated east to New York City, where they now live with their young daughter in a modest apartment a few blocks from the United Nations.
In New York, Park found his way into the restaurant business, ultimately winding up as the owner of four Manhattan Tokyo Joe burrito places. Meanwhile, he was trying to make money in the stock market the old-fashioned way--and losing. Frustrated with the mess he says a blue-chip brokerage was making of his investment portfolio, he went online and turned to the Motley Fool Website and message boards.
Launched by brothers Tom and David Gardner in 1994, The Fool (www.fool.com) has become the best-known brand name in online financial advice, generally espousing a conservative, buy-and-hold philosophy. Park began posting his own stock ideas and became a presence on the Motley Fool's America Online site (keyword: Fool), weighing in frequently in the area devoted to computer-drive maker Iomega. In 1996, that stock famously soared--then crashed--on a wave of wild enthusiasm emanating from the Motley Fool board, a foretaste of the current giddy marriage between Internet chatter and soaring tech-stock prices. "And I was there," Park says. He adds that he first lost money going long on Iomega and then made several thousand dollars shorting when the stock began to fall. He also learned the golden rule of online trading: "Hype, man. Hype moved the f---ing stock.... The Internet is not investment. This is hype, and everybody should know that."
The world of online financial chat is as much show biz as anything else, an endless, open-mike night in which charismatic, energetic (and usually anonymous) self-promoters can rise almost instantaneously from obscurity to a kind of celebrity. So it was with Tokyo Joe. Eventually, his attitudes about investing started to change, and he began to feel out of step with the Motley Fool's value-investing model. "I realized the Motley Fools are fools indeed," he says, "because they don't know when to sell.... [T]hey pump stocks--even when they are going down--based on fundamentals. Who gives a s--- about fundamentals? It's market sentiment. No matter how good a company's fundamentals are, if market sentiment says it's going down, it's going down. You do not fight the ticker. That's when I became a day-trader."
"MEX, YOU SHOULD START CHARGING PEOPLE, MAN"
In 1997, Park began posting on Silicon Investor, which caters to a faster and self-consciously more "sophisticated" investment crowd, many of them day-traders. "It was wide-open territory," says Park. "It was unrestricted. It was the wild, wild West." It still is: The sober minority in many Silicon Investor "threads," or discussion areas, is often drowned out by vapid cheerleading for one stock or another, not to mention a regular contingent of short-sellers, angry cranks and would-be manipulators with a variety of agendas hidden behind their online pseudonyms. But Park, whose Silicon Investor handle is TokyoMex, is no slouch in the invective department, and his loud and distinctive voice made him stand out amid the frequent food fights. He is currently the Website's most followed poster.
The Silicon Investor area devoted to Tokyo Joe and his followers seems to have more than its share of contention, with Park trading insults and ridicule with a rotating cast of antagonists--"Deeber, you are a #@&head"--to the applause of his large amen corner--"TokyoMex is a Prodigy!!!." Until recently, one of Park's loudest and most vitriolic critics ran a thread on Silicon Investor devoted solely to trashing him. But the site's management ultimately took the thread down.
Notwithstanding (or maybe because of) such brawling, Park attracted a following. He says, "People kept sending me e-mails: 'Next time, Mex, you buy something, you let me know.' So this list grew to 2,000 people. So when I bought something, I sent e-mails out and the volume went up and the price went bonkers. I had no desire to make any money out of this thing; it just happened, you know? But then some members started saying to me, 'Mex, you should start charging people, man.'" He did just that, and a business was born.
LAUGHING OUT LOUD
Park currently posts comments three or four times a day on the "Tokyo Joe's Cafe/Societe Anonyme" discussion area at Silicon Investor. He has also flirted with newcomer Raging Bull (www.ragingbull.com), whose managers have been trying to woo him to their site. Park says he's grown tired of the yelling and screaming online. The chief function of the message boards, as far as he is concerned, is to serve as advertising for his other enterprises. The real Tokyo Joe action can be found in his e-mail to Societe Anonyme members--about a dozen a day ranging in content from recycled news to specific stock picks and price targets--and in his private online chat room.
One afternoon in February, for instance, Park was online in the chat room under the name TokyoMex, with about 200 of his followers crowded around him in cyberspace like eager yeshiva boys encircling a learned if sometimes irascible rabbi, alternately flattering him, joking with him and peppering him with arcane questions. Park, tapping away from behind his Level Two screen at home in Manhattan, had written earlier that he had received a tip from a reliable source that there would be news coming on PC Quote Inc., a company that retails market data via satellite and over the Internet.
At about 1:15 p.m., one of his members piped up to ask when the news was coming.
Park shot back: "How the hell do I knwo [sic] when... what am I a messenger?... its coming soon!"
Another member wrote: "I always thought you were a messenger--I'm crushed!"
A third chimed in: "TM...can you tell me when my niece will have her sixth contraction? She's pregnant and the doctor wants to know."
Yet another added: "I don't think TM should answer these questions...until he tells me if I should lighten my hair."
TokyoMex himself responded: "lol"--which means "laughing out loud" in cyberspeak.
Park says he decides which stocks to hype to his members based on information he gets from public sources: newspapers, CNBC, the array of market data available to anyone over the Internet. "But," he adds, "I do have some tremendous resources through the [Societe Anonyme] membership. So we do get some information that comes out before the rest of the world knows about it." Park says, for example, a member tipped him off to J.C. Penney's bid to buy Genovese Drug Stores last November, four days before the news became public. "So we got in at $25.25," he says. "We sold at $30, $31."
"WHAT AM I? A CHARITY?"
Occasionally, there are incidents that provoke sniping on the Internet and bring questions that Park would just as soon not hear. He insists--angrily and repeatedly--that his operation is strictly aboveboard, but he does admit to a practice that should give pause to anyone considering taking his advice: He will sometimes take a position in a stock and then recommend it to his Societe Anonyme and anyone else who will listen via his posts on the Web. Then, when buying drives up the price to his satisfaction, he sells.
This, Park says, is okay as long as he's honest about it. "Everybody knows that I'm buying before you buy, and I'm selling when you're buying. Otherwise, what am I? A charity?" Indeed, his Website does carry a lengthy disclaimer, and his e-mail to subscribers often states how many shares he owns of a particular stock and at what price he bought them. Which is more, Park likes to say, than you can expect from most stock pickers: "[With] day-traders and any other kind of scam hypesters--including myself, sometimes--when they say 'buy,' that means they already have a position in the stock, including Peter Lynch, including Abby Cohen."
But if Peter Lynch or Abby Cohen or any stockbroker or money manager bought a stock, hyped it and sold their own shares into the demand they'd created among their own clients, it would be what market hands call front-running--which is not only bad manners but also a flagrant violation of federal securities law. Can what Joe Park does be legal? Probably, say securities law experts, including one senior federal enforcement official who spoke privately. According to Ira Sorkin, a leading New York City defense lawyer and a veteran of both the SEC and the U.S. Attorney's office for the Southern District of New York, a tipster like Park is likely in the clear as long as he discloses his holdings to his subscribers. Because he is neither a registered securities dealer nor a certified financial adviser, Park is for legal purposes essentially a publisher of financial information. As a result, he has all the protections of the First Amendment and is subject to none of the regulation to which financial pros must submit. Which means that anyone following his advice has no legal right to expect Park to be bound by a fiduciary duty to anything but his own wallet. "Anyone who wants to make an investment on that basis," Sorkin says, "God bless them."
Besides being legal, says Park, his tips don't offend his subscribers because most of them are doing quite well, thank you. Indeed, if a few sessions in his chat room are any evidence, Park's Societe is composed mainly of satisfied customers. Danny Chan, an Indiana University finance major, says he has been up as much as $57,000 this year day-trading, partly due to Park's tips. He writes in an e-mail message, "T-Mex is the man.... For 100 a month T-Mex is a bargain."
Park says he has received no visits or inquiries from regulators, although he admits, "I'm surprised I have not." But he doesn't seem particularly worried. Sipping Scotch and chain-smoking Marlboros one recent evening in a genteel bar catering to a U.N. middle-management clientele a few blocks from his home, he relaxes after a long day in front of his screens. A dapper older man whom Park describes as a foreign diplomat thanks him for a recent stock tip. Meanwhile, Park sits awaiting the arrival of some potential business associates whom he plans to wine and dine at a Manhattan geisha house (an entirely respectable and elegant Asian business practice, the well-traveled Park is quick to point out to a provincial American). He talks big--about starting his own mutual fund, about writing a book about himself ("It's the American dream"), about taking his operation public one day. Nothing seems out of reach.
A year ago, he says, he had $20,000 in the market. Now he is up more than $1.6 million. Life is good, and Park is feeling expansive. He takes a moment to reflect on what he, his followers and his imitators mean to the markets and to investing. In a word: the future. If that's discomforting, he says, smiling beatifically through a nimbus of cigarette smoke, get over it: "We're the new blood, man."
Another very good article on him... he reminds me of Maui, in a good way - banned of silicon investor for being insulting.
'Tokyo Joe' Park Says SEC Charges Ignore His Blunt Warnings
January 13, 2000 By Neil Roland Bloomberg News
Internet pundit 'Tokyo Joe' Park says federal charges that he manipulated stocks and misled investors about his personal trades are baseless.
Park, in his first public comments since the Securities and Exchange Commission filed civil fraud charges against him last week, said he routinely sends cautionary e-mails to his 3,600 customers. While his language may sometimes be crude and insulting, Park said his clients understand that he owns every stock he recommends and plans to sell his shares quickly.
"I tell them daily that I'll be sitting on their fat, greedy faces if they jack up the prices without first checking the fundamentals,'' said Park, while sitting in front of five computer trading screens and a pastel self-portrait in the office of his Manhattan apartment.
Park said the SEC's Jan. 5 suit hasn't hurt his business, with 78 new customers enrolling since the complaint was filed.
SEC enforcement director Richard H. Walker said Park's disclosures weren't frequent enough, and deceived investors. Park, 50, whose real name is Yun Soo Oh Park, is one of the best-known stock pickers on the Web and the most prominent Internet operator to be charged by the SEC.
Park has a subscription-based e-mail club called Societe Anonyme that charges as much as $200 a month to clients in 18 countries, including Russia, Dubai and New Zealand. He has made about $10 million from fees and investments in the last two years, which has raised his total assets to about $15 million, he said. He posts as many as 20 messages a day on his TokyoJoe.com Web site, named after a London nightclub he used to frequent.
Take Your Money Clad in a white sweatsuit, Park said his disclosures advise clients to avoid buying a stock right after he recommends it because they will push up its price at a time when he will be selling. He gave Bloomberg News a cautionary Dec. 16 e-mail that he sent to clients. It said: "I will buy before you, I will sell into your greed, and take your money, every single time.''
The SEC, which has been cracking down on questionable Web stock sales for 18 months, accused Park of recommending five securities without telling investors that he owned them and planned to sell after his endorsement. His recommendations led to spikes during which he sold his own shares, the agency's Jan. 5 lawsuit alleged.
For example, he recommended Videonics Inc., a video equipment designer, on Feb. 17, 1999, without disclosing his personal plans, the suit alleged. Its stock rose to $1.37 a share that day from 78 cents the day before, during which Park sold some of his shares. He sold more of his shares the next day, when the stock rose again to $2, the complaint contended. It fell steadily to $1.09 over the next week.
Investment Adviser? The SEC suit, filed in Chicago federal court, alleged Park made $1.1 million in fees between July 1998 and June 1999 while acting as an investment adviser. "He misled and defrauded customers by failing to make certain routine disclosures and disclaimers,'' Walker said in an interview.
Although Park has a disclaimer on his Web site that says he is not an adviser, the SEC contended that in effect he is, and thereby incurs disclosure obligations. The agency is seeking fines and refunds.
A legal expert said the SEC's claim that Park is an investment adviser "is sending shock waves'' through other Web stock pickers. These pundits fear that they may have to register with the SEC, which would subject them to closer oversight and new restrictions, if the agency prevails in this case, Columbia University law professor John Coffee said.
Comment From Clients Many of Park's customers expressed support for him, saying he routinely disclosed his trading plans while urging them to research a stock and not act hastily. Bloomberg News contacted several customers after Park invited his members to comment on his disclosures in e-mail to this news organization.
"He is best - I will stand up for him, and his integrity,'' Jennifer Gould of New York City wrote in an e-mail.
Another, Paul Armstrong of Toronto, said in an interview, "He's an astute student of the market who's never engaged in any deception.'' Armstrong said he has made about $500,000 in the last two years as a member of Park's club.
Others, however, complained that, while Park initially discloses his purchase of a stock, he doesn't keep investors up- to-date about whether he remains an owner or has sold.
"I wanted to take my cues from his trading, but was often confused about what to do because he'd keep pushing a stock without saying whether he was in or out,'' said former customer Chris Perry of San Luis Obispo, California.
Condos, Burritos Park said he emigrated to the U.S. from South Korea in 1990 after working as a marketing executive for multinational companies in Japan, England, and other countries.
He invested in 10 condominiums in Seattle before starting four burrito restaurants in New York. He says he has U.S. citizenship.
Park began trading his own stocks in 1997 after losing money investing through a traditional broker, he said. He attracted a following by posting stock picks on the Silicon Investor message board and Raging Bull.com Web site, and set up his own Web site in June 1998.
Opera music plays constantly in his office, but it doesn't calm Park as he reflects on the SEC suit. "I'm determined to fight this because I've done nothing wrong,'' he said in a raised voice. He said he is seeking to restore his reputation and uphold principles of Internet commercial freedom.
"When a tiger dies, he leaves his skin, and when a man dies, he leaves his name,'' Park said.
Empowering Individuals Park said his challenge to the SEC suit will advance a larger cause that he called "the empowerment of individuals to make their own financial decisions.'' The SEC, he said, "wants to use me as an example to develop Internet case law that suits traditional brokers." He said he wants to comply with SEC guidelines but that few have applied to Internet stock picking.
His attorney, Ira Lee Sorkin of New York, said that the SEC suit makes claims that could impinge on Park's freedom of speech. Park need only disclose generally - as he does on his Web site - that he may own shares of stocks he recommends, Sorkin contended.
A disclaimer on Park's site says that he "may have positions in some of the stocks mentioned on this web site or in e-mails.'' He said he has posted this disclaimer since setting up his Web site.
Sorkin said rules applying to the Internet may be more lenient than those that involve newsletters and phone calls, and that the SEC is trying to shore them up through an enforcement case rather than regulation.
Fraud Charges Central Coffee, of Columbia University, said that none of Park's legal defenses will carry weight if the SEC can establish that he misled investors.
"There's no First Amendment protection for fraud, whether you're doing it in a newspaper, over the phone or on the Web,'' he said.
The SEC suit made other allegations, including that Park failed to disclose a 100,000-share gift he received from DCGR International Holdings, a Florida cigar maker, to promote its stock.
Park acknowledged receiving the shares, but said he got them after telling customers that the stock was a low-risk investment at eight or 10 cents a share. "That wasn't a recommendation, and beside, I couldn't disclose something I didn't have at the time,'' he said.
Donated Proceeds Park said he sold the shares the same day he received them in July 1998, and donated the $4,800 proceeds to his daughter's private school. He said he then urged his customers to sell the stock.
The SEC also accused Park of exaggerating his advertised investing performance by as much as 2000 percent on at least 30 stocks. "It's possible I made some inadvertent human error,'' Park said. He defended the price data used in these calculations, which the SEC said was inflated.
Park, summarizing his investment philosophy, compared investors to surfers.
"They should be like surfers who study the waves all day long before picking one to ride, rather than like schmucks who ride every wave, big and small, and probably drown,'' he said.
Park, who said he is fluent in six languages, said he speaks bluntly to customers "to try to change their lives.''
'I Spit on Them' "I slap them, I spit on them, I kick them out, I don't give a s--- about their $100 or $200 a month,'' he said. "Some people are thick, they don't get it.''
He said he was banned from the Silicon Investor bulletin board last year for "abusive and insulting comments.''
Park said he plans to start a hedge fund later this year, and has 88 investors who have already committed $50 million. He also is buying 10 percent of a new online brokerage that is due to open in the next few months with the accounts of 1,200 of his members.
Contanct Neil Roland in Washington at (202) 624-1868
These are old articles ORkiter and if you dig into it there is more to him then all the SEC cases. the article above gives a good idea.. ""I slap them, I spit on them, I kick them out, I don't give a s" lol
btw what sparked my interest was the fact that he now charges $1k a month where it used to be $300 a month or so ago.
He is the best. I did not work for him. We worked together. He realized talent...but I was like one of those surfers...I rode the bull market out to Maui. You have to remember I told him and everybody in that chatroom the great bull was dead (suck off all you perma-bears who think I am always bullish). I moved to Maui in June 2000. We parted ways. That is that.
I said it before and I will say it again. SeoulJoe is one of the best STILL. Is his room worth $1000 a month? f*** YEAH!
well i hope he is different from the way that 1st article that Lafayette described him, i am sure he has adapted since those dotcom days because otherwise he woldnt have people paying him $1k a month for hype
This guy was on the "TODAY" show with D. Trump stating that oil was still going to 100. He is calling for a collapse in the dollar. Just another liberal thinking he is smarter than the market itself. Anyone can make a prediction...just laugh.
Success is a State of Mind - - Tommy Bahama Profits always take care of themselves but losses never do. The speculator has to insure himself against considerable losses by taking their first small loss. - - Jesse Livermore The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, nor for the get-rich-quick adventurer. They will die poor. - - Jesse Livermore
If the oil-producing nations stop accepting the dollar and switch to gold or the Euro, things will definitely get sticky. The world might be tipped into a global recession and possibly even a depression.
For now, though, this funny money game continues. How long will it last? I don't know. I do know that throughout history, all paper money has eventually come back to its true value, which is zero. That's when the game truly ends, and a whole new cycle of pass the buck begins.
this guy is insane!!!
Success is a State of Mind - - Tommy Bahama Profits always take care of themselves but losses never do. The speculator has to insure himself against considerable losses by taking their first small loss. - - Jesse Livermore The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, nor for the get-rich-quick adventurer. They will die poor. - - Jesse Livermore
I was just watching the late night version of the Conan O'Brien show (they run last weeks episode at 330am) and right after it was over I heard the theme music for the 'Today Show.' I just stopped everything I was doing and turned around searching for my controller. I HAD TO CHANGE IT. It was like second nature.
Logged
- banned of silicon investor for being insulting.
Male