March 13, 2000
Barber's Tech-Stock Chit-Chat
Enriches Many Cape Cod Locals
By SUSAN PULLIAM
Staff Reporter of THE WALL STREET JOURNAL
DENNIS, Mass. -- "You making money, Billy?" William Allen asks as he saunters into Bill's
Barber Shop around 1:30 one quiet midweek, midwinter afternoon.
William Flynn, who is busy clipping a customer's hair, indeed is making money. Lots of it. But
Mr. Allen isn't talking about the $10 that Mr. Flynn pockets for a haircut. He's talking about the
barber's technology-laden portfolio of stocks.
"Would you look at Abgenix?" says Mr. Flynn, trimming a
customer's eyebrows and glancing at the television tuned to
CNBC business news. Abgenix, a biotechnology company, is
rising (and will end the day up 8.5%). Ditto for Vasogen, a
Canadian biotech (up 14.7% on the day), Tricon Global, a
restaurant franchiser (3.7%), and Infinium Software, a
business-software company (3.5%).
"Market's having a nice run today," Mr. Flynn notes.
Neither sports, nor politics -- even in this election year -- are the
topics of choice at Bill's Barber Shop. Just about any time of
day, stocks are the subject -- where they're going, which are hot
and which are not, and of course, how much their owners have
profited from them. And not just any stocks, but in particular,
tech stocks.
The scene in Bill's Barber Shop, repeated in countless locales
across the nation -- different settings, different characters, but all
caught up in the highflying drama of the tech sector -- helps
explain why the Nasdaq Composite Index powered past the 5000 mark last week -- little more
than two months after it first topped 4000.
"I'm thinking about buying a Janus fund," says Mr. Allen, the retired owner of a small
power-equipment company, as he sinks into a chair, joining the others who wander in to pass an
hour or so, as they do many days, whether or not they need a haircut.
Larry Street, a local bookkeeper, stops by for a trim. He's bought Coyote Technology, a
telecommunications company. "I'm hoping for a split," he says.
Joe O'Keefe, who makes his living painting and wallpapering for affluent summer residents,
doesn't need a haircut. He wants to talk up Network Appliance, a data-storage company. "It's
just like EMC, only smaller," he says. EMC, a Hopkinton, Mass., data-storage company, is one
of the group's favorites, thanks to Mr. Flynn's recommendation.
'If You Miss This One ...'
Most of the people who gather at Bill's hold jobs in the old economy, but none are buying
blue-chip industrial stocks. "You get three or four times in your life to make serious bucks,"
says Ron Danforth, owner of a local direct-mail business and a regular at Bill's Barber Shop.
"If you miss this one, you're crazy."
The conviction that the party is far from over is part of the reason why, despite experts' constant
warnings about a speculative bubble, technology stocks soar ever higher. "I don't think anything
could shake my confidence in this market," Mr. Allen says. Mr. O'Keefe adds: "Even if we do
go down 30%, we'll just come right back."
Not long ago, few of these people had any interest in the stock market. "I grew up in a
working-class neighborhood in Boston," Mr. O'Keefe says. "I always thought stocks were for
rich people."
It's the off-season, when the tourist shops downtown in this
Cape Cod vacation spot are empty and most of the beach
homes are shuttered for the season. Many of those who
remain year-round are retirees and owners of small
businesses that cater to the summer crowds. They have
plenty of time on their hands to stop at Mr. Flynn's
cedar-shingle shop, where an American flag snaps sharply
outside the window on this bright afternoon.
Many of the men credit the 60-year-old Mr. Flynn for
introducing them to technology stocks. He has been cutting
hair here for 30 years; for the past 20 of those years, he has
been buying stocks and mutual funds. His interest in the
market comes partly from his great-grandfather, who was a
barber in Framingham, Mass. "He used to tell me to put
10% aside each month and put it into the stock market," he
says.
In the 1987 crash, Mr. Flynn's $50,000 investment in the
stock market was wiped out. "I bought $16,000 worth of
Coleco Toys on margin and invested another $10,000 in a
small U.K. concern," he says. "My wife told me at the time
she wished I hadn't done that."
After Coleco's shares collapsed, he got a margin call he
couldn't meet. "I didn't really understand at the time how
margin worked," he says.
Undeterred, he soon began investing savings from his
business, along with what his wife, Jean, could set aside from her salary as a secretary at a small
insurer.
Since 1991, Mr. Flynn, a portly man with a handlebar mustache, has invested $100,000 in
stocks and watched it grow to $600,000. His picks read like a caption history of the
technology-driven bull market: America Online, Yahoo!, Amazon.com and the like, plus an
assortment of smaller biotechnology and penny stocks.
He does some trading online through Datek, but he handles most of it through his broker at
Dean Witter in Boston. His picks come to him the populist way: word of mouth. He first
bought EMC on the recommendation of another barber in a nearby town. He picked up
Abgenix on the advice of Mr. Danforth, the owner of the direct-mail business. Infinium was the
inspiration of Michael MacDonald, owner of a local restaurant.
Lately, EMC is the star of his portfolio. He first bought the stock, in 1995, at around $6.75, on
a split-adjusted basis, and it has soared to $130 after two splits. Now, EMC accounts for about
half his portfolio, and he still thinks the price will triple in the next three years. Then, he figures,
his portfolio will be worth enough to let him retire and live comfortably on interest income.
"Somebody else can cut hair then," he says.
Until then, he plans to continue collecting and dispensing his brand of market wisdom on the
barber-shop floor. "I'd say I've put 100 people into EMC," he says as he administers a buzz cut
to a teenager.
Rick Smithson, owner of the gas station down the street, bought EMC shares on Mr. Flynn's
advice. At the Chinese restaurant nearby, the waiter owns EMC, too. Rick Capobianco, the
Maytag dealer in town, bought some shares a few weeks ago after months of cajoling by Mr.
Flynn.
"That guy?" Mr. Flynn sighs, pointing to a customer in the parking lot who has just left his
shop. "He had $5,000 set aside two years ago, and I told him to buy EMC. Would've been
worth $18,000 right now if he'd have listened."
Mark Mercurio, a Vietnam veteran who now runs a residential lawn-sprinkler business, says he
bought his first stock -- EMC -- last May after Mr. Flynn convinced him he could make in a
matter of weeks what it would take him all year to earn on a $10,000 certificate of deposit he
and his wife had bought. "I never gave the stock market a thought," Mr. Mercurio says. "Didn't
know anyone who did." After a stock split, his initial investment of $4,700 has nearly tripled in
value.
Mrs. Flynn, whose office is two doors down from Bill's, stops by for lunch. Heating up a bowl
of noodles while Mr. Flynn pulls a sandwich from a brown bag, she concedes that her
husband's big bets on technology make her queasy sometimes. "I'm a little nervous," she says.
"I try not to pay too much attention to it."
Since the end of January, the value of Mr. Flynn's holdings has swung $100,000 in either
direction -- first down, and more recently, up. Part of the decline at the end of January was the
result of a plunge in Qualcomm, which Mr. Flynn bought near its peak on a day when it split its
shares.
"It's hard to stay bullish when you're down $100,000," he says. "I was a little nervous. I had
trouble sleeping that night thinking about it." He vowed to hold his 500 Qualcomm shares,
which he bought at about $170 each, until they hit $270, but he sold them a week ago at a total
loss of about $8,600. He put the remainder in Abgenix.
Overall, though, he's obviously more bull than bear. "There was that bad stretch a little while
back," he says. "Guys called me up and said, 'What do I do?' I told them, 'Buy more.' " And
should EMC take a big tumble, he says, "sure I'd feel bad, but I have a strong conviction it
won't."
Indeed, Bill's Barber Shop has little use for the faint of heart. Mr. Capobianco, the local Maytag
dealer, says he's "terrified of technology. EMC's a strong company, but who's to say some
company won't come around with a better deal?"
"You want a guarantee?" Mr. Flynn shoots back. "Go buy a muffler."
Write to Susan Pulliam at susan.pulliam@wsj.com |
