Tulip Contest & Participants Make Dow Jones Tape:"A New York fund manager wants to know when he should short Internet stocks and he is willing to pay $5,000 for the right answer.
Dow Jones Newswires -- December 23, 1998
Fund Mgr Holds Online Contest To Predict Web Stock Drop
By Johanna Bennett
NEW YORK (Dow Jones)--A New York fund manager wants to know when he should short Internet stocks and he is willing to pay $5,000 for the right answer.
Known to members of the popular financial Web site Silicon Investor (http://www.techstocks.com )only by his alias, "Auric Goldfinger," the mysterious online figure is sponsoring a contest, offering a $5,000 cash prize to anyone who predicts not only when the Internet bubble will burst but also the reason for the plunge.
For Goldfinger, the right information is valuable.Although he claims not to have any short positions in Internet shares, Goldfinger, who refused to reveal his identity when interviewed by phone, has shorted Web stocks in the past.
Investors who sell securities "short" borrow stock and sell it, betting the price will decline and they will be able to buy the shares back later at a lower price for repayment to the lender.
"Some of the people are smart out there," Goldfinger said. "If they come up with an idea that makes sense, it will help my trading. I am just trying to ferret it out. And that's worth $5,000."
The contest rules are fairly simple. Entries must be posted on the message board, explaining in 50 words or less when and why an index of five Internet stocks - America Online Inc. (AOL), Yahoo!Inc. (YHOO), Amazon.com Inc. (AMZN), eBay Inc. (EBAY) and CMGI Inc. (CMGI) - will fall 40% for five consecutive trading days. A panel of three judges will pick the winning entry.
The notion has attracted attention. Goldfinger's message board on Silicon Investor, entitled "Tulipmania Blowoff Contest," has drawn more than 130 responses since it was posted Monday afternoon, making
it one of the site's most popular message board.Little wonder.
Web stocks have been surging for the better part of the last month, defying all explanation as companies like Amazon.com, AOL and eBay continue to hit unprecedented highs. The situation has confounded Wall Street and driven away short sellers, for whom Web stocks have
always been a popular target."No one could have stayed short on these stocks for the last three months and had any equity left," said
one hedge fund manager. "The short community has figured they can't get in front of this freight train."
That doesn't mean others aren't going to try.Among the contestants, Kevin Podsiadlik predicted shares will fall on Jan. 4. He cited a number of factors, including the belief that fund managers are holding onto Web stocks as "window dressing for their end-of-the-year prospectus and will then dump their shares."
James Gottesman agreed with the Jan. 4 prediction, explaining that "e-commerce sites are crazy" and people are holding the stocks for tax reasons to avoid realizing capital gains this year."I bet it will start early in the morning," Gottesman wrote. "By the end of the week, Internet stocks will be back to reality."
Meanwhile, "Jorj X. McKie" predicted the tumble will begin Feb. 1 amid a selloff caused by widespread credit card fraud due to "ineffective security measures" by online shopping sites."
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