** Book Extract featuring Tokyo Joe Park
The following was scanned (by permission) from the book "Scam Dogs & Mo-Mo Mamas; Inside the Wild and Woolly World of Internet Stock Trading" by John Emshwiller. I've proofed the text as best I can but I don't claim to have caught all scanning errors. I'm not getting compensated for posting this; I just thought people here might find it interesting. Anyone wishing to know more information should check out the following:
amazon.com
shop.barnesandnoble.com
Today's selection is from the end of Chapter 2 and the beginning of Chapter 3, and features Joe Park. Tomorrow I'll post Chapter 9 which is about Tony Elgindy (Anthony@Pacific).
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When the markets close, Park is ready to relax. He pours himself a cognac and fills my request for a beer.
As we sip, I spend some time looking around the long and narrow living room. A piano stands against one wall. Nearby is a large globe. Next to Park's desk is a small collection of books, a mixture of tomes on stock trading and classics by Kipling, Tolstoy, and Shakespeare. Photographs and paintings adorn the walls.
Park points out several paintings that he did in his younger days as a would-be Gauguin. There is a painting of a nude woman. There is a self-portrait in ink and a multicolored painting of a man being chased by a woman on a horse. "My wife chasing me,' he says with a laugh.
One photograph shows Park on a horse that is jumping over a fence at a riding competition. He is wearing the red-and-white riding outfit of an English foxhunt. Park says he has been riding for years and still takes an occasional canter in Central Park. I also notice on his desk a book touting a golf resort, a sign of Park's current sporting passion.
The rest of what turns into a long evening with Park is largely spent eating, drinking, and ogling. It's my first taste of how Park loves to party, almost as much he loves to play the stock market. Indeed, one of Park's more memorable e-mails, sent out about a month after our meeting, involves both subjects:
"Just got home from a fashion show, the Elitte US ,, model,, Seinfeld ,,Naomi,, Vogue et ak were te judges,, 11 13 14 16 year old girls from Missouri.. California,, Florida,, Yexas,, friggin awesome beautifull and sknny,,, 5 ft 9 in ,,avg,, awesoem., got drunk., with a beautiful balck girl . . . met coupole of rCEOs,, . , . I am too drunk and abd tight., this black girl was like a chocolate cnady , and she liked me,, thank god ,, for my soul ,,I came home alone.. mot like Clinton.. We rock .. got 2 pump and dump lined up ,, byt I think thewse 2 really could go ,,"
That night we go first to Park's old Mexican restaurant on East Fifty-third Street. It's now owned and operated by the woman who had been Park's cook at the restaurant. Park says he gave up the restaurant business when he found he could make more money and have more fun as a full-time Internet trader. Several steps down from street level, the restaurant is small and narrow with a bar on one side and about a dozen tables on the other. The new proprietor isn't wasting any money on air-conditioning. At least the beer is cold.
We move on to dinner and more drinks at a trendy-looking restaurant of Park's choice. By the end of the meal, I'm feeling fired and a little woozy. TokyoMex is just getting revved up.
Since I--or more precisely, my newspaper--pay for dinner, Park insists that I be his guest at the next stop. I've been looking at the next stop as my hotel and bed. But Park isn't easily put off.
We grab a taxi and Park gives the driver directions. Figuring I'm at least as important as the chief executive of Tava, Park directs the cabby to Scores, which no less an authority than Playboy magazine has described as "the country's premiere strip dub."'
As our cab pulls away, Park discovers that his wallet is missing. I extend sympathy and offer to call it an evening. Park won't hear of that. "I have cash," he says, pulling out a wad of cash from his pocket. But what about your wallet, I ask. "I'll deal with it later," he replies as he strides toward the dub.
We enter, and from the greetings he receives, Park has been there before. Through the evening he hands out $20 bills like a man who doesn't want to be forgotten. It is quickly clear why the place gets high ratings from Park and Playboy: the women are beautiful and largely naked. And, oh yes, they dance. Lap dancing seems to be the specialty of the house. Park and I don't get a lot of interviewing done the rest of the evening.
In his profile of TokyoMex, TheStreet.com's reporter recounted asking Park to take him to a place in town where people know him. They ended up at Scores.
The reporter quoted one of the dancers as saying how Park is "very honest and forthright. That's so rare here." Park also has expensive tastes, as TheStreet.com reporter discovers after offering to pay for that night's festivities. When the poor scribbler howls over the $300 bar bill, which includes Park's order of strawberries and a bottle of champagne, TokyoMex responds, "Relax, loose up. Don't be so cheap. You can't work all time, invest all time. You have to have a life, you have to have good times. You have to have stories to tell."
As Park and I say our drunken good-byes--at least mine are drunken--it seems dear that TokyoMex has plans for plenty more stories from the new frontier of stock trading. But I also can't help wondering what kind of ending these tales would have. Would he find a permanent stock-trading success or a defendant's chair in some federal courthouse?
Certainly Park is piling up enemies, with more waiting in the wings. Already, Ga Bard has attacked him. Big Dog has invaded his turf. And still coming is Park's most dedicated and dangerous foe, Anthony@Pacific. Anthony doesn't merely want TokyoMex banished from cyberspace. He wants him put behind bars. Some people believe he just might have the muscle to get his wish--though he might go to prison, himself, first.
One of the things that makes Park a magnet for enemies is his great number of fans. In cyberspace, like other dimensions, your ability, to generate foes tends to be directly proportional to your ability to generate followers. And Park has a whole Societe of them.
CHAPTER THREE
IN JANUARY 1998, Park formed Societe Anonyme. For a time, it was "Anonym," sans "e." But Park later explains that was just an early spelling error.
Societe Anonyme, SA for short, was formed at a time when the stock market was coming off another strong year. The Dow Jones Industrial Average ended 1997 over 7900, some 20 percent higher than where it began the year. While not quite in the league of the all-time one-year record rise of 81 percent in 1915--when the DJIA was still a tadpole at 99--the 1997 gain was well above the average annual increase for the Dow over its history.
Of course, investors didn't get through 1997 without a few burps along the way. At one point, the market topped 8,000. Then, on October 27, the Dow plummeted 554 points, the biggest one-day point drop in history. (On a percentage basis, however, it was still well behind several whoppingly bad days of the past when the DJIA provided a smaller denominator.) The next day, October 28, saw, what at the time was, the biggest point gain ever, as the Dow bounced back by over 337 points. For people who like big rollercoaster rides, the stock market in 1997 was amusement park heaven.
Possibly spent by the gyrations of 1997, some forecasters were taking a cautious view of 1998. For example, a December 28, 1997, outlook piece in the Washington Post carried the headline "Several Obstacles Could Slow Stocks' Torrid Pace Next Year, Analysts Say." The Post article listed several potential problems looming over the markets, ranging from the Asian economic crisis to questions about the continued growth in the profits of U.S. corporations.
Plus, the stock market had been going so strong for so long that at some point it had to take a breather, the Post suggested. The story noted that "investors with a diversified portfolio have doubled their money since the beginning of 1995- Never before in the 200-year history of U.S. stock investing has there been such a run, according to market historians."
Joe Park, for one, planned to keep the run going. At least for him.
Societe Anonyme was integral to Park's plans for a jolly 1998 and beyond. For him, its creation was a logical extension of what he had been doing. Besides his discussion-board postings, Park was already sending out e-mails with his thoughts on stock trading. Anyone who contacted him could get on his e-mail list. By the beginning of 1998, the list contained 2,000 names, he says. So he decided it was time to organize them into something more cohesive. He chose the organization's name for a simple reason: he didn't know the people who would be his members, except by their Internet identities.
Initially, membership in Societe Anonyme was free. Later, Park began charging. By the end of 1999, the fee would be as much as $200 a month.
Some early Societe Anonyme members said they viewed the organization as sort of an online investment club. If so, it was a club that Joe Park planned to swing with some oomph.
"We are here to make money and we take no hostages," he wrote in a sort of electronic mission statement that he posted on the Internet early in Societe Anonyme's life. "We only pick stocks that are sensitive to volume and momentum," he said. "It is easy to trigger momentum and we do not even have the kind of money Soros or Buffet have." (George Soros and Warren Buffett are two of the richest and most famous investors on Wall Street.) And, he added, "regardless of the market sentiment the momentum wins on certain stocks."'
While there would be some longer-term stock investments, the group's primary mission would be "strictly blitzkrieg, quick in and quick out: instant gratification," he wrote. For one thing, there was the "unabomber' to worry about. Park took that name from the infamous mail bomber who wreaked havoc. For Park, a unabomber is an unexpected event that can turn around the fortunes of a stock or a stock market overnight.
He posted a long list of rules, some more like homilies, for Societe Anonyme members to follow. Never send him foolish questions. Never "bullshit" each other. Nor hype a stock. There would be a central "DD (due diligence) committee" of three people to review and research stocks that members suggest for the group to buy. But any suggestions are expected to be well researched by members, who were warned by Park not to share their suggestions widely with others.
"Otherwise we will have every one's ideas running around like a chicken without a head,"
Park wrote.
Park was in some ways, putting out a call to arms. He was certainly going beyond the traditional role of the individual investor or even investor dub. He was going beyond the kind of world that the Gardners sought to create at the Motley Fool. The Gardners' aim was to encourage orderly, long-term investments in stocks. In an effort to keep things orderly, the Gardners banned discussions about the thousands of volatile--and easily manipulated--little companies known as "penny stocks," many of which were found on the Bulletin Board.
With Societe Anonyme, Park was going beyond talk and forging a mechanism for more concerted action. Instead of shying away from go-go little stocks, Societe Anonyme would seek out some of them and try' to affect their price. As Park argued, given the right circumstances and with enough muscle provided by the right societe, momentum wins.
If Societe Anonyme was to be a new kind of Internet army, Park promised it would be a polyglot force, if one not necessarily blessed with perfect spelling.
"Our society is made up of anonymousmous members from all walks of life: students, labourers, lawyers, home makers, investment bankers, Nasdaq market makers, a burrito maker, doctors, truck drivers, Asians, AfroAmericans, Anglos, Italians, Arabs, Jews, etc,"
Park wrote in his SA manifesto.
But whatever their backgrounds, Park set before his members one common, if seemingly outlandish, mission:
"Our goal is for every member to make $5,000 per week day trading."
A quarter-million dollars a year per person could breed a lot of harmony amidst almost any diversity--if the money could be made. Park soon enough began putting his new organization to the test.
In January, Park came across a press release from BAT International. This BAT is not to be confused with BAT Industries, the huge British tobacco conglomerate. BAT International was based in the decidedly noninternational town of Burbank, California. And it was decidedly not giant. Like many small Bulletin Board companies, BAT didn't file public financial statements with the SEC. A later financial statement would show that sales for the first nine months of 1998 were a mere $131,617, which produced a loss for the period of over $925,000.
But BAT had big plans. BAT described itself as an automotive and energy technology company. Among other things, it claimed to have the know-how--in the form of the "Dolphin Pulse Charge Engine Technology"--to produce high-powered car engines that could get more than eighty miles to a gallon of gas. In its January news release, BAT said it was "prepared to offer new ideas to major auto companies.., and we certainly believe they may listen."
Up to then, not many people in the stock market seemed to be listening to BAT's story. BAT shares ended 1997 at under 8 cents apiece.
What caught Park's eye was nestled down a bit in BAT's January press release. It talked of a coming demonstration of the company's new "super-efficient engine." The demonstration, which would involve matching the BATmobile against cars with standard power plants, was scheduled to take place at the Penske California Speedway in Fontana, California, on January 15, 1998. And to believe BAT, it would be a day to remember. The affair was open to auto industry officials, the press, and the public. Invitations had already been sent out to the major auto companies. BAT was "planning to license a whole array of engine technologies to major auto manufacturers, immediately after the demonstration," according to the release. No doubt moguls from Detroit to Tokyo would be standing in line in Fontana.
Park had actually been following BAT for several months, not that he had gotten much satisfaction from the exercise. He owned a few thousand BAT shares, purchased at about 18 cents each. Needless to say, seeing the stock at half that price didn't make for a happy TokyoMex. But unlike the average investor--who would either hold his shares and curse or sell them at a loss and curse-Park saw an opportunity to recover his money and then some.
He figured this announced drive-off between a supposed supermileage vehicle and a run-of-the-mill road car would likely garner some press attention and Internet chatter--particularly if a certain Mexican food maven helped feed the conversation. Such attention just might push up the stock price. "I realized the potential of this," Park tells me later.
One of the first things he did was to call Joseph LaStella, the president of BAT, to find out more about the test. In giant companies, layers of factotums protect top executives and make them unreachable by anyone who isn't an officially anointed VIP. The top executives of many small companies, by contrast, often take calls from shareholders and would-be shareholders. Sometimes they're the only ones there to answer the phone. So, the good news is they will talk to you. The bad news is they might tell you lies.
Park doesn't recall any fibs from LaStella. But, he says, he did come away with the impression that the guy "loves hype."
LaStella remembers talking to Park. In an interview, he tells me that he is always straightforward and factual when giving out information about the company. Park did seem to be supportive of the company, which was a nice change of pace from some of the BAT followers that LaStella says he has encountered in cyberspace.
The company president says that some people on the Internet stock-discussion sites have been impersonating him and putting out "all kinds of information that is wrong. Anything you can imagine is on the chat boards." One poster, he adds, even claimed that LaStella had just been killed by a car falling on him. I don't ask if the purported killing machine was supposed to be Dolphin-powered.
In talking with Park, he didn't seem overly bothered by his impression that the BAT executive might have been a tad too enthusiastic. Indeed, for what Park had planned, a little enthusiasm could be a good thing.
He sent out an e-mail to his members telling them to start buying BAT. He estimates that 300 to 400
of them bought a total of about 500,000 shares the first day and within a few days had accumulated about 1.5 million shares. At the time there were over 70 million shares of BAT stock. {However, roughly half that total was held by company officers and other insiders. Under federal securities law those shares were considered restricted and couldn't readily be sold.)
Park also started talking up the stock on the Internet. Three days before the demonstration, he posted the following message on the BAT discussion site at Silicon Investor. He began with a reference to the company by its stock ,symbol, BAAT?
"Just talked to BAAT..
Last Sat they ran the pre-test at the Burbank Airport..
City of Burbank gave them a red carpet . . .
Bloody car ran 80 miles on a friggin gallon of gasoline . . .
Their license with Mercedes is still in effect and they are coming as well as host of other suto manfs from US Europe and Asia..
It will be a media blitz ,,,
15 th of January is the world demonstration ....
Expect news on this starting very shortly., ."
And in case anyone might have rifled to detect his enthusiasm for the company, Park signed off the e-mail with yet another new moniker. Now he was "Joe Bat."
Joking Joe Bat. In an e-mail discussing which media representatives might or might not be at the car demonstration, Park wrote that
"Al Gore will attend and report back to the White House. Also Pope will reside over the finish."
Park did punctuate those points with a "<g>," which is often used as Internet shorthand to denote a "giggle' (though it also sometimes seems to be used to denote an online growl). Presumably, Park didn't want any readers to take his predictions about A1 or John Paul seriously. Or at least too seriously.
As January 15 approached, Park seemed to be of two minds about the stock. On the one hand, he kept feeding the enthusiasm. In a January 13 e-mail to the BAT discussion thread at Silicon Investor, Park suggested that investors forget about the BAT car getting eighty miles per gallon because he just heard
"that the bloody car din close to 200 miles on a gallon of fuel."
However, he also noted that the price of BAT stock had already risen dramatically. It had reached as high as 47 cents a share. While still not enough for a cup of coffee, that per-share price was nearly six times its 1997 year-end level.
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