Uncle Frank *OT* Perhaps we can all ask Dr. Wall Street as he appears to have all the answers!!! <gggg>.
LOL,
John
July 10, 2000
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Heard on the Street
Paging 'Dr. Wall Street':
Teen Prescribes Stock Gems
By JEFF D. OPDYKE
Staff Reporter of THE WALL STREET JOURNAL
SEATTLE -- As a stock-market analyst, Justin Hendrix has a Midas touch. He predicted the rise earlier this year of Finisar, and its stock surged 85% in 20 days. He warned investors away from Terayon Communications Systems just before the company's shares plunged to less than $50 from $130.
Now, if he could just keep his bedroom clean.
Mr. Hendrix isn't your ordinary Wall Street analyst. He's just your ordinary teenager, a spike-haired, 19-year-old freshman at Seattle University, with a messy bedroom and a summer job maintaining ice-making machines at local supermarkets.
But on nights and weekends, Mr. Hendrix morphs into his online persona: "Dr. Wall Street." Holed up in a small computer room off the kitchen of his parent's house in Seattle's leafy Magnolia neighborhood, he quaffs Cokes and trolls the Internet for hours, researching companies, scribbling notes on random scraps of paper, and publishing his investment "reports" on Web site iExchange.com.
Some clients insist his age is irrelevant. The young forecaster "is doing a good job," says John Wineski, a 56-year-old investor in Mahopac, N.Y., who used a report Dr. Wall Street published on Plug Power as a starting point for an investment in DTE Energy, which partly owns Plug Power. "His age doesn't scare me at all," Mr. Wineski says. "It's his numbers that matter, and they're good."
Mr. Hendrix's rise comes amid broad discontent with traditional Wall Street research. Many analysts these days actively promote stocks of corporate clients, and it's not surprising why: If Wall Street analysts aggressively tout a company's stock, their firm stands a greater chance at an advisory role, and fat fees follow for the firm and analyst. (Unlike Wall Street analysts, Mr. Hendrix gives away some of his reports; others he sells for between $1 and $3. He has earned about $2,000 since October.)
Now, amid the Internet's democratization of Wall Street, ordinary folks are publishing, and often selling, their own research. First it was electronic bulletin boards and chat rooms offering investment counsel, or what passes for it. Then Web sites such as Motley Fool and Raging Bull attracted investors seeking advice. Motley Fool last month launched a new site, Soapbox.com, where investors with specialized knowledge -- such as a bioengineering expert opining about biotech shares -- hawk industry reports online for between $5 and $40.
At iExchange, more than 8,000 everyday analysts post "buy" and "sell" recommendations on stocks big and small. Some of the research is free, and consists of little more than the cursory "AllState [sic] Corporation is trending." Others are detailed analyses costing as much as $80. The average price is about $5.
The average return is larger. The top 1,500 analysts are up an average of about 50% since the site opened in October, according to iExchange, which tracks every recommendation and publishes the results. (The entire knot of its prognosticators is up just 7.5%.) Analysts set target prices and dates for stocks, and iExchange rates them on their accuracy and performance. Comparing results with stock-market indexes is nettlesome because analysts' picks may be open only for a few weeks or days; iExchange doesn't compare how a similarly timed investment in an index would have fared.
Doctor's Orders
Six recent stock picks by Justin Hendrix, a.k.a. Dr. Wall Street
Price
Stock Recom-
mended When Recom-
mended Target Current
Purchase-
Pro.com June 12 $32.88 $100.00 $35.75
Radcom Ltd. June 10 7.62 25.00 6.00
Foundry Networks June 10 110.88 300.00 119.81
Avenue A Inc. June 8 18.69 50.00 7.25
Ventro Corp. June 8 26.47 100.00 17.69
ImageX.com June 8 7.19 15.00 5.94
But here's what has gone largely unnoticed: Some reports are penned by market "mavens" who were in diapers during the 1987 crash. Among them is "P. O'Keefe." The iExchange analyst bills himself as "CEO of Patrick's Stock Market Services," and his calls on Cisco Systems and Charter Communications have performed well. What investors don't know: He's 15 years old, home-schooled in Philadelphia, Miss., and isn't certain if he wants to be a mutual-fund manager, Internet entrepreneur or professional baseball player when he grows up.
Some of these fledgling analysts recommending go-go stocks can't fathom quaint investment ideas such as "value" investing. "I had one teen who called to ask: 'OK, what's a value stock, and why would anyone ever want to own one?' " says Steve Lipson, an iExchange spokesman. "You don't know whether to laugh or be scared."
Perhaps this was to be expected. The Internet has become the symbol of a new investment paradigm and the cultural icon of a generation adept at exploiting technology. But this is Wall Street, after all, where analysts usually have years of experience scrutinizing balance sheets and corporate operations. If nothing else, they typically don't have a life-size cardboard cutout of baseball slugger Ken Griffey Jr. in their bedroom, as does "Dr. Wall Street."
The young Mr. Hendrix came by his market talent thanks to encouragement from his older brother and a gift from his father. Back in junior high school (just seven years ago) his Dad gave him $2,000 to invest. The young Mr. Hendrix bought hometown favorite Microsoft and quickly quintupled his money. (He dumped some of the profit into Amazon.com and watched it quadruple in just weeks. Both are on his list of recommended stocks today.)
His brother introduced him to the Value Line Investment Survey at the library, gave him a copy of Peter Lynch's investing manifesto, "One Up on Wall Street," and showed him how to cull market-related data online. Dr. Wall Street was hooked. He worked as an intern for the family's stockbroker, Stephen Moe, in the local Merrill Lynch office, and spent much of the time quizzing Mr. Moe about the market. "He was just way more into it than any other intern I've had," marvels Mr. Moe.
When he heard about iExchange last fall, Mr. Hendrix logged in, signed up and began pumping his own research reports onto the Internet. Since then, more than 5,200 people have read Dr. Wall Street's writings, according to iExchange's running tally.
The 63 stock picks he has published, and which have since been closed out, are up an average of 65%, ranking him as one of iExchange's 15 best analysts, based on average annual return. His 58 currently open picks are down 30% with the recent sell-off in technology. His focus is largely tech-centric, though he has recommended some financial issues as well. His best pick: Commerce One, a business-to-business e-commerce company; a $10,000 investment based upon the good Doctor's recommendation turned into $51,438.35.
He was leery early on of flagging his age. And he says he specifically avoided names like Wall Street Kid "because I didn't want older people to think, 'Why am I buying advice from a 19-year-old,' " he concedes. He says he wanted something "that sounded more professional, like a doctor." Thus, Dr. Wall Street.
Followers noticed his performance and have begun e-mailing him for personal advice. Many inquire about his credentials. When he mentions his age, Mr. Hendrix says, "They usually say: 'Oh my God, I thought you were older.' "
He's quick to point out that while older analysts have experienced more, "this is the new economy, and you can learn as much about Wall Street on the Internet in two years as you could in the 10 or 15 years it used to take others." His age, he says, "helps me better understand technology stocks because I grew up with computers."
His fans are happy to hear from him. Chris Anderson began following Dr. Wall Street several months ago and receives e-mails every time he posts a new report. He bought Intel on the Doctor's advice, "and made money" says Mr. Anderson, who works for a Big Five accounting firm in Atlanta raising venture capital and advising on mergers and acquisitions.
"A 19-year-old," he says, "is probably more adept at understanding technology than an old-timer like me." (Mr. Anderson is 31.) Still, when he hears that Dr. Wall Street has spiked blond hair and is crisscrossing Seattle repairing ice-making machines at grocery stores and refitting them with plastic bags, he groans:
"I can't believe I'm buying investment advice from the ice-machine repair guy." |
