Ever Wonder What Happened To That Ornery Critter, ‘The Waaco Kid?’ He’s Baaaack. / FinancialWire®
August 3, 2005 (FinancialWire) (By The Waaco Kid) Every once in awhile someone muses, “Whatever happened to the Waaco Kid?,” that ornery critter who was once the toast of “Low Society” and a stockpicker extraordinare for individual traders – never investors – who were looking for a place to quite literally gamble on from 5% to 25% of their portfolios.
August 3, 2005 (FinancialWire) (By The Waaco Kid) Every once in awhile someone muses, “Whatever happened to the Waaco Kid?,” that ornery critter who was once the toast of “Low Society” and a stockpicker extraordinare for individual traders – never investors – who were looking for a place to quite literally gamble on from 5% to 25% of their portfolios.
The Kid, who got his internet start in the early 90s at SBC’s (NYSE: SBC) Prodigy about the same time as TheStreet.com’s (NASDAQ: TSCM) James Cramer and The Motley Fool, recently returned – more on that later – to guide Investrend in positioning a small portfolio at J.P. Turner into streetTracks Gold Shares (NYSE: GLD) and Health Sciences Group (OTCBB: HESG).
In his heyday, whispered news of what “The Waaco Kid” was buying at tables in the Hamptons would in fact turn heads and hush conversations just as in those old EF Hutton advertisements. Posts on Prodigy and its brash new competitor, America Online, would start out, “I’m a broker with 29 years experience, and I can’t believe I am sitting here telling my clients what ‘The Waaco Kid’ is buying!”
“The Waaco Kid” was a moderated electronic community of several thousand individual traders like The Motley Fool; and its daily summaries, as described in a BusinessWeek feature, contained members’ picks, tips, musings and trading strategies.
“The Waaco Kid” eschewed “investment” strategies. Its motto, “never sleep with a speculative stock,” promoted day-trading to new heights. The Kid found the Fools’ strategy at the time, mostly “hold and hold and hold” through good times and bad a threat to the portfolios of those who held what would later become bubble stocks with “seeming” good stories.
“Waaco’s” strategy also eschewed fundamentals because its members’ picks, after all, were never to exceed more than 5% to 25% of anyone’s portfolio at any time, and were designed for shorter-term gains. Waaco fought for greater disclosures and transparencies and often went to battle with stock promoters when “the Kid’s” members believed that declines in value were associated with pumps-and-dumps.
“The Kid” said that only those with nimble trading fingers, a keen sense of timing, a solid understanding of how financings and non-company events can impact holdings, the stock tools to watch market-makers’ changing positions and the ability to absorb a complete loss should “play” the stock market’s more speculative equities, and emphasized that those holdings should never be more than a small portion of a portfolio.
His members’ choices, all “story stocks” – without excessive regard for fundamentals or technicals – had to meet the 5 “U”s: “undervalued, undercovered, underdiscovered, undertraded, and underpriced.” Not all of “the Kid’s” selections were money-makers, but the vast majority over a several-year period were, and “the Kid’s” (referring to the community) philosophy was always to take some profits and to watch out for scams, some of which would from time to time ride up in a black hat and sow bad intent. The community learned as well as traded, and Waaco always professed to have attended the “School of Hard Knocks,” making the stock market seem like right at home.
Following “The Kid’s” advice to Investrend, the portfolio purchased 350 shares of streetTracks at $42.52 and 5000 shares of Health Sciences Group at $1.09. As of the close Tuesday, the portfolio had gained $760, with $550 of that gain coming from Health Sciences in a 2-day period. HESG closed at $1.20, up another 6.19% from Monday’s spurt, and GLD closed at $43.12, up 0.02%. The portfolio was up 1.41% on GLD and 10.09% on HESG.
If “strictly” following Waaco’s overnight rule, the portfolio could have closed out its speculative Health Sciences holdings on Tuesday with from an $800 to $900 gain on a trading position (notice the absence of the word “investment”) initiated at just over $5,000.
It was touch-and-gold, because as “Waaco” noted, Health Sciences is outright paying for promotion, for example, paying MarketByte LLC, publisher of the OTCJournal.com $25,000 in cash, 200,000 newly issued restricted shares and 200,000 warrants convertible at $0.88 for ongoing “coverage” of the company.
If a company is “real,” why isn’t it paying for independent research coverage instead? “Waaco” asked, knowing that one of Investrend divisions, Investrend Research, provides such a service. “Why is it paying for promotion? Is it for a financing? Won’t its accomplishments speak for themselves? Also, is MarketByte cashing in those warrants?”
A look at the chart, however, indicates that the “promotion” may have been strong enough to overcome conversions of only 200,000 warrants, with the company trading 5 times its average volume both Monday and Tuesday, and if the company’s press releases can be believed, it has been accepted to begun distribution of what appears to be a remarkable new zero-calorie sugar substitute, “SHUGR,” via a huge retail network, General Nutrition Centers.
If it is just a promotion, profit-taking will set in, and Investrend will join the sellers, and this will be a further but for Investrend a cost-free “Waaco Kid” object lesson in the perils of trusting, or “sleeping with” a speculative “stock.” If it is real, sellers will take a vacation and a new surge of buying will come along this week and take it intermediately towards what will be a resistance level of $1.54, the top of its 52-week range reached last in late March according to the chart at finance.yahoo.com .
“Waaco” had said to hold the stock overnight Monday because of the “gap up.” In other words, when a stock is charging up at the end of the day, the prevailing wisdom says it will “gap up” the next morning, which it did. Some of “Waaco’s” old crew actually played the gaps, buying charging stocks in the last 30 minutes of the trading day and selling them in the first 30 minutes of the next trading day. So holding Monday overnight was a no-brainer. Holding overnight Tuesday, though not “Waaco’s” wisdom, was to test the “realness” of the market’s belief in a product the company, and its promoter, says tastes like sugar, cooks like sugar and behaves in every way like sugar, unlike the substitutes of the past, and appears to be in or near production. Also, the company’s financials indicates it is already attracting revenues, so it doesn’t appear to be a rank start-up. So, is it a health/food play Taser, or more likely, another “I Can’t Believe It’s Not Butter,” or a thud in the making? Time will tell.
The decision on GLD was easier. Henry Weingarten, the prognosticator-market-timer guru with an uncanny stock market track record, has been screaming, “hold Gold” this summer, at least through the “ides of August,” for weeks now. When “Waaco” talked to Weingarten, he said Investrend could own some contracts and other forms of gold investments that are nice and risky, or the portfolio could be lined not with gold itself, but a less volatile tracking stock. Since this was to be, for now, 75% of our public portfolio (Investrend does not own stocks in companies that are covered by its research division’s analysts), the safer investment was chosen. GLD has fluctuated between $41.02 and $46 for a year, and “The Kid” decided Weingarten, if he turns out to have one of his rare “wrong” moments, couldn’t be “that” wrong.
So GLD it was, and is, and if gold declines, the position can be sold close to its buy-in position or even above, and if it edges up to its high, that would be a nice, tidy short-term play. On the other hand if gold starts stratosphering towards the $800 or $1,600 range ultimately seen by Weingarten, owning GLD could be “cool,” indeed, and give ol’ “Waaco” back his spurs.
Speaking of “Waaco,” Investrend acquired full rights to “The Waaco Kid” from Capital Markets Communications in 2001, for its Investrend Information (http://www.investrendinformation.com) division, but it has taken four years to track down and locate the persnickety codger somewhere in the New Mexico outback near Roswell looking for what he called “artifacts.” He said he would have been just as happy to have found even “artifictions.”
The company had put a “wanted” flyer on the door at the general store in Langtry, Texas, where “The Kid” used to hang out with the likes of Judge Roy Bean and Pecos Bill. Sure enough, about two weeks ago he wandered in, wondered aloud whatever happened to Prodigy, was dumbfounded by what had happened to America Online, and was jealous to see his old online contemporary and nemesis Cramer spouting on the tube short-term trading strategies that “Waaco” thought he had patented, and asked to get back in – or would that be out of? – the saddle again.
Okay, “pick us a couple of stocks,” he was told, in exchange for an article contribution from time to time, and the rest, at least until the market opens again today, is history.
For up-to-the-minute news, features and links click on financialwire.net
FinancialWire is an independent, proprietary news service of Investrend Information, a division of Investrend Communications, Inc. It is not a press release service and receives no compensation for its news or opinions. Other divisions of Investrend, however, provide shareholder empowerment platforms such as forums, independent research and webcasting. For more information or to receive the FirstAlert daily summary of news, commentary, research reports, webcasts, events and conference calls, click on investrend.com
The FinancialWire NewsFeed is now available in multiple formats to your site or desktop, free. Click on: investrend.com
--------------------------------------------------------------------------------
|
