Original article : http://honeyman.livejournal.com/111309.html
Disclaimer: carefully, then there are speculations, conjectures, Reflections, personal opinions, and other information, verified a little less than nothing. And yet...
Tim Sykes was written about in magazines, it was shown on television; is he, under the pseudonym "The Start-up", even starred in the infamous reality series "Wall Street Warriors", as yourself - a day trader *, hedge fund owner, athlete, Komsomol member, and just a smart guy, who converted their 12 thousand dollars from "savings for bar mitzvah" in more than one and a half million.
After seeing the Wall Street Warriors, I wandered around Tim's sites a bit, read his story on wikipedia, thought a little ... And I got the impression, that the "holy grail" * Tim is not so difficult to decipher.
A Brief Introduction to Thymology
Take Tim's Most Successful Period, 2003–2006. Рынок на подъёме, stocks are growing, hedge funds attract money from enthusiastic investors. Тим, как и любой гений, stands out prominently in the general fund: On the one side, is he, it would seem that, ignores positive market sentiment - it specializes in short deals *. Tim realizes that his approach is somewhat “unpatriotic” - every short transaction implies, what Tim thinks, that the state of the company's shares, with which he works, get worse; but nonetheless, this is the specialization of Tim's hedge fund. Why? Почему Тим предпочитает играть в short, если это более рискованно и потенциально менее прибыльно (because when playing long *, the risk is limited to the value of the shares, and the potential profit is not limited; when playing short, everything is exactly the opposite)?
Furthermore, Tim is not working with blue chips *, not with the "second echelon", and with the most "garbage" of American exchanges - penny stocks, stocks worth one or more dollars apiece, or less. This is also part of Tim's strategy.; in the film he tells, what, On the one side, Too many illiterate investors are involved in such stocks, and a person with intelligence will feel comfortable and safe enough in this field; On the other hand, similar garbage shares, due to small capitalization * of firms, especially prone to excitement and manipulation of news and rumors. And it is this excitement that Tim plays out - when he counts, that stocks are overvalued for biased reasons, he conducts a short transaction in the expectation of, that the excitement will subside, and the share price will fall. But how do you know, whether the price increase was caused by the excitement or an objective improvement in the company's situation? What if the price of such a junk stock jumped, but it won't fall anymore? After all, then you can stay with a handful of useless shares instead of money.
Какая ещё информация у нас есть? Can, for example, recall, that in the movie Tim is having trouble with his strategy, when the market is in a downturn, and his affairs are getting better, against, when the market is on the rise again. Но ведь, it would seem that, Tim's technique is just a fall game!
so, let's repeat again, what do we have:
Junk stocks are highly prone to hype.
There are too many unqualified investors on junk stocks. With these words, Tim implicitly admits, that it is them that he will beat with his actions. Money for inexperienced players is Tim's main goal.
The strategy works better in a rising market and worse in a falling market.
Sale (more precisely, it is the game of short - selling shares even though, that you don't have them) at the height of the hype. Although some sources say, that Tim from time to time caught a wave of excitement while still on the rise and bought stocks even at a low price, then at the top "flipped", got up short at a high price, and then closed the trade again at low; but in the film, the "short" essence of the strategy is clearly emphasized.
Есть ли что-нибудь, which will complement the existing list to a coherent and holistic picture, and will close all raised questions? By Occam's rule, it should be as simple and compact as possible. Any suggestions, Besides, which occurred to me?..
How to get to the Grail?
Спам.
As many owners of mailboxes of those years remember, at that time there was just an incredible amount of so-called "stock spam" - spam with information about the shares of various small companies, who "will receive a large grant from the government in the near future", "Are on the verge of discovering a new source of energy" and the like. And of course, согласно спаму, in literally the next few days, the value of shares of this company will skyrocket, and we urgently need to buy these shares, until it's not too late, and then you will definitely get rich, и будет вам счастье. In full accordance with the description of the pump and dump scheme, investor, heeded the good advice of an unknown expert, in the very near future will lose a noticeable amount of money. The organizers of such spam, buying shares of this company at a cheap price even before mailing, wait for the reaction of believing mugs, investing their money in this company (but after spammers), raising these stock prices ... to that level, until spammers decide, that the shares are already worth a lot; after that the organizers will sell their large package, getting the maximum profit on this contrived price increase, and again dropping the share price.
What role do garbage stocks play in pump and dump?? А простую. As Tim himself said, they are most prone to hype. Several relatively large, even private buyers, having run into the shares of a small firm, can raise their cost quite noticeably. And sellers - just as noticeably drop. On expensive stocks of well-known, with huge trading volumes, the influence of such individual buyers will be simply unnoticeable, negligible compared to the flows of money from large banks, Funds, множества трейдеров.
What does unqualified investors have to do with it?? Namely, with the same. An experienced exchange player will not be led to such a layout by "unknown well-wishers". An experienced player will conduct a thorough analysis of the state of affairs of the company and assess its real state of affairs. The inexperienced is inclined to recklessly trust the opinion of that, who will he consider more experienced.
How this strategy is related to the rise or fall of the market? Also obvious enough. It was during the upturn of the market, when they advertise on all channels, how fast and vigorously stocks grow, a lot of inexperienced people and decides to start managing their finances on their own, play on the stock exchange, invest and speculate ... And advertising around assent, that's what, these stocks skyrocketed by 50%, these - by 30% ... and if you invested in that company over there three years ago $10 000, then now you would have a million.
I want a million, and faster, And, desirable, without going into boring technical analyzes and fundamental indicators. Stock spam бьёт точно в цель, going exactly to newcomers on the exchange and promising them that, что они ищут. And with the growth of the market, the number of such newcomers just increases ...
Can't start - join
Not, I in no way consider, that Tim organized such spam mailings and was engaged in pump and dump. He's too smart a boy, to substitute this way. Why organize something yourself, if other scammers send such spam themselves? Рынок-то открытый, and you can join any movement at any time.
Логика неимоверно проста. Organizers profit from stock spam, buying stocks before sending spam and selling some time after. Most boobies, who believed in spam and bought promotions after reading the newsletter, lose money. For reasons of symmetry - what should a prudent person who understands the market do at least a little, after that, how will he find out about the stock spam scheme and receive a corresponding letter advising him to buy some stock?..
To my mind, no higher education in economics is required to answer this question.
Life after a million and a half
OK, вернёмся к Тиму. In the meantime, events are taking place in the world. More and more attention is paid to stock spam, and the SEC gradually got down to business. Several high-profile processes with the organizers of such spam have gradually reduced its amount in our inboxes and, maybe, saved hundreds and thousands of market newbies from ruin. However, if Tim has a serious and fundamental base, this will not prevent him from continuing to grow and develop - after all, nothing else has changed, рынок по-прежнему растёт, penny stocks full, they, as before, easily react to hype and gossip, и опытный trader легко отличит искусственно вздутую цену от реальной стоимости акции, is not it?
In 2006 and 2007, Tim Sykes dumps about a third of his capital, for some reason deciding to leave the proven track (shorts and trash stocks) and reorient towards investment.
Can't join - ...?
2008-th and 2009th year is not only years of a difficult crisis and then an unexpected rebound and growth (which the, normally, attracted another "youth" to the markets, hoping to "buy at the bottom"). This, no matter how unexpected, the victorious return of Tim Sykes. He's back in power, he plays penny stocks again, he's into short again, he already has more 500% arrived since the end of 2007. It is a miracle, how did this genius manage to rise so quickly - after all, even if we assume, that Tim once joined the organizers of stock spam in deals, there is almost no such spam now?…
Tim is now widely recognized as an experienced and highly efficient trader.. 12 thousands of dollars from savings for bar mitzvah are already legendary, he has many fans and students, who would like to play the market as well, как и он. Like any popular person, he has already written and is selling his book («An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund»); released several DVDs with tutorials (they can be bought for as little as $749 - a trifle compared to his previous assets and income, but enough for bread and butter).
А ещё, to help inexperienced investors, he organized the TIMAlerts newsletter. Paying everything 447 dollars a year, you will receive emails directly from Tim, in which he speaks, what penny stocks he just sold or bought, and what, respectively, he recommends to sell or buy to you, after that, how will you receive such a letter.
You see, receive 500% прибыли за 2 the year is not so difficult.
