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12/06/2016 Fortune: 12.18.2000 Investor's Guide: My Stocks Are Up 10,000%! Dan Zanger

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My Stocks Are Up10,000%!Tired of listening to neighbors brag aboutstratospheric returns? Convinced their figuresare nothing more than hot air? Turns out someare telling the truth--and they're willing to proveit.

Dan Zanger

By Lee Clifford

Name

Profession

Top

Pick Reason

DanZangerFormerpoolbuilder

U.S.dollars

The market is in a "breakawaygap to the downside," saysZanger. (Um, right.) Until thecharts look better, he says, he'ssticking to cash.

Every few weeks last fall, a shiftingarray of Dan Zanger's friends wouldgather in the basement of his LosAngeles home. They weren't there forchitchat, however, or to watch the game.They were there to witness a

performance--and to learn.

For a few hours at a time, anywherefrom three to five buddies would sit raptin the darkened room, with windowsshuttered to keep out the light, trying toglean the secrets of an artist at work.His blond hair as rumpled as his casualclothes, Zanger sat in front of fivecomputer screens like a rock keyboardistsurrounded by synthesizers. His bodywould tense as his eyes darted over thescrolling list of 800 stocks that he

follows. Every so often, with the flick ofa finger, he'd enter a buy or sell order.

Zanger would concentrate so hard thathe didn't notice when spectators cameand went. He wouldn't hear the questionsthey called to him. "I'm like a surgeongoing in to do an operation," saysZanger. "I'm totally focused."

It's no wonder his friends and neighborswere curious. Just three years ago,Zanger, 47, was paying his bills by

working in Beverly Hills as a swimmingpool contractor, building Hefner-worthytropical fantasy pools for rich andfamous clients. In a good year he couldmake $50,000. Since then his investing,Zanger says, has turned $11,000 in

SECTIONS

My Stocks Are Up10,000%!Dan Zanger

Brent McKinney

Amin Virani

Wayne Chang

A.J. Lee

ChartWhen Your BarberGives You Stock Tips...

Cover Package:Investor's Guide 2001

introductionThe Year That Will Be

breaking outSeven Stocks That AreReady to Run

not a very good yearThe FORTUNE IndexesUpdate

the markets in 2001

Yes, Virginia, There Is aSoft Landing

takeover candidatesRiding the Buyout Wave

fundsThe Perfect Funds toBeat This Market

stratospheric returnsMy Stocks Are Up10,000%!

energy stocksIs Dynegy the NextEnron?

buy nowTenHot Global Stocks

four marketsEmerging Markets ThatLive Up To the Name

timelineThe Big Scare

championsAmerica's Best & WorstWealth Creators

money manager

What You Need to KnowAbout Game-ShowWinnings

wired investorDo PC Makers StillDeserve a Place in YourPortfolio?
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savings into $18 million. That's a gain of164,000%. "As far as I know," he exults,"it's the world record."

Talk about any recent investing trend,and Zanger will tell you he was one stepahead of the market. "I foretold thebiotech move two or three months aheadof time," he says. And those otherinvestors who got whipsawed by therapid turnaround in Internet stocks? NotZanger. He says he was short-sellingthose stocks. Referring to a prediction hemade in an investing newsletter that hebegan publishing last year, Zanger adds,"I showed everybody the market top ofMarch 10."

Yeah, yeah, yeah. We've all met a DanZanger--or 20. You know whom we'retalking about: the guy at work who won'tshut up about how he's whipping every

fund manager on the planet with his techportfolio. The golf buddy who can't stopdroning on about the excruciatinglyobscure--but incredibly lucrative--optionsscenarios he picked up from a $25 book.Or your neighbor's 21-year-old kid who,to hear his parents tell it, has madeenough in the market to pay for theirretirement.

The only difference? Zanger appears tobe telling the truth. His 1999 tax returnand trading records, which he shared

with FORTUNE, show capital gains of$14,232,878.

Zanger is rare, but he's not alone. Weundertook to locate members of a veryunusual breed: individual investors whochalked up out-of-the-ballpark returns--and were willing to prove it with tax ortrading records. Though no one was ableto equal Zanger's universe-beatingnumbers, we did find a tiny, scatteredtribe of investors with the kind of results

that entitle them to all the cocktail-partybragging they want to indulge in. Ournot-so-motley selection includeseveryone from a stay-at-home dad to apersonal trainer. Their investing stylescouldn't be more different, though theyusually combine an Olympian tolerancefor risk with a penchant for unorthodoxstrategies that involve charts, options,margin, and the like--not to mentioninsane luck. They all have one thing incommon: They are hands-down, no twoways about it, making mincemeat out of

all those highly paid pros.

By definition, most of us can't beat themarket averages. But since investingbecame America's most popularparticipatory sport in the '90s,

street lifeWhich Stocks Will Win in2001, Old Economy orNew?

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outperforming Wall Street wisemen hasbecome a national obsession. It's thequintessential American myth--Anybodycan make it big--reincarnated for thenew millennium. And like any compellingmyth, it requires a handful of unlikelyindividuals to keep us convinced that,yes, a muscle-bound personal trainer canoutinvest a hedge-fund manager with

billions of dollars in his portfolio. It's atale Horatio Alger might have penned--ifhe had known a world with discountbrokers and online investing.

So what's Zanger's secret? The formerpool contractor, who resembles a poorman's--er, a rich man's--RichardBranson, was always more than happy toexplain his secrets to his friends once themarket closed. He would becomeanimated, describing to his awed flockwhy he bought, say, 1,000 shares of

AskJeeves.com at the precise moment hedid. The stock, he'd tell them, wasclearly headed into a "pennant"formation--it had risen and then taperedoff quickly--and thus seemed primed foranother quick, steep increase.

His friends would look on in glassy-eyedbewilderment as he explained his"technical" investing philosophy. It's notexactly a strategy that would makeWarren Buffett proud. Zanger completelyignores yardsticks such as price-earningsratios and revenue growth. The onlything he cares about is how a stock isbehaving. "I trade whatever the marketis going to push up the most," Zangersays. "It doesn't matter what thecompany does, or what their earningsare." Devotees of technical analysisbelieve that stock prices move in easilyrecognizable visual patterns that anexperienced investor can capitalize on.So when CMGI is gearing up to a "cupand handle," or Amazon is perilously

close to a "descending triangle," or--egad--"channel formation," Zangermoves. He internalizes those curves,those spikes, like a doctor scrutinizing aheart patient's monitor in an intensive-care unit. "Stocks are my buddies,"Zanger says. "I know when they feelgood or when they feel bad."

At the beginning of November last year,Zanger noticed that Qualcomm's stockwas acting "a little frisky." So he dove in,buying 5,000 shares on the way up froma split-adjusted $57.50 to $62.50. In amatter of weeks the stock was trading ashigh as $93 but was incredibly volatile.Zanger hung on, buying and selling partsof his position on dips and spikes. By

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Dec. 30 the price had leaped past $161.On the first day of the New Year thestock jumped a bit more, and Zangerunloaded his remaining positions at $196and $194 for a profit of $2.7 million. Howdid he know to sell near the very peak?"It was clearly in a massive parabolicblowoff top," says Zanger. Obviously.

This spring, Zanger says, he moved mostof his assets into cash, shielding himfrom the tech meltdown. There themoney will remain until his charts tellhim the worst is over. While he waits forthat to happen, Zanger is busy preparingto raze the home he recently bought inKirkland, Wash. He plans to replace itwith a dwelling modeled on Frank LloydWright's Falling Water. "You should seethe pool it's going to have," he swoons.As for the building of his mini-empire,Zanger is unequivocal: "It's the greatest

story ever told."

Next Section:Brent McKinney

Vol. 142, No. 14December 18, 2000

Feature Contents| My Stocks Are Up 10,000%! Dan Zanger | BrentMcKinney| Amin Virani| Wayne Chang| A.J. Lee|Chart: When Your Barber Gives You Stock Tips ... |

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