Intrepid Characters Blaze Trails on the Day-Trading Frontier

Now and then in Wall Street Journal reporter John R. Emshwiller’s account of how the Mice (busily clicked by do-it-yourself investors at their PCs) have become as mighty a force in the stock-trading world as the traditional Bulls and Bears, an arresting fact or opinion jumps out at us:

“By 1998”--a scant three or four years after Emshwiller’s story begins--”about 22 percent of all securities transactions were done over the Internet, according to a report by the General Accounting Office, the investigative arm of Congress.” The percentage, he notes, is undoubtedly higher today.

A 1999 study by the North American Securities Administrators Assn. is quoted as saying that 70% of the people who day trade--using the speed of the brokerless Internet to jump into and out of investments quickly--”will not only lose, but will almost certainly lose everything they invest.”

The U.S. Securities and Exchange Commission has been slow to address stock fraud in cyberspace--no surprise, Emshwiller says; the SEC wasn’t even created until five years after the crash of 1929 and even today has limited powers. It can only “file civil cases against alleged wrongdoers.” Actual prosecution is left to the Justice Department, “which often doesn’t seem to take white-collar crime all that seriously.”

But most of “Scam Dogs & Mo-Mo Mamas,” including the title, is entertainment rather than old-style public-service journalism. Emshwiller, like the stock-picking gurus he has profiled for his newspaper (and re-profiles in this book) is intoxicated with the free-wheeling, frontier ambience of Internet trading, which he compares to the Klondike gold rush a century ago.

Instead of “Aunt Minnies” who have lost their nest eggs, he focuses on colorful figures such as Yun Soo Oh Park (“Tokyo Joe” or “TokyoMex”), a former burrito maker turned top guru whose hundreds of Internet followers pay him hundreds of dollars a month each for stock tips mixed with lush descriptions of his travels. Accused of “pumping and dumping”--hyping a stock for his own advantage--he says disarmingly, “Everybody knows that I’m buying before you buy, and I’m selling when you’re buying. Otherwise, what am I? A charity?”

Mike Nichols (“Big Dog”), a 400-pound New Jerseyite who sold textile coatings before he invaded Tokyo Joe’s turf, growled and got rich. Companies, or major investors in companies, paid him to boost their stocks. “These new Internet players have gained enough influence that they can no longer be ignored,” Emshwiller says. “Should they be subject to licensing, as are [the] stockbrokers and other market professionals” they are threatening to replace?

Amr Ibrahim Elgindy (“Anthony@Pacific”), a professional “short seller” who works the other side of the street: He attacks companies whose stocks he believes to be overvalued. This means he’s also attacking the likes of Tokyo Joe and Big Dog. Emshwiller gives us transcripts of their e-mail battles--jargon-laced, misspelled, amusing at first but ultimately tiresome.

Janice Shell (“Janice Shell”), a Milan-based prankster who exposes stock scams without, supposedly, profiting therefrom. Her specialty is to tout imaginary companies on April Fool’s Day.

Jill Munden, the “jailer” who polices the accuracy and propriety of messages on the vast and influential Silicon Investor site.

Emshwiller likes these people, on the whole, and asserts that Internet stock trading, despite its hazards, is a good thing. “Power that was long concentrated in the hands of a relatively few professionals in and around Wall Street is being spread across the fruited--and sometimes fruitcaked--plains,” he says. “Lots of people may just decide that they like having more knowledge and power and responsibility over their own financial affairs--even if they get mugged sometimes as a result.”