The rise and fall of Andy Zaky - How an Internet-trained Apple analyst lost other peoples' money

[mahatmakanejeeves]

I allude to this debacle in another thread I have in the Economy group, but the mistakes made by this fund caused so much money to be lost that I feel that the article deserves its own thread.

"Past performance is not a guarantee of future results."

The rise and fall of Andy Zaky - How an Internet-trained Apple analyst lost tens of millions of other peoples' money

FORTUNE -- In the late 1990s, an ad agency creative director I'll call Joe Smith to protect his privacy bought several hundred shares of Apple (AAPL) at $60 apiece. Last fall, at age 42, he found himself out of work and increasingly dependent on the value of those shares to make ends meet.

Following the lead of a 33-year-old investment advisor named Andy Zaky who had written that Apple was going to $750 by January and to $1,000 within a year, Smith converted most of his Apple common stock -- more than he should have -- into high-risk Apple call options. When those options expired in the third week of January with Apple trading below $500, they were worth exactly zero. Smith had lost roughly $400,000 and all his Apple shares.
....

Zaky had taken under management more than $10.6 million of other people's money and lost it all.

But those lost millions -- suffered largely by well-to-do investors who knew the risks they were taking -- pale next to the damage done to the 700 subscribers at Bullish Cross Pro. Many of these investors have since fled the site and joined a Google group called bc-subs (for "Bullish Cross subscribers&quot , where they commiserate about their lost retirement funds, their ruined marriages, their thoughts of suicide. Many lost hundreds of thousands of dollars. Some lost millions.

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Disclaimer to forestall, in total futility, the complaints of the Apple fanboys: I have owned Macs (as well as PCs) for years. I also have some shares of AAPL. I am not, however, facing the abyss the way that the people who handed their money to Zaky are.

[Tobin S.]

1. That's terrible

It makes me want to convert my savings to silver dollars and bury them in the back yard.