Las Vegas, Nevada Stock Tips and Slot Machines

By RICHARD CONNIFF

Outside the meeting rooms of the Las Vegas Hilton, where 2,000 well-heeled stock-market investors prowl for new ideas, the pay phones are not sweaty with fevered trading. A California broker ties up one line grousing about a "chisel-wad" client. The other phones are empty. Nobody's buying.

It is "Whipsaw City" on the stock exchanges, in the words of one of the esteemed financial-newsletter editors speaking at this three-day "money show." Up 25 points Monday, down 20 Tuesday. The common opinion, derived by computer analysis of 50 leading indicators or by going out and staring at the moon, depending on one's methodology, is that the future looks bad. The audience of gray and balding heads does not know if the economy will make a soft landing or a big splat, but for now they have their assets safely tucked away in Treasury bills and money-market funds, where the 9% or 10% return makes it O.K. to be boring.

So what are they doing here in Las Vegas if, as appears to be the case, they are also too conservative for the risk-to-reward ratio of the $25-a-pop blackjack table? They have come at the invitation of their favorite financial- newsletter editors, who are still trying to come back from the 1987 crash and have offered this investment seminar as a subscription-renewal bonus ("A $500 retail value! Act now! Air fare and hotel not included"). They are here because they are eager students of the market, even if temporarily absent from it, and they are determined to figure the whole thing out, or find somebody else who can figure it out for them. The newsletter gurus look to be their best hope. Ralph Campbell, a retired furniture manufacturer, admits that he subscribes to eight or ten newsletters, at an annual cost of upwards of $2,000. "I'm a newsletter junkie," he says, evoking a sigh from his wife Doris.

Buck up, Mrs. Campbell, it could be worse. There are 1,500 financial newsletters being published at the moment, and many of them are on display at the money show: the Astute Investor, the Busy Investor, the Patient Investor, the Contrary Investor, the Cheap Investor and so on. Most of them are solo operations, and one editor describes them unabashedly as the "alternative press" of the era. The wished-for kinship is not with some Age of Aquarius tabloid, of course, but with pamphleteers like Thomas Paine and Alexander Hamilton. The newsletter gurus see themselves as disabusers of Wall Street myth, as missionaries of economic truth. Since readers can lose big money if their guru is wrong, the work is fraught with the peril of being hanged, though only in effigy.

Al Frank, who writes his Prudent Speculator in Santa Monica, Calif., took a turn slowly, slowly in the wind when his portfolio of recommended stocks dropped 50% in 1987. He recovered with a 49% gain last year, but the crowd may string him up yet again. "People think too much about the market," he tells his audience, comfortable in the subtle distinction that what he thinks about roughly 14 hours a day is companies, not market fluctuations. He espouses the solid, old-fashioned idea of buying good companies cheap and sticking with them long-term, with the added fillip of using borrowed money to maximize returns. Right now he is margined up to his Adam's apple, being just about the only person in the house who still thinks the market's heading up. People regard him with a fascination and solicitude otherwise reserved for a condemned man on the gallows. "It will happen, it will happen, it will happen," a short man with a German accent warns him, "but this time it won't be the Fed, it will be the Japanese stock market. I'm talking about panic." Frank concedes mildly that this is possible, but says it is unlikely.

Frank is about as far as you can get from a pinstripe, commission-driven Wall Street professional, which is probably why his readers like him. He is a former professor of philosophy, carelessly dressed, with watery blue eyes and a fleshy, houndlike face. He is still doing penance for his 1987 performance, having vowed not to smoke another cigar till the Dow Jones average tops 2722. He tends to dwell on his losses, even though he started out with $8,000 in 1977 and by taking his own advice has boosted it to $422,000. Charles Allmon, a rival newsletter editor, suggests that Frank is a ringer, a "riverboat gambler" suitably disguised by self-deprecation and a digressive academic manner. Frank replies that Allmon, who has lately kept his portfolios in cash, just can't handle the action anymore. He's got "gun-shy." Las Vegas is not big enough for both of them.

The money counts, of course, but perhaps not so much as puzzling out the future and proving that everybody else has it wrong. Charles Githler, who is sponsoring this money show, captures the visceral quality of the obsession (though with a blithe disregard for mixed metaphors) when he introduces the editors: "They'll really spill their guts. They'll put their necks on the line, and then let you fire back with your questions."

The marketplace being a multilayered and ever more convoluted place, there are newsletters that devote themselves solely to scrutinizing other newsletters' performances. Stan Weinstein, who edits the Professional Tape Reader, is still bleeding from one such analysis, in which the writer likened his record to that of the Suzuki Samurai. "Stan's not always right," he tells his audience. "I'm not saying, 'Follow me across the river, this is Moses.' " He just wants them to think with him. What he thinks about are the elaborate, hand-drawn charts that fill his filing cabinets and cover every wall of his office. Weinstein runs his hands over these charts like a sorcerer, working most nights till dawn. As a technical analyst, he does not care about good companies or bad. When a reader advocates Apple Computer, he replies, "You're right, it's a great company. You're right, it has good earnings. You know what? Sell it." For Weinstein, price patterns tell all.

Weinstein is a popular speaker, a motormouth with a New York City accent and a concise choreography of hand and facial expression to convey such messages as "gedoutta-heah-gimme-a-break." He wears tailored suits and a gold bracelet with STAN spelled in diamonds. His admirers are legion. "I'd be lying if I said I didn't love it," he says. "One time we were flying in from Europe, and we had 40 minutes to get through Customs at Kennedy and make our next flight. The Customs man said, 'Are you Stan Weinstein? I saw you on Wall Street Week. Do you still like Mobilhome?' I said I still liked Mobilhome, so he raps on the suitcases, done-done-done, and he yells out, 'Hey, the guy's gotta make a flight!' "

The crowd picks through the offerings carefully, learning something about what makes Al Frank and Stan Weinstein and possibly also the market tick. They search for revealing new indicators or for an unknown face who has it all figured out (a hidden imam, in the jargon). They browse among new ideas, like one newsletter's espousal of the "butterfly effect," the chaos theory that a hurricane in the Caribbean may be caused by an unknown butterfly flapping its , wings six months earlier somewhere in Brazil, and that, by analogy, there are no hidden imams because it's all too complicated to figure out. They listen for reliable word of when the market's going to turn (this is what people really want from newsletters, says an editor, the chance to pat a neighbor on the back and say, "I got out, you poor slob"). They listen for the sound of butterfly wings flapping.

Then they go home and mull it over till the next big conference, which happens to be in June in Monte Carlo (admission $695, and no freebies). The title, "How to Profit from a World on the Brink," suggests several interesting possibilities: a) starting a financial newsletter; b) playing host to an investment conference and bringing in dueling newsletter editors for entertainment; c) before you subscribe or attend, locking up all your money in a certificate of deposit at 10%; or -- and we have to admit we like this one best, diversification being a very big idea in the investment world -- d) all of the above.