House of Nails

by Lenny Dykstra

  The solution? Using my deep-in-the-money-calls strategy, which allows you to control the stock in much the same way as if you owned the stock. Let’s use the same stock we talked about earlier, Microsoft (MSFT), and let’s assume it was trading at $50 a share. By using my deep-in-the-money-calls system, you can control the same thousand shares, but you would have to invest only $8,000 to $10,000 by buying ten contracts, which is equal to a thousand shares. Moreover, you will be in control of the stock for approximately two years, but again, instead of it costing you $50K, you would need to spend only $10K. Remember, the only way you can make a profit in the market is by trading in and out of positions when you realize a profit. My deep-in-the-money-calls system gives you leverage and puts you in a position of strength, as opposed to having all of your cash tied up in one or two stocks. Furthermore, using my strategy, because we are buying call options, eliminates any temptation to dance with the devil, in this case, margin; the results are incredible.

  If I were to buy those Microsoft calls mentioned earlier, I would have made my choice by comparing stock charts and other technical information, then placing a limit order for ten contracts using a formula I came up with for determining the right price I would be willing to pay for the options. If my purchase was filled at the price I set, I would immediately put in a sell order at a point higher, which would then trigger an automatic $1,000 win when the sales price was reached. It was, and still is, beautiful.

  I didn’t have to sit there watching the stock to collect a win, and with the option price needing to go up only a buck, the stock itself had to go up only about $1.30 to $1.50 for me to earn an easy grand.

  The average hold time of one of my stock options was about three weeks, so I didn’t have to worry about each investment sitting around for long periods of time. It didn’t take long before I would see I had made a quick $1,000 on my $8,000 to $10,000 investment.

  The strategy is simple. Those subscribers who followed through on my recommendations since my system has been in place would have profited well over $1,000,000. Yes, you are reading the number correctly, over a million fucking dollars in net profit! After reading this, you are probably saying to yourself, Is this really the truth? It can’t be. It’s not only the truth; it’s a fact and it’s indisputable.

  Do you really believe that the feds would allow me to have a website that posts my record each and every day if the numbers, or my win-loss record, were wrong? You don’t really believe they would let me defraud each and every person who signs up and pays $1,000 for a one-year subscription to my website, www.NailsInvestments.com, if the numbers were not perfect, do you? I put my record out there for the world to see each and every day. Are you fucking kidding me? If those numbers were wrong, they would throw me back in the cooler so fast it would make your head spin.

  So, after discovering that my strategy was immensely profitable, I began to send e-mails with questions and stock recommendations to Jim Cramer. Cramer was very popular with individual investors and would soon parlay his fame and stock market acumen into the TV show Mad Money, which still airs on CNBC.

  As I write my book today, my win-loss record stands at more than 565 wins and 1 loss. That’s not a misprint. The only misprints come from all the haters in the media who are either jealous or too fucking stupid to get their facts straight before saying and printing things that are completely false. All anyone has to do is go online to my website NailsInvestments.com. The numbers don’t lie!

  I will say it again; the only person who has been right about me is Jim Cramer. He was being interviewed by Bernard Goldberg, on HBO’s Real Sports, when he hung his balls out there by telling Goldberg, “Lenny Dykstra is one of the great ones.” So let’s go to the videotape. My record at the time of that interview was 110 wins and 0 losses. Since Cramer made that call on national TV, my record has soared from 110 wins to more than 565 wins. Which leads me to make the following statement: Cramer was the only one who was right about me, but the media loves to take shots at him. Like I said, the numbers don’t fucking lie!

  When you combine the fact that I filed a Chapter 11 to reorganize with the media’s calling me a fraud, while at the same time making me out to be some type of monster, people instantly get the perception that my record is false. This perception led to the media taking shots at Cramer, who, once again, was the only one who was right with his ballsy call.

  Back on point. One day I was sitting at home trading in the market, when I received a call from Mike Figliola, the producer of Real Money. He said that Cramer was a big-time Phillies fan, and asked if I would be interested in making a guest appearance on his radio show. I agreed, and that’s how our relationship began. We talked about the market and my deep-in-the-money calls, and Cramer saw that even though I was an ex–baseball player with no formal background in the markets, I actually knew what I was talking about.

  I began to appear on Real Money regularly, and I enjoyed sharing my knowledge. No one paid a cent for my advice at the time, but those who listened in were hooked.

  Soon thereafter, Cramer asked me if I wanted to be a celebrity columnist on his website, TheStreet.com. At the very beginning, I did it for fun. I also did it because people told me I couldn’t. No one believed that anyone would follow my stock advice. They said there was no way I would be successful with a financial column. As the poster boy for the stereotypical stupid jock, I was told I wouldn’t be taken seriously.

  When underestimated, I’m motivated in a way I can’t explain, just so I can prove everyone wrong. Especially when I know I am right. A shrink might say I excel and thrive on negative feedback.

  So in spite of all the haters, I wrote the columns. I included a stock choice for the day and why it was being recommended, and I explained how to implement my strategy. I also added a section I called the Game of Life, in which I wrote about sports, news, and other nonfinancial subjects. Sometimes I spent more time on the Game of Life section, as it was hard for me. There were nights when it felt like my keyboard had to be bloody, because I abused it so much agonizing over each word.

  The more columns I wrote, the more of a following I developed. People were using my strategy and it was working. The readers could follow my advice and make money. And cash in they did!

  Cramer was impressed, and said to me, “You’ve found a way to get the little guy involved, using options as a stock replacement system.”

  My column, Nails on Numbers, generated more business than any other column on Cramer’s site. I think it was my notoriety as an athlete that drew people in, but the winning advice was what ultimately kept them coming back.

  Soon, other media outlets took notice, and I began appearing on TV talk shows, including Bulls & Bears and Fox & Friends, on which I’d offer up a stock pick of the day for viewers.

  It wasn’t long before I came up with a subscription model that I was sure would be very successful for both TheStreet.com and me. I called up Tom Clarke, a cool Irish dude and the CEO of TheStreet.com, and asked him to set up a meeting with Cramer and the rest of the brass. “I have an idea that will make your company a lot of money,” I told him.

  I showed up at the conference room, and all the top dogs were there.

  “Okay, so what’s your idea?” Clarke asked.

  “I have an idea for a newsletter that we sell by subscription.”

  “What are you going to charge?” he asked.

  “A thousand bucks to join for a year,” I said.

  Everyone broke up, laughing hysterically. They thought I was out of my mind.

  Clarke was blunt. “Hey, Lenny, with all due respect, Cramer only charges $350. Are you serious?”

  “No, hear me out on this, Tom. My strategy is for the guys who don’t have much cash to get in the game, but want to participate in trading blue-chip, high-quality stocks. This is all about the leverage of options.”

  Options are power and leverage. Most people use options for quick hits, and they lose because they expire worthless. “But my syst
em is different,” I told them.

  I explained in detail how I use my deep-in-the-money calls as a stock replacement system. They were skeptical but agreed to give it a go.

  Sure enough, even though I charged $1,000 for my stock tips and I was an ex-ballplayer who hadn’t gone to some Ivy League school, an army of subscribers signed up as soon as it was launched.

  I was earning about $75,000 per month from my share of the subscriptions generated on TheStreet.com. By mid-2009, my record, which I tracked daily, was at 110 wins and 0 losses, when an attorney working for the Securities and Exchange Commission (SEC), one of the most powerful government agencies in the country, headed up an investigation to negate my win-loss record. He called, saying, “You know who I am? I’m with the SEC, and you know what we do? We put people in jail, that’s what we do.” He continued with his scare tactics: “And that’s exactly where you are going for making up a win-loss record of 110 and 0 to defraud people out of a thousand dollars. Nobody can have that kind of record.” This guy was a real prick. He had one goal: to put me in jail.

  The SEC investigator followed my site closely for about seven months. He studied every one of my picks in detail. The only thing he came up with was air! I was charging $1,000 for a subscriber to receive my deep-in-the-money calls for a solid year. My subscribers were getting their money back and then some. Everything documented on the website was accurate and true.

  For seven months, they tried to bring me down, putting my assistant, Dorothy, through the wringer, attempting to trick her into an admission that would send me to jail. We answered all the phone calls, sent in all the documentation they demanded, and explained over and over how it worked. She never backed down and showed up for every meeting. She took every call and pleasantly showed them the door. After bringing their full arsenal, only to end up with nothing, the SEC went dark, hoping that I would just forget about it.

  On the contrary, I discovered that I was entitled to a letter from the SEC. Armed with information, I called and demanded a letter stating the results of their investigation.

  Acting on my telephone call, the SEC wrote me a letter stating, “This investigation has been completed as to Lenny K. Dykstra, against whom we do not intend to recommend any enforcement action by the Commission under Securities Act Release No. 5310.”

  Below is the true and actual letter.

  When the majority of people hear the word bankruptcy, the first thing they think is “This guy is a loser.” They usually follow that up by saying, “How could he lose all that money?” That’s not the full picture. The reality is that filing a Chapter 11 bankruptcy is an option for many to put the brakes on, so that they can reorganize and put together a viable plan to pay off their debt.

  For example, numerous well-known individuals have experienced bankruptcy. Here are some of the more prominent names you will recognize: Abraham Lincoln, Thomas Jefferson, Ben Franklin, Ulysses S. Grant, Mark Twain, Henry Ford, Walt Disney, Wayne Newton, Larry King, Willie Nelson, Tom Petty, Dorothy Hamill, and Burt Reynolds. Those people I just named have all bounced back. The comeback story is part of the American way of life.

  Nonetheless, after I declared bankruptcy, the critics were merciless. They said I never really picked the stocks and claimed my whole system was a sham. They were wrong on both counts.

  My investment strategy still flourishes today. My website NailsInvestments.com continues to perform and function uninterrupted since its inception. We still have subscribers who pay us $1,000 a year for my strategy and receive three picks a week. And, yes, they are still profiting handsomely.

  In closing, nothing else I have done, or may yet do, can ever invalidate that.

  25

  PLAYERS CLUB

  A person who never made a mistake, never tried anything new.

  —ALBERT EINSTEIN

  While many dream of becoming professional athletes, only a select few realize that dream. The Players Club was uniquely created and designed to understand and appreciate the dedication and commitment that a professional sports career entails.

  Perhaps more important, as a former professional athlete, I knew firsthand the needs and desires of professional athletes off the field.

  After spending twelve years in the major leagues, I recognized that the majority of players had no idea what to do with their money and hadn’t even thought about how they would be able to secure their financial future after retirement from the game. Without information or guidance, professional athletes are notorious for making poor financial decisions. Yet nobody, not our union, not management, not veteran players, was helping anyone with this.

  Not surprisingly, professional athletes also become accustomed to, and expect, a certain lifestyle that accompanies their first significant contract. They expect their families to participate and benefit from that lifestyle as well. The Players Club was designed to appreciate and nurture the lifestyle desires of athletes along with a strong educational message for prudent financial safeguards.

  Simply put, we had three goals: to help professional athletes prosper long-term, to provide financial education for the professional athlete, and to be a conduit for qualified financial products/partners to assist the professional athlete.

  I launched the Players Club magazine on April 1, 2008. It was something the professional sports community had been waiting for, and something it desperately needed.

  With the Players Club, I had figured out a way to get the kind of information the players wanted and needed directly into the clubhouses and locker rooms of every major professional sport, for both men and women. It was the first lifestyle magazine specifically tailored for top athletes.

  It didn’t start off as a huge enterprise. My idea was simple, as I wanted a way to educate today’s players on the importance of financial planning and to show them a way to create and generate recurring cash flow that would kick in after their playing days, allowing them to live in style all the way to the end of their lives. So I would create an educational newsletter like the sixteen-page newsletters I subscribed to for trading in the stock market and mail it to all the professional sports clubhouses. And it was going to be completely free for the athletes.

  In January 2007, I started out with a modest presentation, a mock-up of the first newsletter, and presented it to UBS financial services. It was well received, but they decided to pass. I went to the Hartford, MetLife, and just about every other top-ranking insurance company to finance it for me, because if the players wanted recurring cash flow, buying an annuity was the way to guarantee the income. With a financial partner, I’d have a way of covering the costs and monetizing the concept.

  It didn’t take all that long before I could see the whole beautiful concept of the Players Club laid out before me. Out went the cheesy newsletter, and in came the ultra-high-end glossy magazine where we would not only educate but capitalize on the lifestyle the players lived. I wasn’t asking that they save all their money, just a nice healthy portion. With players earning millions each year, it’s not hard to see that there is room for both. High living and prudent savings, coexisting in perfect harmony. The concepts are not mutually exclusive if you make enough.

  Of course, due to my expanded vision, the Players Club became quite the high-end venture. Just as I set out in baseball to be the best at what I do, once I decided on publishing a magazine, I set out to publish the best magazine in the world.

  The magazine’s articles were written by the country’s most respected writers in their particular field. The content was a mix of how the elite top 1 percent live, along with heartfelt and hard-luck stories sharing advice to make sure athletes could avoid ever having their own hard-luck story. I had assembled trusted sports figures like Wayne Gretzky, Willie Mays, and Harold Reynolds to be on my advisory board, and popular athletes like Derek Jeter, Tiger Woods, and Danica Patrick appeared on the covers and were also featured in articles.

  The business model was truly beautiful. Ordinarily, the hardest part would be to get
the message out, especially to an elite group of athletes. However, I set out to put the magazine into the hands of every single professional athlete in every single professional sport and I am proud to say that I accomplished this. That turned out to be the easy part. We were guaranteed a circulation of millionaires because it would go straight into the locker rooms of MLB, the NBA, the NFL, the NHL, tennis, and golf. It had the potential to be huge.

  With a commitment from AIG, the largest insurance company in the world, to provide us with the necessary financial strategic partner, we were on our way.

  What happened next is well chronicled, so I won’t go into all the details. AIG disappeared and nearly collapsed with the economic bloodbath, along with many other insurance companies.

  The Players Club was designed to provide all professional athletes the opportunity and the tools needed to secure their financial future. In so doing, the result would have been a positive impact not only on the professional athletes; it would have also served to help keep the families of professional athletes intact.

  Although my vision for the Players Club did not come to fruition due to unfortunate circumstances beyond my control, the need to provide professional athletes with a vehicle whereby their financial health is safeguarded still remains.