Lenny Dykstra, Investment Guru- or Is He?

Every investor wants to hear a guru tell them he (or she) can make them money.

We all want to hear it’s easy. We all want to be told that there’s some method that can make us 20% a year.

And we’re willing to pay big bucks to get any information that might lead us to the holy grail of investing: year after year of blockbuster returns.

This is why we’re willing to buy the books, go the seminars, and pay thousands of dollars for newsletter subscriptions that are supposed to give us the answers.

But they never do.

Beware of those who tell you they can make you rich if you just listen to them.

Jim Cramer might come to mind- but I actually like Mr. Mad Money. He tells you you’ll have to work at it to get rich. And he doesn’t say he has all the answers. He makes investing fun. I’ve bought his books. They’re good reads.

But then there are others, like Lenny Dykstra.

Lenny who?

If you’re a baseball fan, you’ll recognize the name because Lenny Dykstra used to play outfield for the Philadelphia Phillies in the 1980-1990s. He’s retired now, but he’s reinvented himself as an investment guru, complete with his own column on TheStreet.com and now, apparently a $1000 a year newsletter.

What does Lenny Dykstra know about investing?

I have no idea.

But hey- he can make you rich, right?

Don’t get me wrong, I think it’s a great story to have a former athlete re-invent himself and actually be “good” at some other profession. Only, apparently, Lenny isn’t all that he seems.

But first- let’s look at the gushing. The New Yorker did a feature story on him in March 2008:

Improbably, he has since become a successful day trader, and he let me know that he owns both a Maybach (“the best car”) and a Gulfstream (“the best jet”).

Lesson #1: Stay away from an investment guru who tells you what kind of car he drives.

The man didn’t even use a computer until after 2003, but apparently he’s a stock picking genius:

“My approach in investing is much the same as my approach to hitting,” he wrote. “I would rather take a walk or single and reach first than shoot for a home run and strike out swinging.” According to The Street’s “Stat Book Scorecard,” Dykstra’s picks earned $183,650 on a hundred and three trades in an eight-month period last year.

“He had an Amgen trade,” Cramer said, referring to the biotech company. “It was like hitting the ball between the shortstop and the third baseman in a way that made me feel proud.”

He went on, “I have yet to meet anyone other than Lenny from the world of sports who was able to make the transfer so that they have something to say that has value added. Many sports figures have been successful salesmen, but I would most likely have hired Lenny at my hedge fund, back when I was doing that.”

Dykstra is now working on a book about investing, with the literary agent David Vigliano, whom he calls “the No. 1 book agent in the country.”

Lesson #2: Never invest in hedge funds that hire investment gurus.

But it gets better. Apparently Lenny wasn’t picking the stocks after all (at least not from the entire world of stocks.) According to a recent article in Forbes Magazine, Lenny was allegedly getting assistance from another stock analyst who had his own newsletter who provided Lenny with a list of stocks every morning.

Granted, Lenny still had to pick from those stocks for his own picks. But it doesn’t take an investment genius to do that.

From Forbes:

“At Dykstra’s insistence, Doubledown began negotiations to pay Richard Suttmeier, a stock analyst, to provide Dykstra with research assistance for the Dykstra Report and who, upon information and belief learned subsequently, provided Dykstra lists of recommended stocks daily.”

Who is Richard Suttmeier? A market strategist for financial Web site RightSide Advisors and formerly a contributor to RealMoney.com, a subscription Web site owned by TheStreet.com.

Suttmeier, 64, says he got his Wall Street start trading Treasurys in the 1970s. He later bounced around second-tier investment banks and landed at RightSide in 2006.

Suttmeier says that after he did a television appearance several years ago he received a call from Dykstra. “He wanted to learn how to read a [stock] chart,” Suttmeier says. “I taught him.”

The two men have kept in touch ever since. Suttmeier says Dykstra calls from time to time asking where to add to positions. Suttmeier also e-mails Dykstra a spreadsheet of stocks each morning but denies that he picks stocks for the former ballplayer.

“I am not his brain,” Suttmeier says. “Dykstra makes his own trading decisions.”

Lenny was going to charge $995 a year for his newsletter. Suttmeier charges $300 a year.

Lesson #3: Never pay $1000 a year for investment advice- especially from a guru.

What are you really getting anyway?

Hopes. Dreams. The lure of the holy grail.

Resist!

Save your money. The only “guru” you should know is Warren Buffett. You can get his advice for free every few months in interviews.

What will become of Lenny Dykstra, investment guru?

Stay tuned.