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Jim Geister, 49

Started investing: 1982, in his second year of college.
Focus: Hot stocks in hot sectors.
What stands out: Huge gains with tech stocks in the late 1990s, then the good sense to bail out before the collapse.
His advice: Always talk over your investments with a trusted friend.

Jim Geister trades too much, isn't well diversified and loves hot sectors. And he accomplished what few investors did: rode the Internet wave to its crest, and then, through a combination of skill and instinct, sold most of his winners just before the crash.

Critical to his success was having someone with whom he could kick around ideas. Geister and Jay Payne, 49, a friend since junior high, talked stocks day and night for years. Each brought different attributes to the table. Geister had a finance degree. Payne is a tech wizard who used to be an aerospace executive and now invests full time. "It's always good to have someone to bounce your ideas off," Geister says. "He's more optimistic, I'm more skeptical, and so we balance each other out. We worked together to keep our egos in check."

For many years, Geister's investing performance was uninspiring. "I had a lot of dogs, but I learned a lot by losing money," he says. In 1996, Payne visited Geister's Austin, Tex., office, where Geister buys distressed commercial real estate and tries to fix the problems. Payne noticed Geister's stock portfolio on the computer screen and told him, "I'd like to do some investing." It was an unremarkable start to a profitable relationship.

Payne pushed Geister into unfamiliar territory. Until then, Geister had valued stocks by traditional measures -- P/Es and the like. Payne prodded Geister to embrace the market's measure du jour for Internet stocks: the number of users, or eyeballs, that Web sites attract. "The metrics the markets focus on are constantly changing, and you have to roll with the punches," Geister says.

His big winners: AOL, E*Trade, Excite, RealNetworks and Yahoo, all of which he owned by the boatload. Diversification, he argues, dilutes performance. "I read everything I could lay my hands on about them," says Geister. "We had the DNA of these stocks in our genes."

But even as he and Payne were racking up ridiculous gains on dot-com stocks, Geister was trying to keep a grip on reality. "Trading during the Internet bubble, you had to believe in it, but you couldn't divorce yourself from reality," he says. The signal that the party was ending, says Geister, came when button-down gurus such as Louis Rukeyser turned bullish on Internet stocks. Geister persuaded Payne to lighten up.

They sold in late 1999 and early 2000. Geister earned $9.7 million in 1999 alone from trading stocks, by far his best year. The next two years, he lost some money but remained miles ahead of the game. Today, his stock-investing fortune is comfortably in eight figures. He has big holdings in about ten stocks, many of them in energy.

--Steven T. Goldberg

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