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The Dow Zero Insurgency

“You can tell he was feeding that conspiratorial audience,” says Roche, who posted a comment on Zero Hedge about his concern that the site was losing its focus and indulging in cheap theatrics. The comment was promptly deleted by Zero Hedge. “He got a backlash from a lot of readers,” says Roche. “Personally, I thought it detracted from his credibility.”

But not necessarily from his revenue stream. In July, Zero Hedge joined Halogen Network, an online-advertising company, which has placed Delta Airlines and Forex Trading ads on the blog’s pages. Halogen plans on conducting a reader survey for the site in the coming month. Greg Shove, founder and CEO of Halogen, says it will likely show the same demographics as other successful financial blogs: men between 35 and 55 who make $200,000 and up a year—a pretty juicy target audience. Zero Hedge could potentially rake in $25,000 a month in ad revenue alone. That’s a pittance for someone accustomed to hedge-fund wages, but it’s a healthy foundation for a nascent web-publishing firm that’s less than a year old.

Zero Hedge has certainly attracted high-powered readers drawn to his way of thinking. Jim Chanos, the founder of the investment firm Kynikos Associates, calls it a “must read” for his firm. A famed short-seller, Chanos is strategically sympathetic to Ivandjiiski’s radically bearish market views. Zero Hedge’s central argument, that the big banks are a menace and must be broken up, is “one that I and a lot of people secretly support,” says Chanos.

Chris Whalen, a banking analyst who met Ivandjiiski for lunch this year at the Peking Duck House in Manhattan, compares him to the pamphleteers of early-nineteenth-century America, non-journalists who distributed opinionated political tracts. “If we just relied on the old media, we’d have nothing right now,” he says. “He’s taken some things on that could easily have gotten him a lawsuit. He’s got a lot of balls.”

It’s fair to say that Zero Hedge’s success has given Ivandjiiski a newly minted sense of his own importance. In conversations with reporters, he regularly touts his influence with political figures like Schumer and Senator Ted Kaufman of Delaware, whose aides, he says, call him all the time.

For all his flame-throwing, Ivandjiiski is very sensitive to criticism. When a fellow blogger, who declined to be named, privately corrected him on some evidence he used to criticize the Fed, Ivandjiiski responded with a chest-thumping defense, citing his background working for a $10 billion hedge fund as evidence of his undeniable expertise. “I am well aware what I am talking about,” he told the blogger, “and the truth is there are many other things happening that I have yet to bring up … Unlike the mainstream media, I don’t tip my cards all at once … My style may hyperventilate, but at least it achieves its goal—which is to wake the people up from the stupor.”

Zero Hedge’s reputation has grown so much that last month, CNBC personalities Charlie Gasparino and Dennis Kneale felt moved to attack the site on-air—Kneale was particularly aggrieved by Zero Hedge’s ridicule of his declaration that the recession was over and delighted in describing anonymous bloggers as “dickweeds.” (Gasparino used the more prosaic “morons.”) Zero Hedge struck back with an “Open Letter to the Financial Media,” characterizing criticism as the dying gasps of the old media. “Ladies and Gentlemen,” it reads, “one-line zingers and contrived time limits designed to impale your hapless guests do not constitute ‘constructive conflict’ worthy of your interest in the Fourth Estate, which, incidentally, you do not own, but rather hold in trust on behalf of the citizenry.”

Zero Hedge’s critics aren’t confined to the old media, though. Some financial bloggers see “Tyler Durden” as a fact-bending, fear-mongering opportunist. “It’s nihilist, and that kind of vision lends itself to all manner of overreaching and conspiracy,” says Felix Salmon of Reuters. “You need some kind of critical judgment to separate out the [stories] that make sense and the ones that don’t. Zero Hedge just seems to not care about that. It doesn’t matter if it’s not true.”

Even Zero Hedge’s great triumph, the flash-trading exposé, is dismissed by some of his blogger peers. “It’s like one of those Star Trek episodes where computers are taking over,” says Paul Kedrosky of Infectious Greed. “It makes no sense, but it’s fun to imagine. It hit the sweet spot of paranoia.”

John Hempton of Bronte Capital has been among Zero Hedge’s toughest critics, arguing that the high-frequency-trading issue is a “storm in a teacup” and “massively overstated,” writing that “the argument that Goldies blowout trading profits have been caused by its recent forays into high-frequency trading is absurd. Everyone I know of who has hugely electronic trading systems is making less money, not more.”

Hempton also says he was among the first to raise the question of “who the hell Zero Hedge is—and what his dollar on the chit is.” Which is to say, what’s his agenda?