Wade Cook Revisited
The Horror, the Horror
By Yi-Hsin Chang (TMF Puck)
April 22, 1999
I attended a Wade Cook financial clinic and lived to tell about it.
The free three-hour session -- c'mon, I'd never actually PAY to go to a Wade Cook event -- was truly a scary experience, one I wouldn't wish on my worst enemy. But I'm getting ahead of myself. Let me start from the beginning...
It all started about a month ago, when while driving to work, I heard on the radio a commercial advertising a free Wade Cook clinic here in the Washington, D.C., area. Curious to find out more about Wade's "amazing, money multiplying" investment strategies and to meet the man himself, I committed the 1-800 number to memory until I could get to a phone. Later, I called the toll-free number and reserved a spot.
I was disappointed to learn that Wade wouldn't actually be at the clinic, and that one of his "trained" minions would be leading the session instead. Later I realized that you have to pay money -- lots of it -- to even get a chance to see the main act.
On Saturday, March 27, I arrived at the Crystal City Marriott bright and early a little before 9 o'clock. In all, about 80 to 90 people showed up for the clinic. The fact that so many people came of their own volition, like lambs to their slaughter, terrified me.
Our instructor was an average, innocent-enough-looking fortysomething guy named Lance Strauss, a professional seminar conductor who said he himself had attended Wade's Wall Street Workshop 2 1/2 years ago. This is where it started getting very scary very quickly. I soon felt like I had been thrust in the middle of one of those horrible late-night infomercials hawking some ridiculous, useless product.
From the outset, Lance pitched the Wade Cook seminars like there was no tomorrow and explained that the clinic was really a preview to the three-day Wall Street Workshop, which he accurately described as "very expensive" (more details later). Then there's the one-year millionaire apprenticeship program, where you essentially hang around millionaire instructors until you "make it."
"You need to be careful who you take advice from," Lance warned. "If you want to make $100,000, don't take advice from someone making less." That's why we're supposed to take advice from Wade Cook, a self-made millionaire who started out as a cab driver -- never mind that Wade Cook Financial Corp. (OTC: WADE) recently reported a 58% drop in 1998 earnings year-over-year, to $3.7 million from $8.9 million.
Lance said not to focus on "boring annual rates of return" but on monthly or even shorter returns. "Don't buy and hold. It doesn't make money anymore," he declared. I cringed and suppressed the urge to jump up and cry foul. "You won't make money until you sell," he continued, arguing that because our cash flow requirements are monthly -- as in, mortgage payments and credit card bills -- we should forget about the idea of "annual" return. "Our lives are way too short to get rich slow."
Then he said he could give us a 20% return -- not annually but monthly. "You could be 30 days from retired," he declared. I couldn't figure out how this could be possible. I mean, even if you had $100,000 in cash with which to invest, you'd have $120,000 after a month, before taxes -- hardly enough to stop working altogether.
Lance went on to proselytize on the company's highly dubious methods, such as investing in so-called "rolling stocks," stocks that "roll" up and down between a resistance line and a support line -- so you're buying at the support level and selling at the resistance level. Why, you can double your money four times a year doing this, Lance said with far too much confidence.
The Wade Cook sales pitch was filled with unFoolishness. Lance encouraged day trading and never once mentioned the tax hit you'd take on any quick profits. As for commissions, he dismissed them by saying, "Don't trip over pennies on your way to millions." He endorsed penny stocks, options trading, and even charging up your credit cards to pay for the overpriced Wall Street Workshop. "If you can't afford it, you really need these classes," Lance said. That must be some kind of new logic also being taught by Wade.
This gets us to the scariest part of the story. You've heard of the Wall Street Money Machine. That's the title of Wade's most well-known book. Well, the truth of the matter is, the title could refer to Wade Cook's pricey seminars for the gullible. Brace yourself. Here it is, infomercial-style:
Total cost of the one-year millionaire apprenticeship: $20,955
Total cost of the three-day "classic" training program: $14,875
Financial clinic special package on one-year program: $11,195
Financial clinic special package on three-day program: $6,195
One-year program with extra special discount: $6,695
Three-day program with extra special discount: $4,695
One-year program with extra, extra special discount: $5,695
Three-day program with extra, extra special discount: $3,242
Now call me ungrateful, but I think even with the extra, extra special discount these programs are a rip-off. There are quite a few testimonials on our Wade Cook Investing message board from people unfortunate enough to have shelled out money for a Wade Cook seminar that confirm my skepticism. What scared me most was that supposedly at least 10 people signed up for the $3,242 Wall Street Workshop right there on the spot! I so wanted to go up to them to talk them out of it. No! No! Don't do it!
The only consolation was that about half of the attendees took the opportunity to walk out and leave during the "break" that was taken for people to sign up for the seminar. It was good to know that at least some people easily saw through Wade Cook.
Still, thinking about the ones who fell victim to the sales pitch still makes me shiver.
Next: Wade in Hot Water »