Wade Cook Investing
An Open Letter to Wade Cook

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By czako
June 14, 2001

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Dear Mr. Cook -- may I call you Wade?

I was in my local bookstore this evening, and came across your latest opus Wall St. Money Machine, Volume 5 - Free Stocks

In the book, you offer a rather unique challenge -- $10,000 to the reader's favorite charity if they can produce someone who has taken the Wall Street Workshop, traded in the stock market exactly as taught in that seminar, and lost money.

Please forgive me if I don't have all the details quite accurate. You see, at 250 pages, with the bulk of the book ending at page 150, and then veering off into sales-pitch-land, not to mention all the testimonials, product placements within the book, and other nonsense we've seen in all of your other books.... Well, you can understand why I didn't plunk down my hard-earned money for the book.

You see, I know of a few people who have taken the Wall Street Workshop, and most likely have lost money in the last 18 months. But given the likelihood that they've followed the instructions to the letter, or that they'd even let you or I see all of the specific steps they took on each trade they've made, I figure the odds of finding a person to fulfill the terms of your challenge to be rather bleak.

But then I thought of someone. Someone who could almost without a doubt be counted on to apply the instructions in your seminar (to the letter even!). Someone who would survive the scrutiny your staff would place on them to ensure they've followed those instructions. Someone who would actually fulfill the terms of your challenge!

That someone is Wade B. Cook!

You see Wade, given that you are a publicly traded company (note that I didn't say that you run a publicly traded company - you are the Stock Market Institute of Learning, owning about 2/3 of the company the last time I checked), you are required to file certain public documents. Particularly, you are required to file quarterly and annual reports to the SEC.

The following text appears in your latest filing:

During the quarter ended March 31, 2001, the Company experienced a realized and unrealized loss on the trading of securities in the amount of $(679,000) compared with a gain of $217,000 in a comparable period of 2000. The Company attributes losses on trading securities to a continuing down trend in the equities market.

Now, I'm no accountant, and I realize you've discussed this "unrealized loss" issue in your other opus, Safety First Investing, but it seems to me that if your unrealized loss of $679K is actually a combination of paper losses (the value of stocks going down in the company's portfolio) and gains, but you really made money in the first quarter, your actual paper loss would be higher than $679K.

Let me give an example in case the previous paragraph was not clear.
If you earned $1,000,000 in trading during the last quarter, but had an $679K realized + unrealized loss, then the following would hold true:

Gains: $1000K
Paper loss: $1679K
Total (realized + unrealized) loss $679K

But Wade, since I've seen no press release explaining that you actually made any money last quarter, I'll have to assume that you didn't.

Here's another part of the SEC report that troubled me: The reference to the continuing downtrend. In many of your previous books, tapes, CDs, seminars, etc., you have offered this pithy and time-tested saying: "Play the market at hand." Do you recall it?

Wade, the market has been in a downward spiral since early 2000, and despite your assertions in Bear Market Baloney, it seems that we are indeed in a bear market. Did you not play the market at hand?

Regardless, Wade, I appreciate the time you've spent reading this. Since you are a man of your word, I look forward to reading a press release saying that you've honored your side of the challenge. I would very much like to see the $10,000 donated to the American Cancer Society. You see, my stepfather died of lung cancer several years ago, and it's a horrible way to go.

Yours truly and sincerely,b