Bull Marketing

Originally published in Salon.com

BULL MARKETING
By Anita Bartholomew

I met Amanda in the ladies' room of the Marco Island Radisson. The
11-year-old with her long strawberry blond braids had piqued my
curiosity. Why was she sitting through the two-day "Wall Street
Workshop," a Wade Cook seminar on stock market speculation? Couldn't
her parents find a sitter?

"I wanna get a horse," the pudgy, freckled child explained. "They
won't let me get a horse unless I buy one."

Amanda said her parents were "making" her a brokerage account,
expecting, it seems, that their daughter would earn enough at
day-trading (a speculative investment strategy where investors
typically sell a security within days or even hours of buying it) to
pay the $1,500 price of the animal, plus another $450 per month for
boarding.

Back in the meeting room, as little Amanda rejoined her family and
jotted notes about support, resistance and price/earnings ratios, I
perused the audience.

Considering the price of admission, up to $4,695 (with free admission
for kids accompanying parents, and journalists with press passes), I
had expected a subdued roomful of rich, market-savvy suits. Instead,
on this morning in late September, my fellow attendees were mostly
middle-income boomers who (with the exception of a couple of
stockbrokers, trolling for new clients) had little more market
experience than Amanda.

Behind me was tall, lanky Robert Toombs from Chicago, who had dreams
of making enough at trading to quit secretarial work and become a
playwright. Until he'd looked up the definition a month before, he had
not quite understood what a stock was. On the other side of the aisle
was mother of four Terri Yankopolis and her husband, Konstantine, a
gynecologist. Terri hadn't worked outside the home in 15 years, and
had never purchased stock, but hoped to learn enough here to make a
career of trading. Sitting to my left was Gerard Marino, a 40-ish
insurance salesman who had been trading for about six months, had made
money, but wanted to learn how to make more.

Toombs, the Yankopolises and Marino, like the other 50 or so
attendees, had come to learn former cab driver Wade Cook's strategies
for doubling your money every couple of months. Seminar leader Mike
Covill and his assistant, Lisa Hyatt, began by cautioning that the
market was volatile and traders might lose any money they put at risk.
But they just as quickly buried those cautions under a mountain of
easy-money promises.

Hyatt, a tall, blond 23-year-old in a form-fitting olive suit,
interspersed basic information about how markets work with tales of
stocks and options that had doubled and tripled in value, making
earlier Wall Street Workshop students wealthy overnight. Covill picked
it up from there, promising that, by applying the strategies he
outlined, everyone here could enjoy the same success, working out of
their homes for, at most, a few hours every day, spending the rest of
the time at the beach, playing golf or going fishing.

"How many of you are doing what you wanted to do when you got out of
school?" asked Covill, whose forced cheeriness, plastic good looks and
drill-sergeant posture conjured up memories of the battery-operated
characters in the old Duracell commercials. A few hands went up.

"How many of you would like to quit your day jobs and do this
[day-trading] instead?" Covill held up his own hand and nodded an
enthusiastic "yes" in case some of us were too dim to get the correct
answer on our own. Half the people in the room raised hands.

He had them. These market novices saw themselves as the most bullish of bulls.

But that was last September. Today, some of these same people suspect
that, to Wade Cook and associates, they looked more like fresh meat.
"He's telling you just enough to get you in trouble," says Marino, who
lost $13,000 the first month he tried trading the Wade Cook way. What
Marino and others taking the seminars don't realize is the Cook
strategies ignore almost all the technical indicators experienced
traders use when determining what securities to buy, and when. Worse,
the seminars fail to address when to sell, so that would-be traders,
using Cook's methods, hold on to sinking stocks and options rather
than cut their losses. Marino, who has kept in contact with others at
the workshop, laments, "I don't know a single person who the
strategies worked for. But I know two other people who, like me, have
lost their shirts."

That probably wouldn't surprise Raul Noriega, assistant attorney
general of Texas. His office has filed a complaint against Wade Cook
Seminars Inc., and its president and CEO, Wade B. Cook, for violations
of the state's deceptive trade practices act. The suit alleges that
Wade Cook Seminars sold incomplete information that in no way prepared
neophytes to play against the big boys in the market, and that those
who had tried had lost thousands, sometimes their entire life savings.
Attendees who asked for refunds were told all sales were final, in
violation of Texas law. Attorneys general in California and Washington
state are currently investigating similar allegations against the
outfit.

The Texas complaint also alleges that, while seminar speakers
mesmerized their marks into believing Wade Cook's strategies -- such
as borrowing money on margin to buy options -- would make them
wealthy, they bombarded attendees "with an unrelenting pitch to
purchase more tapes, books and seminars."

The pitch is, indeed, relentless. Covill continually reminded
attendees that Cook, a former cabby, took on Wall Street, beat it at
its own game and now makes $1 million a month. Anyone can do it,
Covill said, with the right education, available through various Wade
Cook products and services with a total value of $22,865. But if you
order today, you can have it all -- the videos, the audio tapes, the
advanced seminars, even the Internet bulletin board subscription --
for just $12,999.

In a style part Alcoholics Anonymous confession, part Pentecostal
sermon, with just a smidgen of stand-up comic, Covill confided his own
long, sorry job history -- from failed burger flipper for Wendy's to
failed store manager for Safeway supermarkets -- and finally, the
miracle of his financial redemption. If a former cabby and an
ex-burger boy can succeed, given the right education (for which he was
now dropping the price to just $9,999), why not you?

Another 20 or so inspirational minutes followed, during which Covill
claimed he now only works until about 10:30 in the morning, and earns
six-figures ... "and I'll knock off $3,695, bringing the total for
this package to $6,300."

But only if you order now.

At about this point, I turned to Marino, prepared to make a joke about
how Covill might soon throw in a set of Ginsu knives. But his eyes
were gazing hungrily as Covill elaborated the deal: the Wall Street
Workshop videos, the Zero to Zillions tapes, an 18-month subscription
to the WIN bulletin board, the advanced Wealth Academy workshop, the
Executive Retreat for two, the Financial Fortress audio course, and
the Next Step technical analysis seminar. Everything you need to make
truckloads of money, he implied, gain financial independence, and all
for the low, low price of -- did he say $6,300? -- not $6,300, but
$5,300, his last, best and final offer.

He managed to sign up several people, including Marino and the
Yankopolises, without having to toss in the Ginsu knives, without
having to explain why, if he was making so much money in the stock
market, he was here, pitching this stuff to us.

Next Page: How Wade Cook lost money in the hottest bull market in history

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