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.
Regardless of what prosecutors and other detractors say, though, Wade Cook has found a sure-fire way to make money. Wade Cook Financial Corporation (WCFC), the holding company for the Wade Cook empire, reported 1997 revenues of $104 million, primarily from sales of seminars, books, audio and video materials and subscriptions to its Internet bulletin board, WIN. During the same period WCFC lost more than $800,000 trading stocks and options.
“Funny how the greatest super-investor in the world managed to lose money in the biggest bull market in history,” chuckles Gary Wall, a longtime investor and one of Cook’s most vocal critics. But WCFC general counsel Kiman Lucas insists that that $800,000 was an “unrealized loss” only — even though WCFC’s own press release puts the unrealized portion of the loss at $600,000, leaving it with, at minimum, $200,000 in real losses. Lucas also claims that “the stock market was way down Dec. 31,” making balance sheets look worse than they were. In fact, at that point, the Dow was up 1,465 points for the year. WCFC had lost in a market that had made most investors feel like natural winners.
While veteran traders often exchange such information through the Internet, the inexperienced investor has no easy way of gathering such cautionary tales. To them, Cook’s promises must seem irresistible. In his book, “Stock Market Miracles,” for instance, Cook says that, after attending the Wall Street Workshop and investing just $2,000 to $5,000, people can make from $5,000 to $8,000 per month. “That’s per month,” reiterates Cook’s text. “And they’re only working 15 minutes a day, two or three days a week.”
I asked one of the market’s best-respected technical analysts to comment on the validity of this and some of Cook’s claims. He abruptly ended our interview with, “My stomach is churning. Please don’t put me in the same sentence with this guy.”
Wade Cook insists that the Wall Street guys just don’t get it, and has an answer for such nay-sayers in another of his bestselling books, “Wall Street Money Machine,” where he writes that stock market pros are “wedded to stodgy, boring and risky methods.”
Gary Wall has a simple answer to the former cabby’s claims. “Professional investors dismiss Wade Cook as a fraud,” says Wall.
It’s easy to understand the appeal of the Wade Cooks of the world, though. They embrace the masses, who have small bankrolls but big dreams.
Which brings me back to my fellow attendees. Toombs, the would-be playwright, says he lost 41 percent of his $10,000 trading account. The Yankopolises tell me they lost it all — more than $15,000. And what about 11-year-old Amanda? Her parents decided against opening a day-trading account for their child. They have leased her a horse and enrolled her in a riding academy. Right now, she might be in jodhpurs and helmet, off for a pleasant canter — a far preferable alternative to the wild ride taken by so many of the grown-ups at the Wall Street Workshop.