I don't care who is running this thing. Anyone who guarantees results
? or anyone who even suggests you can make 3,700% profit on a regular
basis ? is a scam artist.
These guys may be legitimate investment pros. They may have a good
system. But never -- and I emphasize never -- follow the advice of
advisers or use a system unless those advisers or that system have a
proven track record. If they won't show you the historical record ?
one that reflect both the successful and unsuccessful trades over a
period of time ? then find something else.
It's easy to make money in the stock market over time. The market's
general trend is upward, and it's been decades since stocks lost money
over a 20-year period. As such, if you buy a diversified proxy of the
market and hold it for a long time, you stand a very good chance of
making a strong return. The problem occurs when we try to make money
over shorter time periods. It is indeed possible. I'm in the
investment business, and I can attest that superior research can yield
superior results. But 3,700% profits? That's called dumb luck.
You bought the tiny mining stock just before the big gold strike. You
bought the tiny biotech stock just before it came up with a
blockbuster drug. You bought the tiny semiconductor maker just before
its radical new technology was adopted by Dell. Sometimes it works.
Most of the time it doesn't.
These guys may very well have found a system that earned them great
profits over a short period of time. That's no guarantee it will work
over another period of time.
I'm not going to get into a discussion of efficient markets, but I'm
going to illustrate some trouble spots in the marketing piece you
cited:
"You see, in today's world of rampant scandal and fraud, investing has
become a "zero-sum game." "
Quite literally, that is a lie, at least as far as it pertains to the
stock market. A zero-sum game is a game in which the net value of the
market is constant or declining. In such games, it is almost
impossible for an individual to win without another individual losing.
However, the underlying trend for the stock market is upward. Over
long periods of time it has always returned to that upward trend.
If assets increase in value over time, it is quite possible for more
than one investor to win. I buy a stock for $10, hold it for three
years, and sell it for $15. You buy it for $15, hold it for three
years, and sell it for $22. Joe Schmoe buys the stock for $22, holds
it for one year, and sells it for $24. You, I, and Joe all won. And
who's to say Joe's buyer won't be able to sell the stock at a profit
in a few years and win also?
"In fact, you can make a simple choice - right now - that could put
you in a position to pull in 3,700% gains in the coming year."
"The Special Report, titled Doji War Book: How to Make 3,700% Gains in
the Next 12 Months! is based on a 400-year-old trading secret ..."
There are very smart, very successful investment professionals who
manage billions of dollars who never in their 40-year careers earned a
return like that. 3,700% gains in the stock market are the equivalent
of an obstetrician delivering 1,800 babies in a single year or an NFL
quarterback throwing 102 touchdown passes in a season. They are
theoretically possible, but unlikely to happen.
If you read farther, you can see that the 3,700% gain is based on
annualizing an incredibly high seven-week return. In other words, they
had a really, really, really good short-term return (and there are a
lot of ways to measure returns ? they might not be including the
results from the stocks that declined) and calculated a target return
based on repeating that performance over every seven-week period for
the rest of the year. Even for a pro, that?s unlikely. Michael Jordan
sometimes sank seven shots in a row. But over his career, he missed
more shots than he took.
Then again, these guys could have lost 70% on their investments and
simply be lying through their teeth.
? How to Capture 3,700% Total Gains in the Next 12 Months!
Secrets of the Hanging Man!
How to Ride the Dragon Fly for 450%!
Power of the Hammer!
The Profit Star of Doji!
Amazing Wealth-Building Secrets of the Gravestone Doji!
The Ultimate Buy Signal!
And Much More!?
Sounds exciting, to be sure. There is a benefit to learning about
investment mentality and studying strategy. Many historical military
and business strategies can be applied to modern investing. But not to
the tune of 3,700% gains.
I?m sure the book is interesting. It may provide you with insight
regarding how to ?capitalize on FEAR and exploit herd mentality,? just
as the Web site promises. But while the general principles of
investing ? contrarianism, value investing, growth investing, etc. ?
have not changed in thousands of years, the actual mechanics of
investing have indeed changed. Merchants in ancient times bought up
supplies when times were tight in an effort to corner the market. They
purchased large quantities from desperate buyers because the price was
good, taking a risk that they couldn?t move the merchandise. They paid
top dollar for commodities that were unavailable in other areas, then
traveled to those other areas, hoping to sell for even more. Sounds a
lot like modern business.
But there was nothing like the stock market in ancient times, and the
science of portfolio theory is still very new.
?In just 7 weeks the Doji Master system existence has nailed 17
winning picks out of just 23 tries for total gains of 534%!?
Sounds great. But a system that works over a 7-week period is not a
system ? it?s a crapshoot. I?d be a lot more impressed if the Doji
Master told me about the 170 winning picks he made out of just 230
tries over a 70-week period.
I?m familiar with many investment systems. One I?m fond of is a
quantitative model that has been backtested over 12 years of monthly
return data. Show me 12 years of backtested data and five years of
live data demonstrating outperformance, and I?ll sign up.
Anybody can beat the market for 7 weeks, especially if they keep
investing for a dozen 7-week periods, then pick the one in which the
?system? worked. That way, they can ignore the 11 times they lost
money and just tell you about the winners.
?Followers of Doji Master have had the chance to pull in gains of:
· 156% in 1 day on DST!
· 100% in 5 days on NCCKH!
· 11% in 4 days on AKS!
· 70% in 4 days on AKSKB!
· 25% in 2 days on FXIKK!
· 23% in 2 days on FXILK!
· 44% in 1 day on BJSLW!
· 40% in 2 days on EDSAE!
· 60% in 1 day on SBLAW!
· 31% in 2 days on UMUAV!
· 33% in 1 day on BJSLJ!?
Again, sounds nice. But again, if you buy a bunch of tiny securities
that are very volatile, you?re going to get a lot of one- and two-day
gains ? and a lot of one- and two-day losses. No stocks go up every
day, and I notice they didn?t say whether the companies then declined
87% in the two days after the big gain. Most of these securities are
options, derivatives that are much riskier than the underlying stock.
First off, trying to invest for one- or two-day gains is a sucker?s
game. There are some people who make a living as day-traders, but far
more are unsuccessful. Second, any strategy based on one- or two-day
gains is going to be very risky. These guys seem to ignore one of the
cornerstones of investment science ? high return potential comes at
the cost of high risk. Speculative strategies are not for everyone.
?Even billionaire investor Warren Buffett agrees on this take no
prisoners approach. His advice to investors hungry for profits:
"Be brave when others are afraid."
Nothing spawns fear like a falling stock.?
That?s rich. These guys are quoting Warren Buffett, the quintessential
value investor. He buys when the price of a company or security is
lower than the value of its cash flows. And he never, ever, sells
after one or two days. Normally, he holds on to his investments for
years. Buffett, by the way, does not invest in stock options.
?We use a technical indicator called a put-call ratio (PCR).?
This is no secret. A lot of people use the PCR. Trading based on the
PCR is a very, very risky strategy, particularly when you limit
yourself to stocks with PCR ratios of four or five. It does provide
the potential for big gains. But you don?t need an ancient Japanese
sell signal. Many books have been written on technical trading, and
the candlestick chart is standard fare.
Don?t sign up with these yahoos. Check out a book from the library and
read it. Then, if you like the system, you can use it yourself without
outside help.
?As you can imagine, our readers are very happy. Take a look:?
Then follows a bunch of quotes with initials. First off, if these
people are legit, they should be willing to use their real names.
Second, these quotes are taken out of context. Have you ever seen a
newspaper ad for a movie that includes the quote ?stunning? and cites
a reviewer? That review may very well have panned the movie. The word
may have been taken from this sentence: ?This move was stunning ?
stunningly dull.?
I?ve worked in publishing, and I can tell you from experience that
much of the time, when testimonials are printed using such signatures
as ?B.D.? or ?a Maine reader? they are not from B.D. or anyone in
Maine. They can be composites of comments taken from many letters. Or
they can be pure fiction.
?And most people have paid as much as $3,750 for one year of Doji Master.
But if you lock in your space as a Doji Master Charter Member today,
you'll receive a special rate. But you must act now to save OVER
$2,900! ?
What a deal.
You can buy a book on candlestick charts for $20. If you want to do
less legwork, you can subscribe to any one of many established,
well-regarded technical-trading newsletters for $200 a year or less.
(I?m being very careful not to pitch any, because I don?t want to
prejudice you toward one particular title.) Or you can join a message
board or an investment club or just read columns written by prominent
technical traders.
The book will contain a bibliography that lists its sources and
probably include a lot of numbers illustrating how well the system
works. Good newsletters will publish their historical results and be
rated by the Hulbert Financial Digest
(https://secure.marketwatch.com/commerce/noAccess.asp?returnURL=http://cbs.marketwatch.com/hulbertinteractive/default.asp?siteid=mktw).
Mark Hulbert has been rating newsletters for more than 20 years. You
might be able to find a copy of the printed version at a good library.
Or you can purchase cheap access to the interactive site and see how
different newsletters stack up for short- and long-term performance.
?In just 7 weeks the Doji Master's system, nailed 17 winning picks out
of just 23 tries for total gains of 534%! At this pace, Doji could
capture 3,700% total gains in the next 12 months! Please don't miss
out on this remarkable wealth-building opportunity. Reserve your
risk-free trial of Doji Master today.?
That?s a big ?could.? Remember, seven weeks of success are evidence of
luck, not a real investment strategy that works.
Bottom line:
I would send these guys a dime. I?m sure their book is interesting
enough to get most people to sign up. And I?m sure their trading
system will yield enough big winners that they can continue to produce
good numbers. And I?m equally sure that their trading system will
reveal some big losers. The problem with buying options on stocks that
have a high PCR ratio is that many stocks are in that position because
they?re in deep trouble. Many stocks never pull out of such a
tailspin. More to the point, options have expiration dates, and many
of these stocks will take a lot longer to recover than option
investors can afford to wait. If you buy a call option on a falling
stock that then bounces the day after your option expires, you usually
end up taking a loss on the options and have no chance to share in
those gains.
Their marketing piece sells basic tenets of technical trading as if
they were ancient wisdom. Even worse, the piece implies that investors
will make unfathomably huge returns. The odds of making such returns
over the course of a year even if the system works are, well ?
The Arizona Diamondbacks are more likely to win the World Series. And
the Super Bowl. And the Nobel Prize for Economics.
V |
Clarification of Answer by
vercingatorix-ga
on
10 Mar 2005 14:15 PST
I don't know anything about the guys who run this. Once I figured out
what they were selling, I stopped thinking about the salesmen.
I don't research people very often. I prefer to answer financial
questions like the one you asked. But I'll tell you what I know.
First off, there are too many Ian Coopers out there to know who your guy is.
An Ian Cooper teaches at London Business School.
http://faculty.london.edu/icooper/
Another one teaches at the University of Adelaide.
http://www.ees.adelaide.edu.au/people/soil/icoope01.html
An Ian Cooper served as the CFO of Ian Cooper, AvestaPolarit until
late 2002. He was supposedly headed for England. I don't know if it's
the same Ian Cooper teaching at London Business School, but based on
that Cooper's history, I don't think so.
http://www.outokumpu.com/pages/page____6138.aspx
Another Ian Cooper works at Quantel, and based on his history, I don't
think he's the AvestaPolarit guy either.
http://www.quantel.com/domisphere/infopool.nsf/html/ManagementTeam
This is not to mention the jazz musician and a host of other Ian Coopers.
Christian DeHaemer is a bit easier to pin down. He seems adept at
marketing himself and telling everyone about his big market winners.
He is editor of at least three newsletters, Taipan, The Red Zone, and
The Red Zone VIP.
http://www.247profits.com/Christian-DeHaemer.html
http://www.247profits.com/BUREAUS/eDispatch/articlelist.html?Source=/Sites/eDispatch/eDispatch_Archive/Dispatch20040916.html
Taipan Group LLC publishes out of Baltimore, at 808 Saint Paul Street,
Baltimore, MD 21202-4799, USA, according to their Web site at
http://www.247profits.com/BUREAUS/Copyright.html.
Read the disclaimer at the site, and you'll see why they can keep publishing.
"Information, opinion, research, and commentary contained herein is
obtained from sources believed to be reliable; their reliability,
however, cannot be guaranteed. The maxim of Caveat Emptor applies ?
let the buyer beware! No asset protection strategy referred to herein
should be attempted without competent legal advice. 247profits and The
Taipan Group do not provide individual investment advice, or act as
investment advisors, or individually advocate the purchase or sale of
any security or investment."
There is nothing overtly illegal about the marketing piece I reviewed
above. It's sleazy and deceptive, but they never said "We guarantee
3,700% returns." They certainly implied that over and over again, but
I'm pretty sure the copy would stand up under legal scrutiny.
Convincing people to waste money on foolish investments is not a
crime, unless you misrepresent yourself. I cannot prove that these
people misrepresented themselves.
As for registering historical performance, you don't have to do that
unless you're registered with the SEC as an investment adviser. And
most small money managers never register with the SEC. Registration
requires lots of paperwork and hassle, and you can operate legally as
an adviser for a long time without registering, as long as your assets
under management don't get too large. Moreover, these guys probably
don't manage money, they just publish their newsletters and rake in
subscription fees.
Bottom line: What DeHaemer and Cooper are doing would qualify as
unethical to most of the people I know in the finance field. I would
advise folks in the strongest terms not to subscribe to their system
and not to subscribe to their newsletters. Credibility is the currency
of journalism, and in the wake of that slimy marketing piece, they are
dead broke in my eyes. But nothing I've read, as far as my
non-lawyer's eye can tell, would qualify as a violation of securities
laws.
V
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3 Comments
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