Anyone use/familiar-with Investools?

[Muse]

TDAmeritrade bought them a few years ago, along with Think or Swim online trading/charting/analyzing program. Counselor at TDA got me into Investools, first level stuff, the basic course, and I've gone to 3 two-day workshops over around 4 year period. Been in Level 3 (the tools, online coaching and trading rooms plus one on one coaching by telephone), 2 (the tools, online coaching and trading rooms),and 1 (just the tools, I have just level 1 now) support. Seems to have tremendous potential but I've not had success with it so far (bottom line is do you make money and how much). They are into tons of stuff, stocks (esp. growth stocks, but it goes far beyond that), options, futures, Forex, strategies. I'm thinking of signing up for their Basic Options course, but think I may just dig into the book I have (The Rookie's Guide to Options; 2nd edition: The Beginner's Handbook of Trading Equity Options) and save myself ~$2000. Anyone have experience/knowledge of them and care to share your ideas?

 

[OverVolt]

Buy when green sell when red.

 

[Muse]

Buy when green sell when red.

Talk about an oversimplification!

 

[Brian Alburn]

Dear Sir/Madam:

I am extremely familiar with Investools. I spent about 3,000 hours studying the Firm's two-year $21,500 Program of High Distinction (PhD). I studied Stocks, Basic Options, Advanced Options, and Advanced Technical Analysis.

Based on my experience with the PhD, I can tell you this:

· Investools teaches a huge number of facts, concepts, and theories about the markets (stock, options, currency, and so on).

· It is up to you to use those facts, concepts, and theories to develop trading systems for each of the three market environments (up, down, and sideways). Your systems must have specific rules that tell you: 1) What to buy, 2) When to buy, 3) How much to buy, and 4) When to sell.

I met and interviewed hundreds of Investools students during my PhD. I did not talk with anyone who claimed to have developed one or more trading systems that consistently beat the S&P Index, which is a typical benchmark for market performance. This fact is not surprising. After all, 80% of all professional money managers do not beat the S&P Index in any given year.

Unless you simply want to learn facts, concepts, and theories about the markets, I would not recommend Investools. However, if you decide to take the Firm's courses for the purpose of making better returns than the S&P 500 Index, use caution. I suggest you find an Investools graduate who will show you physical proof that he/she, over a period of years, outperforms the returns of the S&P 500 Index in their overall portfolio. Based on my experience, I believe that to find such a person is, for all ethical intents and purposes, highly improbable.

 

[Muse]

Thank you, Brian. Well said. Well, of course, the bottom line is not exactly to beat the S&P500 on a consistent basis so much as to overall beat it significantly.

Did you interview these people in person or online, I'm curious. I just finished a 2 day workshop, the foundation one that deals mostly with the first two courses, Preparing to Be an Investor and Introduction to Trading Stocks. It was taught by Linda McCoy (i.e. main presenter). I've been to two previous workshops, same material, the previous presented by Linda McCoy, the first one by Darren Kimoto, 3 years ago. I was extremely impressed by them both, but the format being ~200 or more people being addressed by one person sporting a microphone and a laptop being displayed on a large screen, this does not lend itself to very interactive learning, in spite of the intentions and efforts of the presenters.

I have only done those first two courses, been thinking about the Basic Options course and the Advanced Technical Analysis course, but haven't ponied up the money. I used to frequent a lot of online training sessions, the ones the coaches do on a scheduled basis with participator chat. Now I'm just Level 1, so don't get that stuff.

There's one thing that I did learn in the Investools training, and this probably came up in one or more of those online coaching sessions, and it's the 10/40 crossover method of trading longer term holdings, sometimes called the Golden Cross/Death Cross method. I back tested this against the S&P500 ETF (i.e. SPY), over a 20 year period, starting in 1993 (when there was a Golden Cross entry signal), and going all the way until when I did the testing, July of 2013. As is often said, the general market (i.e. S&P500) has about an average yearly return (it does vary a lot from year to year) of ~10%, factoring dividends, and leaving the accummulated assets in the account. This can be realized by trading the SPY. Using the 10/40 crossover method (with a 2 or 3 week confirmation for each crossover before allowing each crossover to trigger an action), my back testing showed that using this entry/exit methodology yielded an additional approximately 2% return, thus 12% on average/year.

Here's part of my exact notes after doing the backtesting:

I just analyze the chart in prophet charts, adjusted for dividends in Think or Swim, the last 20 years using my 10/40 crossover study on a WEEKLY chart. I figure get in after the 10 crosses above the 40, but give it 3 weeks to confirm. Buy at the close of the week. Get out after the 3rd week after the 40 crosses above the 10, again at the close of the week. Initial price was 31.84. What was my profit? The SPY went from 31.84 to 167.51 in this period. If I'd held on I'd be up how much? Assume I invested $100,000. Count $10 commissions. If I'd just held on my account would be worth (if I sold it today), $526,079.

To summarize: The crossovers watched for are of the 10 and 40 period exponential moving averages on a weekly chart, and for my testing I waited 3 weeks to see if there would be a cross-back before an entry or exit.

Now, I've been very strongly considering using this method of trading the market. Advantages:

1. Extremely simple, assuming you are committed to your rules. There's almost no work to do! No watch lists, just pay some attention to the overall market when conditions are such that a crossover might be imminent, which is not often the case.
2. Good return, well, your post would suggest that this is pretty good
3. Commissions are held to a minimum
4. If you are committed to the rules and OK with the overall returns, this system is pretty stress free! Of course, the gut wrenching losses that occur during bear markets are largely avoided. Also, some of the gains are lost because you don't get in until you get a confirmed Golden Cross, but this comes with the territory.

I've seen it suggested (someone said this in a chat in an online training session) that slightly different parameters than 10/40 on a weekly chart will give better results. The suggestion was 325 days/85 days for the exponential moving averages. I've been intending to back test this and compare to the 10/40 period on a weekly chart (which is approximately equivalent to 50 day and 200 day moving averages, and exponential averages are what's used here). I also hope to back test against a few other ETF's, maybe the Dow Industrials, the Nasdaq, even the All World Index and see what I find. It's not all that hard to test this stuff. The data is there in Think or Swim charting/trading platform.

Now, when I did do my backtest of the "last 20 years" it so happened that there was a Golden Cross pretty much at the very beginning, i.e. around summer of 1993, IIRC. That, of course, was an entry signal and the test was off and running. But I'm finding now that I can't execute the system because I'm waiting for an entry signal (the next Golden Cross). There hasn't been a Death Cross since December 2011 (or any crossover). So, I'm sitting on my hands insofar as using this trading system. An investment consultant at my local bank tells me that his people (JPMorgan/Chase) don't expect the S&P500 to have near average returns over the next few years. He's plugging their systems! Even so, I may beat what I'd get with them if I use the crossover in/out signals trading the SPY, is my thought, and I'd avoid the 1.4% charges the bank rakes in.

Investools, well, it hasn't worked for me yet. I have actually been losing money even in this bull run! Maybe I could do well with it, but fact is I have a ton of things I want or need to do and don't know if I can afford all the time it takes to learn their systems. They claim that once you learn, it takes very little time to execute. However, my experience hasn't encouraged me to believe that.

One last thing, Brian, I am male, so "Sir" is OK!

Umpteenth edit: Now, Brian, I did watch a ~20 minutes (well, don't know how long, but it was pretty long) of a couple of guys who run/ran an investment program on some TV channel who interviewed this woman who made millions of dollars after getting into Investools. She'd had a job, enrolled in all the courses, and after some time (years, IIRC) she started doing real well and eventually quit her job and did her investing full time, started a company with employees, piled up millions. IIRC, she traded index funds using options strategies. It's a Youtube video, maybe I can find it.

Yeah, I found it: Trader - Made $41 Million Profit in 3 Years Option Trading

 

[Crono]

Terrible name. Makes me think "inverted stools" more than "investing tools".

 

[OverVolt]

Assume I invested $100,000. Count $10 commissions. If I'd just held on my account would be worth (if I sold it today), $526,079.

That is called woulda coulda shoulda money. My woulda coulda shoulda bank is alot bigger than my real bank. Apparently Investools doesn't keep you from sabotaging your own returns which is I'm pretty sure everyones #1 enemy when they're investing.....and we're back to square one.

Its a tool, if you don't even know what the tool does... well... good luck.

Just curious, how does it claim to get an edge over the market quantitatively?

 

[Muse]

That is called woulda coulda shoulda money. My woulda coulda shoulda bank is alot bigger than my real bank. Apparently Investools doesn't keep you from sabotaging your own returns which is I'm pretty sure is everyones #1 enemy when they're investing.....and we're back to square one.

Its a tool, if you don't even know what the tool does... well... good luck.

Just curious, how does it claim to get an edge over the market quantitatively?

Investools does not make such claims. How you do depends on you, how you use those tools. Most of the strategies/systems they teach have some subjective aspects, however the system I backtested and described here does not have subjective components, it's objective and that's a big part of the beauty of it.

Investools is not a tool, it's a vast array of tools of a wide variety. What I did, the study I described in this thread, is just one thing, a backtesting of one particular investment strategy. Comparing that to Investools is like comparing a leopard with the San Diego Zoo. It's just one specimen of what you can find at the zoo.

My backtesting of the crossover method is much more than a woulda, shoulda, coulda, because it could have been traded in exactly that way using a super simple set of rules that even a 6 year old child could have utilized flawlessly. In fact, that child would have been potentially better using the method because it would not have been tempted to 2nd guess itself.

 

[Hugo Drax]

Do you really think if someone knows how to beat the S&P500 significantly, they are gonna create workshops to show everyone how to do it for 2000 bucks.

Think about this for a second.

 

[Uppsala9496]

OP, you seem pretty set on doing it, so just do it.
You asked if anyone had any experience with them and some replied that they did, and it was negative. Then others posted on why they think it is a waste of money, yet you rebut each comment. Obviously you have already made your mind up.

So...go for it.

 

[Muse]

Do you really think if someone knows how to beat the S&P500 significantly, they are gonna create workshops to show everyone how to do it for 2000 bucks.

Think about this for a second.

Dude, they don't have workshops for this. They did talk about this methodology of managing long term investments for maybe 10 minutes at the tail end of the 2 day workshop I did over the weekend. They did not talk about returns, or what vehicle to trade (what index, mutual fund, etc. but it's pretty obvious that the SPY would be a major candidate). I had 1/2 a mind to interrupt the presenter and state that I'd backtested this against the SPY ETF from 1993 to 2013 and it beat the SPY by ~2%, however it was a big hall with probably close to 300 people, I was not miced (would have had to raise my voice a LOT to be heard all over), I just decided to stay quiet.

2% is not a huge jump on the SPY, it is quite significant though. It's not eye popping. You should note that this is the average yearly premium using the crossover in/out signals. Of course, some years a lot of money is made, other years not so much, some years would likely show a loss using this "system." Last year the SPY was up almost 30%, it was an exceptional year. It's up this year, but nowhere near that clip.

They teach this 10/40 crossover in/out strategy in Portfolio Strategies course and Advanced Technicals course, so I'm told, I haven't access to either course.

You can test this yourself, the figures are quite public. If you are skeptical, look for yourself.

 

[Muse]

OP, you seem pretty set on doing it, so just do it.
You asked if anyone had any experience with them and some replied that they did, and it was negative. Then others posted on why they think it is a waste of money, yet you rebut each comment. Obviously you have already made your mind up.

So...go for it.

I posted not to talk about this crossover trading strategy, but to help me decide if I should enroll in the Basic Options course. It would cost me around $1850 to do that.

In truth I am far from sold on Investools. That's why I posted, I hoped to get some objective views. What I get from the coaches incessantly is them trying to sell me on their systems. What I see from other students is either online in online coaching chats (where they are loath to dis the system) or rubbing elbows with people at the rare workshops I attend. That doesn't tell me much of anything, they are being bombarded with what might be viewed as propaganda, however I admit that the presenters have been inspiring people who tell convincing stories about how their lives were turned around by Investools.

As well, I feel there are too many anomalies with their systems. Too often, something doesn't work and needs fixing. They update Think or Swim, IMO too often, necessitating downloading updates. Think or Swim is awesome, I concede that. The Investools website, well there's a ton of useful stuff there, prebuilt searches galore very few of which I have tried. Also, you can modify any of those searches as you wish or create your own from scratch. They keep updating stuff, keep coming out with new ideas, strategies, new blogs, there's more than you can keep up with and it keeps coming. Meantime I'm supposed to believe that I can be very successful putting in 15-20 minutes a night, 4 hours/week total. Translating all this into real success that justifies the work has been elusive for me so far.

My Level 2 support expired around 2-3 months ago. I didn't hear from them for a while but started getting calls from them, and they'd leave messages for me to return their calls. Their messages remain on my machine, but I have not returned their calls. I have figured I will at some point but, obviously, I've been reticent. I was hoping the two session workshop I attended over the weekend would rekindle my ambitions to succeed using their systems. I posted this thread meantime, between the two sessions. They distributed $250 coupons for a discount, so there was a bit of urgency, "should I or shouldn't I finally sign up for the Basic Options course" or should I just plow into the reportedly very excellent options book I bought a couple of years ago?

Some thoughts have nagged at me about Investools. They have a "Community" and one of the threads there has a title something like "has anyone made money?" I didn't dive into the thread, but just the title suggested that the students aren't brimming with enthusiasm for their successes. Another thing that bothers me is that one of their better and most popular online coaches (by name Brandon Van Zee), teaches their growth stock system in a pretty conservative and orthodox fashion (i.e. he sticks to their rules tightly, doesn't introduce extra risk factors), but he candidly admits that he himself favors investing in the "dividend aristocrats," those S&P500 companies that have managed to increase their dividends every year for the last 25 years. He's many times professed his unqualified admiration for Warren Buffett, hardly a growth stocks investor. He goes to Buffett's investor conference every year in Omaha.

I pretty much do plan to trade the crossover system, I have more back testing to do before I decide on the exact parameters, but in any case we are nowhere near the point where this system can be executed. There hasn't been an entry (or exit) signal since December 2011. It might be years before I can trade this. I do not need Investools to trade this system. I can do it independently.

 

[Brian Alburn]

Dear Sir:

In answer to your question: I interviewed the Investools students at workshops and by means of email. I obtained the email addresses from Investools and from fellow students. As a result of my research, I found that, in any given year, students did not typically meet or exceed the 20-year average-S&P-500-annual-return of about 10%. Quite often, they did worse... much worse

During my investigation, if an Investools student or one of its employees claimed to beat the S&P average, I never saw proof of this claim---with one exception: Investools sales rep Stacy Acevedo claimed that she traded her IRA from $60,000 to $1.1 million during an eight-month period. To prove her assertion, Ms. Acevedo showed her monthly account statements to hundreds of workshop attendees. According to a transcribed audio recording I have of that Investools Advanced Options seminar, on June 7, 2006, Stacy said the following:

In my IRA, I actually forgot I had this IRA. And I remembered it a few months ago. Let’s see if I can find it. So here’s my IRA, September 2005. September 2005. Let’s see if I crossed out all my account numbers. Okay. So I forgot that I left my brokerage firm years ago, and I had a 401K.

And I kind of let it sit there for a long time; forgot about it because I was trading my other accounts. So now 60,000, a pretty good amount to start with; would you agree? (Audience murmurs, “Yes.&#8221 Now this was back in September; September of 2005; $60,000. Now, you can trade anything you want in your IRA. You can do spreads. You can do, you can buy puts, buy calls; whatever you want. (Stacy says something that’s garbled). Oh man, I just kind of ignored this because your IRA is the long-term money. I can’t trade options in that. Even though I knew I could, I just kind of forgot about it. I did some spread trades and everything else.

So this was back September 2005; $60,000. So I’ve been trading it, paying more attention to it recently. I’m going to show you month by month. September 60,000, October 65,000; are you happy or not happy? (Audience says, “Happy.&#8221 Okay, this is one month later, October; October about 65,000. November about 83,000. December about 100,000. That’s like four months, three four months? That’s not quite double, but would you be happy? (Audience says, “Yeah.&#8221 Okay.

Maybe you only have 5,900 to start with, and you’re at 10,000. (Stacy says something that’s garbled.) I don’t care what your amount is. Don’t give me the excuse: I don’t have cash. It’s not about the cash in the account, it’s about the strategy and how that fits your style and your knowledge that you have. Now, that was trading through the month of October. That was trading through the month of October. Oh, you had a great month. Okay, you did. (Stacy says something that’s garbled.) So December: 100,000. So where do you think it is today? December till going through May? Going through May; where do you think it’s at now?

December at 100 (Stacy says something that’s indistinct.) February 275. March 419. Now, notice how much is in money market. I’m sitting in cash. I do my trades; step out; sit in cash. Now, if you aren’t sitting in cash, that’s a great place to be until you find the right trade. I sit in cash the large majority of my time. As soon as I find the right trade, then I go in, and that’s it. So, where are we at? So March we’re at 419. April 777. (Audience says, “Woo hoo!” and applauds!) It’s not about me. It’s about your (Stacy says something that’s indistinct.). This is very basic simple rules here. (Stacy says something that’s garbled.). I’m saying I started with what, fifty-nine, sixty-thousand in October, and now it’s 1.1 something. Yesterday it got to a little higher. (Stacy says something that’s garbled.).

But my point is this folks: I don’t care what you start with. It doesn’t matter what account you’re trading in and what your exact trades are. Do not concentrate; I sit in cash a lot of the time. I just sit there in cash. So if you start with 5,900. Now I’m more experienced, I’m a few years ahead of you guys. But you’ve got to go back to your basic checklist. I tell you something; you go, do you know what you’re talking about? Yes, I do know what I’m talking about. I trade for a living. I did all of this trading pretty much in my bathing suit or my sweats sitting at home. It’s just a matter of I see entry; I see exits. It all comes down to your technical analysis.

So I’m telling you stuff and you go: It doesn’t make sense. Write it down. See I went through a lot of bad markets. I had no big losses in this account since I’ve been trading it in October.

So, again, this isn’t about me. I already know how to trade. This is about all of us, here at Investools. We know how to trade. We are trying to get you to; you might pick up a few jewels. My point is that when I’m teaching you very specific things, this is what has worked and not worked for me. (Stacy says something that’s garbled.). I’ll buy anywhere, you know. I started out for the first few years, the first five years buying ten contracts: Ten, ten, ten, ten, ten, ten. Then once I got my consistency really good, I went to a little more contracts.

Lets’ see, the question was what was my most used strategy on that IRA? I trade the SPX. Was it credit spreads? Nope. No. I’m just a buyer. I just trade directions. I have calls and puts. That’s all I do: Trade calls; trade puts, just buyer.
My broker is actually in Chicago and, it’s funny because they are right there in the Chicago CBOE. (Source: June 7, 2006 Stacy's IRA 60K to 1.1Million in 8 Months.wav)

If you choose to believe Ms. Acevedo’s testimony, that’s up to you. As for me, I believe Investools hires some of the best salespeople in the world. In my experience, these workers only need the same three qualifications as any successful stock broker: the ability to sell, the ability to sell, and the ability to sell. Neither stock brokers nor Investools sales reps need a method for making money by trading and/or investing in the markets (former Investools employees Michael Drew and Eben Miller are public examples, as explained here: http://www.sec.gov/litigation/litreleases/2009/lr21331.htm). Investools reps only need the ability to sell. Based on your earlier email correspondence, you have already experienced the excellent salesmanship of the Investools staff.

Your diligence in back testing the 10/40 Crossover Method is impressive. I believe you need such dedication if you hope to beat the market. You need the system-development skills described in the book "Bringing Down the House" (the true story of MIT students that developed a card-counting system that beat the casinos.) With regards to system development, William Eckhardt, one of the founders of the world-famous Turtle Traders, had this to say: System designers should believe their results only after they have done everything possible to disprove them.

If you aspire to consistently beat the S&P average, I suggest you read “The Way of the Turtle” by the most-successful Turtle Trader, Curtis M. Faith. According to Faith, he suffered a 70% drawdown at one point during his career as a Turtle. Mr. Faith goes on to say that such losses persuade many people to stop trading and result in most traders ending up as net losers; based on my research, most Investools students fall into this category.

I have an audio recording of Investools trainer Dave Johnson as he talked to an Investools class. On the sound file, Mr. Johnson says that the Turtle Traders made $140 million dollars by using a system that lost money 70% of the time. According to Curtis M. Faith, strategies with such high loss rates periodically experience extreme drawdowns and other dangers—including low returns, price shocks, and system death.

No matter how you reasonably define the word consistent, Mr. Faith was not a consistently profitable trader. Even you, during your back testing, could not achieve “consistent” profits. Thus, it is reasonable to conclude that Investools sales reps deceive investors if these employees suggest that the Firm's students should expect to achieve consistent profits after taking the Company’s classes.

In your recent message, you say that an investment consultant at your local bank tells you that his people (JPMorgan/Chase) don't expect the S&P500 to have near average returns over the next few years. You say, “He's plugging their systems!”

Of course he is. But remember this: No one knows the future. This includes the aforesaid investment consultant. His people are either going to guess right, or they are going to guess wrong. They still don’t know the future. Moreover, at no point in their careers do investment consultants have to demonstrate the ability to make money by investing in or trading the markets. That fact is clearly explained in the book called “Brokerage Fraud: What Wall Street Doesn’t Want You to Know” by Tracy Pride Stoneman and Douglas J. Schulz ©2002.

I understand your lack of success with your Investools education. You are not alone. Like I said before, I have met and interviewed hundreds of Investools students. I have yet to find one that can prove he can consistently beat, over a period of years, the average annual returns of the S&P 500 Index.

To help you gain perspective regarding your dreams of making returns that exceed the market average, I could send you some very sad stories written by people who, like you, were not successful when they tried to implement their Investools education. Here is one of the saddest accounts from a person who shall remain anonymous:

I attended more than 25 workshops (some one day, but most were 2 day workshops) during a two year period and had not only managed to spend 20,000 for the PhD program, at least 10,000 in travel and hotel expenses but on top of all that I lost $70,000 in my IRA account and $10,000 in my cash account. While I take responsibility for lack of patience, etc., I was really beginning to feel quite stupid (which I know I am not). Your information about this company has restored my faith in myself (somewhat, for I still made some stupid mistakes).

Nevertheless, I only purchased the PhD program in October 2004 because the instructor gave me a written guarantee that if I did not make back my initial investment in the Investools PhD program by the time I finished all the training, she would personally coach me until I did. As I attended various workshops, completed coaching and purchased additional tools, I was beginning to become very upset with myself for not being able to "get it". I sent many, many emails to her asking for her help. She emailed back that I needed to contact another instructor, not her and then ignored subsequent emails. At one point the company did give me some extra coaching, but not for long. I continued to email various people and finally received a call from the company in November 2006 telling me they were refunding my money. I subsequently received an amount equal to the cost of all programs and additional tools I purchased except the original $1000 for the first workshop. They said they were not refunding that amount so that they could keep my account open for a year, so I could use the tools...

…the $110,000 or so that I spent and/or lost was practically all I had. I'm currently 59 and am really pretty upset. I am grateful for the $20,000 refund I received, but it only makes a small dent in the total amount I lost.

I think you'll agree, that's a very sad story indeed. And it all started with a written guarantee. It's not surprising though. After all, investor-education companies can get away with blatant fraud and outright lies. Here is an article that explains why.

Financial Fraud Favors Fraudsters​

Did you ever wonder why there is so much fraud in America? It is because our current system rewards such crimes. If you are the victim of fraud, chances are, you will not get your money back. Your best protection against fraud is prevention.

To prove this point, let me show you how you can commit a nationwide scam and make hundreds of millions of dollars. This is a proven method. If authorities catch you, you will not go to jail, and you can keep virtually all of your ill-gotten gains.

Here is a regulation you can exploit to make you fabulously wealthy:

By law, the Securities and Exchange Commission (SEC) is limited to a maximum of $150,000 per violation against individuals and $725,000 against institutions. This is true regardless of investor or customer losses.

How can the preceding rule make you rich? Consider this: Let’s suppose you decide to sell investor-education courses to gullible people across the United States. Because the aforesaid ordinance serves as an insurance policy against catastrophic loss, your marketing reps can say and do practically anything to make sales. Your employees can break securities laws with impunity because you only have to pay $725,000 per violation.

Here’s how it works: Let’s say your corporation decides to break four securities laws while promoting your investor-education courses at free seminars across the country. Here are four violations that the SEC considers to be serious breaches (you can use them as an integral part of your sales presentations to potential customers):

1. Have your salespeople make enticing statements such as “You can’t lose,” “It’s the hottest thing going,” or “You are going to make a ton of money.”

2. Instruct your sales team to make exaggerated statements that are not properly qualified and are therefore an overstated or enlarged statement of truth.

3. Tell your marketing reps to imply or guarantee specific rates of return. Your sales team can even put these guarantees in writing.

4. Train your marketers to describe the prior record of accomplishment of your company, its clients, and your sales reps. Be sure such statements are not properly qualified and do not state that the prior successful achievement does not ensure future success.

In our example, let’s say that 77,826 people believe your illegal sales pitches and pay your corporation an average of $6,100 per person. This means you will make about $475 million (this is an actual number from a real-life scam). If authorities catch you, you will pay about $3 million in fines (that is, four violations times $725,000 equals roughly $3 million, as shown here: http://www.sec.gov/litigation/litreleases/2009/lr21331.htm). According to the Office of the Inspector General (OIG), the $3 million penalty is “within [the SEC’s] authority.” In the real-life scam, the company kept $472 million, no one was prosecuted, no one went to jail, and the corporation retained its business license.


I don’t need to tell you what company got away with the $472 million scheme mentioned above. It should be obvious by now.

As a second example, consider the case of “Teach Me to Trade” salespeople David Gengler and Linda Woolf. You can read about the SEC’s charges against these two at: http://www.sec.gov/litigation/litreleases/2008/lr20486.htm and http://investor.gov/news-alerts/investor-alerts/investor-alert-investment-seminars-trading-seminar-scams#.VCHIXEZ0wkk . A jury found Gengler and Woolf guilty of fraud. However, the judge, due to a legitimate technicality, threw out the verdict and let the two go free. You can read about the verdict and “the tossing out of the verdict” by going to: http://www.good4utah.com/content/news/top%20stories/story/Jury-convicts-infomercial-pair-on-fraud-charges/d/story/MTGBsrAkHkO4gPNDfGcilg and http://saleshq.monster.com/news/articles/3146-judge-tosses-verdicts-against-infomercial-stars

If you read the preceding articles about the Teach Me to Trade reps, which includes the SEC's article called "Investment Seminars – Trading Seminar Scams," I’m sure you’ll see similarities with Investools.

As far as the lady on YouTube goes (the one who claims to have made millions by trading options after taking Investools' training), she could be telling the truth--or not. Does it really matter? People win the lottery all the time. Does it mean they have an organized, systematic, consistent, and disciplined approach to playing the lottery? Probably not. The woman on YouTube may have experienced dumb luck, or she could be helping Investools exploit the aforementioned weaknesses in the law. At the end of the day, does it really matter? No. The only way to gage success is by your own results. That’s a harsh reality, but it’s fair… and it’s honest.

Ciao for now,
B

 

[Hugo Drax]

I posted not to talk about this crossover trading strategy, but to help me decide if I should enroll in the Basic Options course. It would cost me around $1850 to do that.

I pretty much do plan to trade the crossover system, I have more back testing to do before I decide on the exact parameters, but in any case we are nowhere near the point where this system can be executed. There hasn't been an entry (or exit) since December 2011. It might be years before I can trade this.

Did you know the Options Industry Council offers a complete options education for free? Which includes podcasts for beginners all the way too advanced strategies?

Www.optionseducation.org

 

[Muse]

Did you know the Options Industry Council offers a complete options education for free? Which includes podcasts for beginners all the way too advanced strategies?

Www.optionseducation.org

I did not know that. Thank you, Hugo.

 

[Miramonti]

Investools = buffoonery

Options = trying to maneuver through a black widow's web for most investors. Otherwise, the simpler you keep it, the more edge you tend to give up. If you're going to go this route, thoroughly understand the various spreads...not that you'll use most of them but it's critical to having a deeper understanding into the risks, leverage, and break even/loss points of anything you do. (not to mention the variables in the pricing models and how time, volatility, and underlying movement affect options prices and values of respective spreads.)

 

[Brian Alburn]

Question: How does it (Investools) claim to get an edge over the market quantitatively?

Response: Investools does not make such claims.

Dear Sir :|:

I must disagree with your response: In my experience, Investools sells its products by making quantified claims about the returns its students should expect to make. To prove this point, here are transcriptions of statements made on the Investools DVDs that I received when I enrolled in the Firm's $21,500 Program of High Distinction (PhD):

· If I’m making, oh let’s just use a round number as a newer student, let’s say you’re making, you know, anywhere from 20 to 50% on your money.
(Source: Michael Drew SuccessMag Stocks DVDs - New Students Make 20 to 50 Percent Per Year.wav)


· We are going to give you the rules for success. We're also going to kind of go over creating a plan; what portion of your account should options be a part of; what percentage returns can you expect. (Source: Drew SuccessMag Options DVDs - Percentage Returns to Expect.wav)


· Literally, every month you can make money doing covered calls. Every single month: 5%, 10% a month. That’s the numbers we’re talking about. Shoot for about 5%, okay. (Source: Michael Drew SuccessMag Options DVDs - Make 5 to 10 percent a Month.wav)


· At a minimum of 5% monthly return. At first, if you’re reading this, or you’re here for the first time, that may seem a bit of stretch. Stay with us, at the end of the day, at the end of your coaching, you’ll realize that’s not necessarily a “No Brainer;” but that’s very, very doable. (Source: Michael Drew SuccessMag Options DVDs - Making 5 percent Per Month is Easy.wav).


· You’ll come to us, and you’ll say, “Hey Michael [Drew]. My last few trades have been 40%; 100%; 120%; 50%; I lost 10%; 20%; I lost 15%; I made 40; you know, those type things. Hey fine, that’s a good record, you know. You’re doing well. Now let’s start using maybe some advanced concepts because you get it. Let’s now maybe use some better tools, okay? That’s where we’ll talk to you maybe about some advanced options. (Source: Michael Drew SucccessMag Options DVDs - Advanced Options Beat Basic.wav)

In the preceding discussion, it is reasonable to conclude that Investools led consumers to believe that, by using the Company’s Buying-Calls and Buying-Puts Systems, they should reasonably expect to make a 38% average return on their trades. That is, by using the percentages in the above illustration (40% + 100% + 120% + 50% – 10% – 20% – 15% + 40% = 305%), if you divide 305% by the eight trades in the example, you get a 38% average profit per short-term options trade. You also achieve five profitable trades and three unprofitable trades, which means you should expect your directional options trades to produce profits 62.5% of the time. The last few sentences in the above quote suggest investors should expect to achieve even better percentages by using Investools’ advanced tools and advanced options strategies.


· We had this little round table with all the other [Investools] instructors, and we were going around the table, and these guys were saying, “Well, I invested $20,000 [in education], and I had $5,000 left. And I took that 5,000 and over the next couple years, it turned into over a million dollars.” And then the other person had invested $70,000 in his investment education, and he had about 70,000 left when he was done with that. And he took that 70,000 over to about 20,000,000 over the next three years just trading options and using a lot of the principles, the foundation that I’m going to talk about here today. (Source: Andrew Scott BusinessWeek Stocks DVDs - Instructors Exponentially Beat Market.wav).


In my opinion, the above statements made by Investools are deceptive at best and illegal at worst. The Investools DVDs, from which the above statements were transcribed, do not contain disclaimers, which make the claims even more misleading. I think it’s reasonable to conclude, based on the foregoing excerpts, that Investools led investors to believe its classes would give them a significant edge in the market. To be clear, the preceding claims suggest Investools' beginning students should expect to make from 20% to 50% per year. Advanced pupils should reasonably expect to make anywhere from 5% per month to a 20,000% return over a two-year period (that is, [(1 million ÷ 5,000) x 100]) or a 28,500% profit over a three-year period (namely, [(20 million ÷ 70,000) x 100]).

Please forgive me for belaboring my views. I just wanted you to know that Investools does imply, suggest, and insinuate that, by using the Firm's education, investors gain an edge in the markets and should reasonably expect, as novice investors, to make at least 20% annually in their overall portfolios. Investools students should expect even greater profits, such as 28,500% returns over a three-year period, as they complete Investools' advanced courses. The fact is, I have recordings of Investools workshops on which the Firm's employees tell investors that, by implementing their Investools education, they should expect to "print money any time they want" (Source: Eben Basic Stocks 5-28-05 Print Money.wav) and "literally get to the point where they can take whatever money they want out of the markets" (Source: Dave Johnson 7-19-07 AITS Take Whatever Money You Want.wav). In my experience, the Company made such claims with impunity and relative immunity.

 

[MomentsofSanity]

Brian.

I guessing your interactions with Investools predates 2007 as Michael Drew has not been associated with the company for many years. Both he and Eben Miller, in Securities and Exchange Commission v. Investools Inc., Michael J. Drew, and Eben D. Miller, Civil Action No. 1:09-CV-02343 (D.D.C.) (December 10, 2009)
were fined and enjoined from any seminar activities. Both had ceased employment with Investools in 2007 I believe.

This is long before TD Ameritrade acquired the Investools product. While I fully believe they presented themselves as successful and implied expected returns it really has nothing to do with the company as it exists today.

 

[Brian Alburn]

Brian.

I guessing your interactions with Investools predates 2007 as Michael Drew has not been associated with the company for many years. Both he and Eben Miller, in Securities and Exchange Commission v. Investools Inc., Michael J. Drew, and Eben D. Miller, Civil Action No. 1:09-CV-02343 (D.D.C.) (December 10, 2009)
were fined and enjoined from any seminar activities. Both had ceased employment with Investools in 2007 I believe.

This is long before TD Ameritrade acquired the Investools product. While I fully believe they presented themselves as successful and implied expected returns it really has nothing to do with the company as it exists today.

Dear MomentofSanity:

Your point is well made and well received. You are correct: My interactions with Investools predates 2008 or so. That doesn't make the lessons I learned any less valid.

The reason I sent my preceding post is to caution investors about claims that investor-education companies can get away with. The fact that "Muse" is impressed with the salesmanship of Investools' current reps suggests that investors need to be warned... today. We can learn from the past and know that investor-education salespeople have the same latitude for "dramatizing their claims" as used car salesmen (no offense intended to used car salesmen).

 

[MomentsofSanity]

Dear MomentofSanity:

Your point is well made and well received. You are correct: My interactions with Investools predates 2008 or so. That doesn't make the lessons I learned any less valid.

The reason I sent my preceding post is to caution investors about claims that investor-education companies can get away with. The fact that "Muse" is impressed with the salesmanship of Investools' current reps suggests that investors need to be warned... today. We can learn from the past and know that investor-education salespeople have the same latitude for "dramatizing their claims" as used car salesmen (no offense intended to used car salesmen).

Actually it is entirely different than it was back in mid 2000's. The SEC civil action demonstrates that there isn't latitude and the acquisition by TD Ameritrade lead to several changes and much tighter monitoring of the seminar programs at Investools. The SEC has also taken steps to crack down on the investor seminar issues and have brought forth several actions in the last few years against individuals and firms making the types of claims you have cited previously. SEC v Long Term-Short Term (BetterTrades), SEC v Hands on Capital and Laishaco as well as the Investools case to name a few.

I understand you had negative experiences but to apply what you experienced then to what Muse was discussing isn't really relevant.

 

[Brian Alburn]

Actually it is entirely different than it was back in mid 2000's. The SEC civil action demonstrates that there isn't latitude and the acquisition by TD Ameritrade lead to several changes and much tighter monitoring of the seminar programs at Investools. The SEC has also taken steps to crack down on the investor seminar issues and have brought forth several actions in the last few years against individuals and firms making the types of claims you have cited previously. SEC v Long Term-Short Term (BetterTrades), SEC v Hands on Capital and Laishaco as well as the Investools case to name a few.

I understand you had negative experiences but to apply what you experienced then to what Muse was discussing isn't really relevant.

Dear MomentofSanity:

I respectfully offer a different viewpoint: My comments have much relevance to what Muse is talking about. Based on my more than 3,000 hours with the Investools PhD and my 5,000-hour investigation into investor-education fraud, anyone who suggests he will teach you (for a fee) how to, over time, significantly beat the S&P Index, is selling snake oil. This applies yesterday and today.

Investools salesmen are some of the best in the world and tell a very persuasive story. Otherwise, why would anybody pay for the Company's classes... and then pay the Firm fees to place trades?

At the end of the day, the facts, concepts, and theories presented by Investools (or any other investor-education company) are, for the vast majority of people, not going to produce the results promoted during the sales process. Sure, you can find students who are happy with their Investools education. But in my experience, that’s all it is: “education.”

I have personally interviewed hundreds of Investools students, and I have yet to meet anyone who can prove he has used his Investools education to design, test, and implement viable trading systems that, over time, beat the annual returns of the S&P 500 Index. So why not just buy-and-hold that index and, year after year, outperform 80% of professional money managers?

I was a major player in helping the SEC investigate Investools in 2007, 2008, and 2009. I have also interviewed representatives from other stock- and options- trading companies who admit that "the real money is in selling investor education, and NOT in trading." After all, people who sell "the snake oil," don't sell it for free.

My take-away from that experience is this (and this is just my opinion that I believe is valid today): Investor-education promoters sell “The goose that lays golden eggs,” but can only deliver “The goose.” Consumers must figure out how to make “the goose” excrete precious metal. If you bought such an animal based on claims that you could train it to emit valuable orbs, most goose owners would likely say, “You were scammed.”

 

[Brian Alburn]

Greetings Muse:

In an earlier message, you said: "The bottom line is not exactly to beat the S&P500 on a consistent basis so much as to overall beat it significantly." I agree, that is often the dream that is sold by companies that offer investor education. If I misstated "the pitch" in a previous note, please accept my apology.

You remind me of me when I was passionate about "the markets." Because you seem like a kindred spirit, I would like to send you (free of charge) copies of the following non-copyrighted WebEx files that were presented in 2005, 2006, and 2007 by our favorite investor-education company: Basic Stocks Trading Rooms, Basic Options Trading Rooms, Advanced Options Trading Rooms, Advanced Technical Analysis Trading Rooms, Active Investor Talks Stocks (presented by Mr. David Johnson), Three-Day Live Course, and others.

I even have several System Development Courses that were each presented over five or six sessions by Mr. Johnson. In my experience, most anything presented by Dave is of the highest quality. He brings a wealth of experience and integrity to the subjects he teaches.

If you are interested in the preceding files, feel free to send me a personal note and let me know what non-copyrighted material you want and where you want me to send it.

 

[Muse]

I was a faithful attendee of Brandon Van Zee's Introduction to Trading Stocks Wednesday morning (6AM Pacific) 1.5 hour online coaching session (up until a few months ago when my Level 2 support expired) and I thought I heard him say one day (only the coaches are audible, every other participant uses a chat facility) that the class's "Paper Money" portfolio had attained a 70% return. Some months later I mentioned this to him in an email and he replied (I'm paraphrasing this, but it's virtually an exact quote) that he would do "backflips" if he could achieve that in the class portfolio. The returns were far more modest. He didn't specify. I think that once in a while during class he'd mention a figure of how the portfolio was doing for the year. Brandon's class was recorded, but I guess I didn't go back and review what he'd said. This is the same coach (he has a Friday mid-day trading room now, not the Wednesday morning class, and I don't have access to trading rooms) who has said in the class that he himself does not trade the classes rules (which are readily ascertained by anyone who has access to the class), but prefers to invest in big cap dividend stocks, most certainly those among the "Dividend Aristocrats."

So, I don't think of Brandon (he's commonly referred to as BVZ in the community) as dishonest, however his espousing an investment strategy (well, he teaches it), that he does not himself employ does raise eyebrows.

I tried to trade the rules of the class over a period of time, and maybe it wasn't the best time but I didn't really have success. My errors were not counterbalanced sufficiently by successes. The class rules seemed marvelous, my results were anything but.

The instructors at the beginning of every coaching session, trading room, market forecast, etc. show on the screen and (partially) read (or paraphrase) a litany of disclaimers, explaining that they are not licensed brokers or investment counselors, they recommend no specific strategies or vehicles or trades, and that "Paper Money" investing does not necessarily translate over to real investing and that there's a substantial risk of losing principle in real trading.

The closest thing I've seen to representing that Investools use promises gains that I recall was a demonstration of what would have happened trading a particular stock using their growth stock set of rules. This was at the first workshop I attended. The stock was Chipotle (CMG), and the presenter backtested over a period of months and years. He showed that you would have made a lot of money. Like they say, hindsight is 20 20. He didn't claim that you would have similar success with any particular stock you'd buy going forward. I recall him noting offhandedly that BAC looked like a short at that time and I followed the stock over the next few months and he was right.

The current coaches don't make claims that you'll succeed, not in my experience. Some of them do try to sell you on buying the courses, they tell you how useful the course materials and instruction are in strengthening your arsenal of tools in developing your trading rules and systems. The most aggressive shill for their courses in my experience is David Settle, who is the head guy with the daily Market Forecast video. He's pretty impressive in those videos, is really good at analyzing the markets from a technical standpoint on a short and long term basis. Brandon Van Zee has said publicly that he considers David Settle to be their best coach.

My favorite coach was Wayne Montierth. He was something of a maverick, had worked in construction for many years, his father in law had gotten him into stock trading, and a guy he worked out with who was in securities got him to join the Investools staff and he became a coach. He was a very popular coach (a lot of people attended his online sessions) but he suddenly disappeared from Investools, my theory is that he was canned because he wasn't orthodox enough.

 

[moonbogg]

Investools?

 

[Brian Alburn]

Hi Muse:

In an earlier post, MomentsofSanity pointed out that, after the SCE's civil action against Investools, the Company's salespeople do not cite specific returns that you should expect by taking the Firm's classes. In contrast, I have an audio recording of an Investools trading room that was presented on September 28, 2009. On that tape, instructor Cameron May tells investors they should reasonably expect to make an average annual return of 18.5% (about 6.5% better than the 10% to 12% typical "20-year" average annual return of the S&P 500).

The preceding notwithstanding, people are still buying Investools' classes. Based on that fact alone, it is reasonable to conclude that the Firm's salespeople are creating unrealistic expectations in the minds of consumers. It is highly unlikely that, over time, an Investools student is going to beat the S&P 500. So why would anyone buy the Firm's courses? The answer is this: Salesmanship. Pure and simple. People want to the believe the hype espoused by the sales reps. Hope springs eternal. And "the carrot at the end of the stick" (namely: "the next class") has a strange appeal... especially if you have lost money in the markets after trying to apply what you learned in an earlier class.

I don't know what to tell you, Muse. If you think you can beat the odds and develop a system that can financially change your life, I do not want to discourage you. Still, you should move forward with your eyes open.

I have already told you that I interviewed hundreds of students, and none of them told me that, over time, they were beating the annual market average in their overall portfolios. If you decide to continue with your dream of "making money in the markets," I suggest you find someone who will show you physical proof that he/she has achieved the results you seek. Until you locate such an instructor or mentor, I would not trust "their word." This is especially true if they are getting paid to create the illusion that you, too, can significantly change your financial life (for the better) by "trading" or "investing in" the markets.

I wish you well,
Brian