One of the speaker’s mannerisms was to have the audience complete his sentences. He would say the whole sentence except for the last word which would be obvious, and pause to let the audience complete it. Basically a tactic to bring the audience into it.
He then started talking about ETF’s (Exchange Traded Funds) and how they have advantages over funds because they can be traded like stocks. He mention covered calls at this point saying it was like insurance. You have insurance for your car and house, but not your money? The problem with covered calls is that they are relatively expensive. Yes, you can use them as insurance, they don’t last long, You would have to keep buying them over and over which would lower your return on investment of the stock you are protecting. Better to buy stocks that are solid and that you are willing to ride through any short term drops. Yes, some investors do use covered calls as insurance, but only to protect themselves against a known uncertainty that might cause the stock to drop. But not as a day-to-day thing. That would be stupid.
Then he showed us a stock chart. The problem with stock charts like this is you can see the past with 20/20 vision. Yes, you could buy low here, and sell high here, etc. But in real life, you don’t know if you are at a low point or a high point.
He went on to trash Dollar Cost Averaging. And there were more horror stories about people who lost everything because a financial advisor put them in tech stocks in 2001. And then there was a short video clip about people having to work into old age because they didn’t have enough money. There were the references to older people working at McDonalds, and as Wal-Mart greeters.
He brought up a list of their competitors (Investools, WizeTrade, Optionetics, BetterTrades), and the prices they charged between $2995, and $3995.
He talked about the mentalities of Shopping versus Investing. Shoppers look for price, and Investors look for return on investment. This kind of segued into how much is education worth. He quoted the book The Millionaire Next Door (excellent book), that most of the millionaires made their own investment decisions…he didn’t mention that the book also says that most millionaires don’t trade stocks!
Then he started talking about the RECIPE. The ingredients to the recipe seem to be their Trade Center software, a 3 day investing workshop, and then the tool free support. The workshop cost $199, and included the Trade Center software. The data feed for the software was free for the first month, and then cost $39.93 per month afterward. He showed a long list of things cover at the workshop including research, timing, assessment, position sizing, exit strategy, allocation, Trade Center, trading accounts, order entry, reading charts, shorting, options, cash flow, hedging, bidirectional trades, candlesticks, etc.
The directions for the recipe were to start off with fundamental analysis. The software would do most of this it seemed like. Then check the chart. He talked a lot about MACD (moving average convergence divergence) which could be used to time your buying and selling. This wasn’t as he said day trading, but was swing trading. He showed one example where you could buy and sell a stock and make money on most trades racking up a gain of 13%. He didn’t include into the calculations brokerage fees, or short term capital gains taxes.
About this time a fire alarm sounded. He said lets wait to hear what they have to say. Well, the announcement came over the speakers to leave the building. He said he was going to stay, but if we felt the need to leave, we could go. Personally, I had been dying to go to the bathroom as there hadn’t been a single break! Also, I have had it ingrained to leave the building immediately when there is a fire alarm. You don’t know when it will be real. I took the opportunity and left. I may have been the only one to leave, not sure. I thought about it later that it was kind of funny that he was teaching to follow the chart as to when to decide to leave, and not to try second guess it. Yet he was ignoring the fire alarm a a sign to leave the building. There was a fire truck out in front of the building when I left. I don’t think it turned out to be anything serious as I didn’t see anything on the news. But why take chances?